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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 0-12. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
[ ] | 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.: |
(3) | Filing Party: |
(4) | Date Filed: |
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![]() | Aetna Inc. 151 Farmington Avenue Hartford, Connecticut 06156 | Ronald A. Williams Chairman and Chief Executive Officer |
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![]() | Aetna Inc. 151 Farmington Avenue Hartford, Connecticut 06156 | Christopher M. Todoroff 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 2008; |
3. | To consider and act on two shareholder proposals, if properly presented at the meeting; and |
4. | To transact any other business that may properly come before the Annual Meeting or any adjournment thereof. |
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From O’Hare Airport: | • Take I-190 East to I-90 East / Chicago Loop | |
• Stay on I-90 East until the Ohio Street exit (exit #50B) | ||
• Drive six blocks to Dearborn Street | ||
• Turn left and go four blocks to Superior Street | ||
• Turn right and the hotel is 31/2 blocks ahead | ||
From Midway Airport: | • When exiting the airport, go north on Cicero Avenue to I-55 | |
• Turn right and follow the Chicago exits to I-90-94 West-Wisconsin | ||
• Take the Ohio Street exit (exit #50B) | ||
• Drive six blocks to Dearborn Street | ||
• Turn left and go four blocks to Superior Street | ||
• Turn right and the hotel is 31/2 blocks ahead |
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151 FARMINGTON AVENUE, HARTFORD, CONNECTICUT 06156
APRIL 21, 2008
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, MAY 30, 2008
THE SHAREHOLDER MEETING TO BE HELD ON MAY 30, 2008
• | The date, time and location of the annual meeting; |
• | A list of the matters being submitted to shareholders and the recommendations of the Board of Directors of Aetna Inc. regarding each of those matters; and |
• | Information about attending the shareholder meeting and voting in person. |
THE ANNUAL MEETING
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 2008. | |
• | Consideration of a shareholder proposal relating to cumulative voting in the election of Directors, if properly presented at the Annual Meeting. |
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• | Consideration of a shareholder proposal relating to nominating a retired Aetna executive to the Board, if properly presented at the Annual Meeting. |
Q: | WHAT ARE AETNA’S VOTING RECOMMENDATIONS? |
Q: | WHICH OF MY SHARES CAN I VOTE? |
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, Computershare Trust Company, N.A. (the “Transfer Agent”), 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 holder of record, 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 other 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 other nominee on how to vote your shares, and you also are 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 other nominee is also 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? |
• | 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 other nominee and mailing it in the |
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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 under “WHAT IF I RETURN MY PROXY CARD OR VOTING INSTRUCTION CARD BUT DO NOT PROVIDE VOTING INSTRUCTIONS?” on page 4. |
• | BY INTERNET — Go to www.investorvote.com and follow the instructions. You will need to have your proxy card (or thee-mail message you receive with instructions on how to vote) in hand when you access the website. | |
• | BY TELEPHONE — Call toll-free on a touchtone telephone1-800-652-8683 inside the United States, Canada and Puerto Rico or 1-781-575-2300 outside the United States, Canada and Puerto Rico and follow the instructions. You will need to have your proxy card (or thee-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? |
Q: | WHAT SHOULD I DO IF I WANT TO ATTEND THE ANNUAL MEETING? |
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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? |
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: | CAN 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 Aetna’s Corporate Secretary no later than December 22, 2008. SUCH PROPOSALS MUST BE SENT TO: CORPORATE SECRETARY, AETNA INC., 151 FARMINGTON AVENUE, RW61, HARTFORD, CT 06156. Such proposals also will need to comply with the United States Securities and Exchange Commission (the “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 year’s Annual Meeting and must contain the information required by Aetna’s By-Laws. (Please see “Director Qualifications” beginning on page 15 for a description of qualifications that the Board believes are required for Board nominees.) |
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• | 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. You also can visit Aetna’s website at www.aetna.com/governance to review and download a copy of Aetna’s By-Laws. |
Q: | CAN SHAREHOLDERS ASK QUESTIONS AT THE ANNUAL MEETING? |
Q: | WHO COUNTS THE VOTES CAST AT THE ANNUAL MEETING? |
Q: | IS MY VOTE CONFIDENTIAL? |
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Board Committee | ||||||||||||||||||||||||
Nominating | ||||||||||||||||||||||||
Compensation | Investment | and | ||||||||||||||||||||||
and | and | Medical | Corporate | |||||||||||||||||||||
Nominee/Director | Audit | Organization | Executive | Finance | Affairs | Governance | ||||||||||||||||||
Frank M. Clark | X | X | ||||||||||||||||||||||
Betsy Z. Cohen | X | * | X | X | ||||||||||||||||||||
Molly J. Coye, M.D. | X | X | ||||||||||||||||||||||
Roger N. Farah | 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 | ||||||||||||||||||||||
Edward J. Ludwig | X | * | X | X | ||||||||||||||||||||
Joseph P. Newhouse | X | X | X | * | ||||||||||||||||||||
Ronald A. Williams | X | * | X | |||||||||||||||||||||
Number of Meetings in 2007 | 9 | 9 | 2 | 6 | 4 | 5 | ||||||||||||||||||
* | Committee Chairman |
• | 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 Audit Committee member, based onhis/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 Audit 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 Audit 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 Audit Committee. The Audit 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 Audit Committee has available from the Company such funding as the Audit Committee determines for compensation to the Independent Accountants and any other accounting firm or other advisers engaged by the Audit Committee, and for the Audit Committee’s ordinary administrative expenses. The Audit Committee conducts an annual evaluation of its performance. For more information regarding the role, responsibilities and limitations of the Audit Committee, please refer to the Report of the Audit Committee beginning on page 65. |
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• | 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 Compensation Committee is directly responsible for reviewing and approving the corporate goals and objectives relevant to Chief Executive Officer and other executive officer compensation; evaluating the Chief Executive Officer’s and other executive officers’ performance in light of those goals and objectives; and establishing 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 and consulting with the nonmanagement Directors of the full Board. The Compensation Committee also evaluates and determines the compensation of the Company’s executive officers and oversees the compensation and benefit plans, policies and programs of the Company. The Chief Executive Officer consults with the Compensation Committee regarding the compensation of all executive officers (except his own compensation), but the Compensation Committee does not delegate its authority with regard to these executive compensation decisions. The Compensation Committee also administers Aetna’s stock-based incentive plans and Aetna’s 2001 Annual Incentive Plan. The Compensation 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 Compensation Committee has the authority to retain counsel and other experts or consultants as it may deem appropriate. |
• | 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 Executive 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 Investment and Finance Committee has the authority to retain counsel and other experts or consultants as it may deem appropriate. The Investment and Finance 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 Medical Affairs Committee has the authority to retain counsel and other experts or consultants as it may deem appropriate. The Medical Affairs 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 Nominating Committee |
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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 of candidates 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: |
• | 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 candidate’s ability 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 are 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 |
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business, professional or academic community. In evaluating Director nominations, the Committee seeks to achieve a diversity 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 Nominating 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 Nominating Committee also reviews materials provided by professional search firms or other parties in connection with its consideration of nominees. The Nominating 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 Nominating Committee considers whether to fill those vacancies and, if applicable, considers various potential Director candidates. These candidates are evaluated against the current Director criteria at regular or special meetings of the Nominating Committee, and may be considered at any point during the year. As described above, the Nominating 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 Nominating Committee at a meeting of the Nominating Committee. If any materials are provided by a shareholder in connection with the nomination of a Director candidate, such materials are forwarded to the Nominating Committee. |
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![]() Director since 2006 | Frank M. Clark, age 62, became Chairman and Chief Executive Officer of Commonwealth Edison Company (“ComEd”) (an electric energy distribution subsidiary of Exelon Corporation) in November 2005, having served as President of ComEd since October 2001. Mr. Clark also served as Executive Vice President and Chief of Staff to the Exelon Corporation Chairman from 2004 to 2005. Since joining ComEd in 1966, Mr. Clark rose steadily through the ranks, holding key leadership positions in operational and policy-related responsibilities including regulatory and governmental affairs, customer service operations, marketing and sales, information technology, human resources and labor relations, and distribution support services. Mr. Clark is a director of Harris Financial Corp. (financial services) and Waste Management, Inc. (waste disposal services). Mr. Clark also serves as a trustee of the University of Chicago Hospitals and Health System and DePaul University. | |
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![]() Director of Aetna or its predecessors since 1994 | Betsy Z. Cohen,age 66, is Chairman and a trustee of RAIT Financial Trust (real estate investment trust), a position she assumed in August 1997. Until December 11, 2006, she also held the position of Chief Executive Officer. 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. Cohenco-founded a commercial law firm and served as a Senior Partner until 1984. | |
![]() Director since 2005 | Molly J. Coye, M.D.,61, is the Chief Executive Officer of the Health Technology Center (non-profit education and research organization), which she founded in December 2000. Prior to assuming her current position, Dr. Coye served as Senior Vice President of the West Coast Office of The Lewin Group (consulting) from 1997 to December 2000. Before that, she served in both the public and private sectors: Executive Vice President, Strategic Development, of HealthDesk Corporation from 1996 to 1997; Senior Vice President, Clinical Operations, Good Samaritan Health Hospital from 1993 to 1996; Director of the California Department of Health Services from 1991 to 1993; Head of the Division of Public Health, Department of Health Policy and Management, Johns Hopkins School of Hygiene and Public Health from 1990 to 1991; Commissioner of Health of the New Jersey State Department of Health from 1986 to 1989; Special Advisor for Health and the Environment, State of New Jersey Office of the Governor from 1985 to 1986; and National Institute for Occupational Safety and Health Medical Investigative Officer from 1980 to 1985. Dr. Coye is a member of the Institute of Medicine, where sheco-authored the reportsTo Err Is HumanandCrossing the Quality Chasm. She also is a director of the Program for Appropriate Technology in Health and serves as an advisor to the Health Evolution Partners Innovation Network, a health-related investment fund. She also serves on the Board of Directors of Aetna Foundation, Inc. | |
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![]() Director since 2007 | Roger N. Farah, age 55, has been President, Chief Operating Officer and a Director of Polo Ralph Lauren Corporation (lifestyle products) since April 2000. Prior to that, he served as Chairman of the Board of Venator Group, Inc. (now Foot Locker, Inc.) (retailing) from December 1994 to April 2000, and as its Chief Executive Officer from December 1994 to August 1999. Mr. Farah served as President and Chief Operating Officer of R.H. Macy & Co., Inc. (retailing) from July 1994 to October 1994. From June 1991 to July 1994, he was Chairman and Chief Executive Officer of Federated Merchandising Services (retailing), the central buying and product development arm of Federated Department Stores, Inc. (retailing). From 1988 to 1991, Mr. Farah served as Chairman and Chief Executive Officer of Rich’s/Goldsmith’s Department Stores (retailing) and President of Rich’s/Goldsmith’s Department Stores from 1987 to 1988. He held a number of positions of increasing responsibility at Saks Fifth Avenue, Inc. (retailing) from 1975 to 1987. | |
![]() Director of Aetna or its predecessors from 1979 to 1992 and since 1993 | Barbara Hackman Franklin, age 68, is President and Chief Executive Officer of Barbara Franklin Enterprises (private investment and management consulting firm). From 1992 to 1993, she served as the 29th U.S. Secretary of Commerce. Prior to that appointment, Ms. Franklin was President and Chief Executive Officer of Franklin Associates (management consulting firm), which she founded in 1984. She has received the John J. McCloy Award for contributions to audit excellence, the Director of the Year Award from the National Association of Corporate Directors, an Outstanding Director Award from the Outstanding Director Exchange, and in 2007 was named by Directorship Magazine as one of the 100 most influential people in governance. Ms. Franklin was Senior Fellow of The Wharton School of Business from 1979 to 1988, an original Commissioner and Vice Chair of the U.S. Consumer Product Safety Commission from 1973 to 1979, and a Staff Assistant to the President of the United States from 1971 to 1973. Earlier, she was an executive at Citibank and the Singer Company. Ms. Franklin is a director of The Dow Chemical Company (chemicals, plastics and agricultural products) and is also a director or trustee of three funds in the American Funds family of mutual funds and a director of J.P. Morgan Value Opportunities Fund. She is trustee and chairmanemeritaof the Economic Club of New York, a director of the National Association of Corporate Directors, former vice chair of theUS-China Business Council, and a member of the Public Company Accounting Oversight Board Advisory Council. Ms. Franklin is a regular commentator on the PBSNightly Business Report. | |
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![]() Director of Aetna or its predecessors since 2000 | Jeffrey E. Garten,age 61, became the Juan Trippe Professor in the Practice of International Trade, Finance and Business at Yale University on July 1, 2005, having served as the Dean of the Yale School of Management since 1995. He also is Chairman of Garten Rothkopf (global consulting firm), a position he assumed in October 2005. 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 CarMax, Inc. (automotive retailer) and is also a director of 28 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 is a director of The Conference Board and the International Rescue Committee. 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, Sr.,age 73, is Chairman of Earl G. Graves, Ltd. (a multimedia company with properties in television, radio, events, digital media and the Internet), having served as Chairman and Chief Executive Officer since 1972. He is the Managing Partner of Graves Ventures, Inc. and also the Publisher ofBlack Enterprise magazine, 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 trustee of Howard University, a member of the Executive Board and Executive Committee of the National Office of the Boy Scouts of America and a Fellow of the American Academy of Arts & Sciences. He also serves on the Board of Directors of Aetna Foundation, Inc. and the Black Enterprise B.R.I.D.G.E. Foundation. Mr. Graves has worked to foster the growth of a vibrant African American business community. He is the author of theNew York TimesbestsellerHow to Succeed in Business without Being Whiteand is the recipient of more than 60 honorary degrees and numerous awards for his business success and civic contributions. Mr. Graves was named byFortune Magazineas one of the 50 most powerful and influential African Americans in corporate America and is the subject of an exhibit in The National Great Blacks in Wax Museum in Baltimore, Maryland. In 1990, Mr. Graves was awarded the 84th NAACP Spingarn Medal, the highest achievement award for African Americans. In 1995, his alma mater, Morgan State University, renamed its business school the Earl G. Graves School of Business and Management. In August 2006, Mr. Graves received the Lifetime Achievement Award from the National Association of Black Journalists for his contributions to the field of journalism and the publishing industry. On April 26, 2007, Mr. Graves was inducted into the Junior Achievement Worldwide U.S. Business Hall of Fame for his outstanding contributions to free enterprise and to society. | |
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![]() Director of Aetna or its predecessors since 1993 | Gerald Greenwald,age 72, is a founding principal of the Greenbriar Equity Group LLC (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. He also is a trustee of the Aspen Institute and a member of an Advisory Council of The RAND Corporation. | |
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![]() Director of Aetna or its predecessors since 1995 | Ellen M. Hancock,age 65, served as the President of Jazz Technologies, Inc. and President and Chief Operating Officer of its predecessor, Acquicor Technology Inc., from August 2005 to June 2007. Prior to its merger with Jazz Semiconductor, Inc., a wafer foundry, in February 2007, Jazz Technologies (then known as Acquicor) was a blank check company formed for the purpose of acquiring businesses in the technology, multimedia and networking sector. Mrs. Hancock previously served as Chairman of the Board and Chief Executive Officer of Exodus Communications, Inc. (Internet system and network management services). She 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) and Electronic Data Systems Corporation (information technology services). | |
![]() Director since 2003 | Edward J. Ludwig,age 57, serves as Chairman of the Board, President and Chief Executive Officer of Becton, Dickinson and Company (“BD”) (global medical technology company). He was elected Chairman of the Board in February 2002, Chief Executive Officer in January 2000, President in May 1999 and Chief Financial Officer in August 1995. Mr. Ludwig joined BD as a Senior Financial Analyst in 1979. Prior to joining BD, Mr. Ludwig served as a senior auditor with Coopers and Lybrand (now Pricewaterhouse Coopers) and as a financial and strategic analyst at Kidde, Inc. He is a member of the Board of Trustees of the College of the Holy Cross and is a member and past Chair of the Health Advisory Board for the Johns Hopkins Bloomberg School of Public Health. He is also a trustee of the Hackensack (NJ) University Medical Center and Chairman of the Advanced Medical Technology Association (AdvaMed). | |
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![]() Director since 2001 | Joseph P. Newhouse,age 66, 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, and a director of the National Committee for Quality Assurance. Dr. Newhouse is the author ofFree for All: Lessons from the RAND Health Insurance ExperimentandPricing the Priceless: A Health Care Conundrum. He also serves on the Board of Directors of Aetna Foundation, Inc. | |
![]() Director since 2002 | Ronald A. Williams,age 58, is Chairman and Chief Executive Officer of Aetna. He was elected Chairman of Aetna on October 1, 2006, and Chief Executive Officer on February 14, 2006, having served as President of the Company from May 27, 2002 until July 24, 2007 and as Executive Vice President and Chief of Health Operations from March 15, 2001 until his appointment as President. Mr. Williams is a Director of American Express Company (financial services) and is a trustee of The Conference Board. He also serves on the Dean’s Advisory Council at the Massachusetts Institute of Technology and is a member of MIT’s Alfred P. Sloan Management Society. |
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• | Attracts and retains qualified Directors; |
• | Recognizes Directors’ critical contributions; and |
• | Aligns, through the offering of stock-based compensation, the interests of Aetna’s Directors with the long-term interests of our shareholders. |
• | Nine of the health care companies included in the Morgan Stanley Healthcare Payors Index;1 and |
• | Nineteen general industry companies included in the Fortune 500 list.2 |
• | The annual retainer was increased to $50,000, and separate Board and committee meeting fees were eliminated. |
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• | The retainer for the Chairman of the Medical Affairs Committee and the Chairman of the Investment and Finance Committee was increased from $7,000 to $8,000. |
• | Committee member retainers remained at $4,000, but were increased to $7,500 for Audit Committee members and $5,000 for members of the Compensation Committee and Nominating Committee, in light of the demands of service on those Committees. |
• | Mr. Farah’s total compensation is lower than others because he joined the Board in June of 2007; |
• | Mr. Jordan’s total compensation is lower than others because he retired from the Board in April of 2007; |
• | Mr. Clark’s and Dr. Coye’s total compensation is higher than others because they joined the Board in June of 2006 and October of 2005, respectively, and their grants of initial stock units made at that time, which are amortized over three years, are still being expensed; and |
• | Messrs. Graves’ and Greenwald’s total compensation is higher than others primarily because they reached retirement age eligibility in 2007 for purposes of vesting under the Aetna Inc. Non-Employee Director Compensation Plan (the “Director Plan”). As a result, certain stock awards made to Messrs. Graves and Greenwald in 2006 and 2007, although the same as those made to other Directors, were required to be expensed over a shorter period of time. |
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Fees Earned | ||||||||||||||||
or Paid | Stock | All Other | ||||||||||||||
in Cash | Awards | Compensation | Total | |||||||||||||
Name | (2) | (3) | (4) | (5) | ||||||||||||
Frank M. Clark | $ | 59,000 | $ | 195,766 | $ | 48,088 | $ | 302,854 | ||||||||
Betsy Z. Cohen | 66,334 | 143,473 | 49,186 | 258,993 | ||||||||||||
Molly J. Coye, M.D. | 63,000 | 251,036 | 48,088 | 362,124 | ||||||||||||
Roger N. Farah | 34,084 | 57,730 | 47,107 | 138,921 | ||||||||||||
Barbara Hackman Franklin | 69,000 | 143,473 | 49,186 | 261,659 | ||||||||||||
Jeffrey E. Garten | 64,833 | 143,473 | 48,088 | 256,394 | ||||||||||||
Earl G. Graves | 71,500 | 174,914 | 50,608 | 297,022 | ||||||||||||
Gerald Greenwald | 67,334 | 196,969 | 50,608 | 314,911 | ||||||||||||
Ellen M. Hancock | 62,500 | 143,473 | 58,088 | 264,061 | ||||||||||||
Michael H. Jordan(1) | 22,666 | 31,654 | 48,136 | 102,456 | ||||||||||||
Edward J. Ludwig | 74,000 | 150,363 | 50,174 | 274,537 | ||||||||||||
Joseph P. Newhouse | 74,500 | 157,629 | 49,686 | 281,815 | ||||||||||||
(1) | Mr. Jordan retired from the Aetna Board of Directors on April 27, 2007. |
(2) | The amounts shown in this column may include cash compensation that was deferred by Directors during 2007 under the Director Plan. See “Additional Director Compensation Information” beginning on page 28 for a discussion of Director compensation deferrals. Amounts in this column consist of one or more of the following: |
Fees Earned | ||||
or Paid | ||||
Activity | in Cash | |||
Annual Retainer Fee | $ | 50,000 | ||
Chairman of the Audit Committee | 15,000 | |||
Membership on the Audit Committee | 7,500 | |||
Chairman of the Committee on Compensation and Organization | 10,000 | |||
Membership on the Committee on Compensation and Organization | 5,000 | |||
Chairman of the Nominating and Corporate Governance Committee | 10,000 | |||
Membership on the Nominating and Corporate Governance Committee | 5,000 | |||
Chairman of the Investment and Finance Committee | 8,000 | |||
Chairman of the Medical Affairs Committee | 8,000 | |||
Committee Membership (except as set forth above) (not paid to a Director for membership on a Committee which such Director chairs) | 4,000 | |||
(3) | Amounts shown in this column represent the estimated fair value, for accounting purposes, related to deferred stock units and restricted stock units (“RSUs”) granted in 2007 and prior years, and required to be expensed in 2007. On February 9, 2007, Aetna granted each nonmanagement Director then in office 1,391 RSUs. On April 27, 2007, Aetna granted each nonmanagement Director then in office 1,071 annual deferred stock units (“Annual Units”). Mr. Farah joined the Board on June 28, 2007 and received at that time a grant of 6,000 initial deferred stock units (“Initial Units”). As indicated above, the amounts in this column reflect stock awards required to be expensed in 2007, which may only include a portion of the stock awards granted during 2007. The full grant date value of deferred stock units and RSUs granted in 2007 for each Director was $109,616, except for Mr. Farah, whose full grant date value was $299,100 based solely on his receipt of Initial Units. The full grant date values for each Director, other than Mr. Farah, are comprised of the Annual Units ($50,401) and RSUs ($59,215). See “Additional Director Compensation Information” beginning on page 28 for a discussion of Initial Units, Annual Units, RSUs and the deferrals of each. |
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(4) | All Other Compensation consists of the items in the following table. See “Additional Director Compensation Information” below for a discussion of certain components of All Other Compensation. |
Group Life Insurance and Business | Matching | |||||||||||||||
Travel Accident Insurance | Charitable Award | Charitable | ||||||||||||||
Premiums | Program(a) | Donations(b) | Total | |||||||||||||
Frank M. Clark | $ | 1,188 | $ | 46,900 | $ | 0 | $ | 48,088 | ||||||||
Betsy Z. Cohen | 2,286 | 46,900 | 0 | 49,186 | ||||||||||||
Molly J. Coye, M.D. | 1,188 | 46,900 | 0 | 48,088 | ||||||||||||
Roger N. Farah | 207 | 46,900 | 0 | 47,107 | ||||||||||||
Barbara Hackman Franklin | 2,286 | 46,900 | 0 | 49,186 | ||||||||||||
Jeffrey E. Garten | 1,188 | 46,900 | 0 | 48,088 | ||||||||||||
Earl G. Graves | 3,708 | 46,900 | 0 | 50,608 | ||||||||||||
Gerald Greenwald | 3,708 | 46,900 | 0 | 50,608 | ||||||||||||
Ellen M. Hancock | 1,188 | 46,900 | 10,000 | 58,088 | ||||||||||||
Michael H. Jordan | 1,236 | 46,900 | 0 | 48,136 | ||||||||||||
Edward J. Ludwig | 774 | 46,900 | 2,500 | 50,174 | ||||||||||||
Joseph P. Newhouse | 2,286 | 46,900 | 500 | 49,686 | ||||||||||||
(a) | Refer to “Director Charitable Award Program” beginning on page 29 for information about the Charitable Award Program, which was discontinued for any new Director joining the Board after January 25, 2008. Amounts shown are pre-tax, and do not reflect the anticipated tax benefit to the Company from the charitable contributions under the Charitable Award Program. Directors derive no personal financial or tax benefit from the program. | |
(b) | These amounts represent matching contributions made by the Aetna Foundation pursuant to Aetna’s charitable giving programs, which facilitate contributions by eligible persons toward charitable organizations and match contributions up to $10,000 per person per program year. Amounts shown are pre-tax. These programs are available on the same basis to all Directors and full-time and part-time employees. Directors derive no personal financial or tax benefit from these programs. |
(5) | The Company has not granted stock appreciation rights (“SARs”) or stock options to nonmanagement Directors since 2004 and therefore no expense associated with SARs or stock options is included in this column. As of December 31, 2007, the only outstanding options held by Directors were as follows: Betsy Z. Cohen, 55,200; Earl G. Graves, 55,200; Ellen M. Hancock, 31,290; Michael H. Jordan, 55,220; Edward J. Ludwig, 14,000; and Joseph P. Newhouse, 35,068. |
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• | Public health care companies consisting of Assurant, Inc., CIGNA Corporation, Coventry Health Care, Inc., Health Net, Inc., Humana Inc., UnitedHealth Group Incorporated and WellPoint, Inc.; |
• | The 2007 Frederic W. Cook & Co., Inc. Non-Employee Director Compensation Report of the 100 largest New York Stock Exchange companies; and |
• | The NACD 2007 Director Compensation Report (approximately 1,200 companies with revenue ranging from $50 million to greater than $10 billion). |
• | Cash compensation (composed of the annual retainer and committee chair/membership fees at levels the same as in 2007); |
• | Restricted stock units valued at approximately $160,000 that will vest in quarterly increments over a one-year period from the date of grant; and |
• | Benefits as outlined above for 2007. |
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Name and Address of | Amount and Nature | |||||
Beneficial Owner | of Beneficial Ownership | Percent | ||||
Legg Mason Capital Management, Inc. 100 Light Street Baltimore, Maryland 21202 | 36,215,478 shares(1) | 7.30 | % | |||
State Street Bank and Trust Company, Trustee State Street Financial Center One Lincoln Street Boston, Massachusetts 02111 | 28,817,179 shares(2) | 5.81 | % | |||
(1) | Of the reported shares of Common Stock, Legg Mason Capital Management, Inc. reports that it shares voting and dispositive power with respect to 36,215,478 shares. |
(2) | Of the reported shares of Common Stock, State Street Bank and Trust Company, Trustee, reports that it has sole voting power with respect to 17,601,893 shares, shares voting power with respect to 11,215,286 shares and shares dispositive power with respect to 28,817,179 shares. Of the reported shares of the Common Stock, 11,215,286 shares are held by State Street in its capacity as the trustee of the Aetna 401(k) Plan. |
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Amount and Nature of Beneficial Ownership | ||||||||||||||||
Percent of | Common | |||||||||||||||
Name of Beneficial | Common | Common | Stock | |||||||||||||
Owner and Position | Stock | Stock | Equivalents | Total | ||||||||||||
Frank M. Clark (current Director and Nominee) | 1,000 | (1) | * | 8,462 | (15) | 9,462 | ||||||||||
Betsy Z. Cohen (current Director and Nominee) | 71,484 | (2) | * | 59,276 | (15) | 130,760 | ||||||||||
Molly J. Coye, M.D. (current Director and Nominee) | 249 | * | 13,557 | (15) | 13,806 | |||||||||||
Roger N. Farah (current Director and Nominee) | 3,000 | * | 6,624 | (15) | 9,624 | |||||||||||
Barbara Hackman Franklin (current Director and Nominee) | 21,092 | * | 40,977 | (15) | 62,069 | |||||||||||
Jeffrey E. Garten (current Director and Nominee) | 3,494 | (1) | * | 26,017 | (15) | 29,511 | ||||||||||
Earl G. Graves (current Director and Nominee) | 57,200 | (2) | * | 60,356 | (15) | 117,556 | ||||||||||
Gerald Greenwald (current Director and Nominee) | 4,194 | (3) | * | 51,119 | (15) | 55,313 | ||||||||||
Ellen M. Hancock (current Director and Nominee) | 39,690 | (4) | * | 97,757 | (15) | 137,447 | ||||||||||
Edward J. Ludwig (current Director and Nominee) | 22,464 | (5) | * | 23,182 | (15) | 45,646 | ||||||||||
Joseph P. Newhouse (current Director and Nominee) | 37,068 | (6) | * | 34,572 | (15) | 71,640 | ||||||||||
Ronald A. Williams (Chairman, Chief Executive Officer, current Director and Nominee) | 6,006,358 | (7) | * | 842,618 | (16) | 6,848,976 | ||||||||||
Mark T. Bertolini (named executive) | 657,192 | (8) | * | 68,309 | (17) | 725,501 | ||||||||||
William J. Casazza (named executive) | 201,334 | (9) | * | 29,551 | (18) | 230,885 | ||||||||||
Timothy A. Holt (named executive) | 549,119 | (10) | * | 0 | 549,119 | |||||||||||
Joseph M. Zubretsky (named executive) | 118,156 | (11) | * | 89,363 | (19) | 207,519 | ||||||||||
Alan M. Bennett (named executive) | 337,930 | (12) | * | 0 | 337,930 | |||||||||||
Craig R. Callen (named executive) | 260,916 | (13) | * | 28,734 | (20) | 289,650 | ||||||||||
Directors and executive officers as a group (19 persons) | 8,468,241 | (14) | 1.71 | % | 1,508,696 | (21) | 9,976,937 | |||||||||
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(1) | Amounts shown represent the shares held jointly with the Director’s spouse, as to which the Director shares voting and investment powers. | |
(2) | Includes 55,200 shares that the Director has the right to acquire currently or within 60 days of March 28, 2008, upon the exercise of stock options. | |
(3) | Includes 4,194 shares held by his spouse, as to which Mr. Greenwald has no voting or investment power. | |
(4) | Includes 31,290 shares that Mrs. Hancock has the right to acquire currently or within 60 days of March 28, 2008 upon the exercise of stock options. Also includes 8,000 shares held jointly with her spouse, as to which Mrs. Hancock shares voting and investment powers, and 400 shares held jointly by Mrs. Hancock’s spouse and step-daughter as to which Mrs. Hancock has no voting or investment power. | |
(5) | Includes 14,000 shares that Mr. Ludwig has the right to acquire currently or within 60 days of March 28, 2008 upon the exercise of stock options and 8,000 shares held jointly with his spouse, as to which Mr. Ludwig shares voting and investment powers. | |
(6) | Includes 35,068 shares that Dr. Newhouse has the right to acquire currently or within 60 days of March 28, 2008 upon the exercise of stock options and 2,000 shares held jointly with his spouse, as to which Dr. Newhouse shares voting and investment powers. | |
(7) | Includes 5,763,402 shares that Mr. Williams has the right to acquire currently or within 60 days of March 28, 2008 upon the exercise of stock options and SARs. Also includes 112,956 shares held by Mr. Williams; 120,000 shares in a family trust of which Mr. Williams and his spouse are the sole trustees and beneficiaries; and 10,000 shares held in a Guaranteed Retained Annuity Trust of which Mr. Williams is the sole trustee. | |
(8) | Includes 592,159 shares that Mr. Bertolini has the right to acquire currently or within 60 days of March 28, 2008 upon the exercise of stock options and SARs; and 65,033 shares held by Mr. Bertolini. | |
(9) | Includes 170,613 shares that Mr. Casazza has the right to acquire currently or within 60 days of March 28, 2008 upon the exercise of stock options and SARs; 27,561 shares held by Mr. Casazza; and 3,160 shares held under the 401(k) Plan as to which Mr. Casazza shares voting and investment powers. |
(10) | Includes 441,089 shares that Mr. Holt has the right to acquire currently or within 60 days of March 28, 2008 upon the exercise of stock options and SARs; 101,579 shares held by Mr. Holt; and 6,451 shares held under the 401(k) Plan as to which Mr. Holt shares voting and investment powers. |
(11) | Includes 96,209 shares that Mr. Zubretsky has the right to acquire currently or within 60 days of March 28, 2008 upon the exercise of SARs; and 21,947 shares held by Mr. Zubretsky. |
(12) | Includes 270,864 shares that Mr. Bennett has the right to acquire currently or within 60 days of March 28, 2008 upon the exercise of stock options and SARs; and 67,066 shares held by Mr. Bennett. |
(13) | Includes 253,252 shares that Mr. Callen has the right to acquire currently or within 60 days of March 28, 2008 upon the exercise of stock options and SARs; and 7,664 shares held by Mr. Callen. |
(14) | Directors and executive officers as a group have sole voting and investment powers over 461,590 shares, share voting and investment powers with respect to 152,105 shares (including 9,611 shares held under the 401(k) Plan and beneficially owned by executive officers) and have no voting or investment power over 4,594 shares. Also includes 7,849,952 shares that Directors and executive officers have the right to acquire currently or within 60 days of March 28, 2008 upon the exercise of stock options and SARs. |
(15) | Includes stock units issued under the Director Plan and plans of Aetna’s predecessors, as applicable. Certain of the stock units are not vested — see description of the Director Plan on page 29. Stock units track the value of the Common Stock and earn dividend equivalents that may be reinvested, but do not have voting rights. Also includes RSUs granted to each nonmanagement Director under the Director Plan which are unvested and are payable in shares of the Common Stock. RSUs do not earn dividend equivalents and have no voting rights. |
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(16) | Includes 554,887 vested deferred stock units which earn dividend equivalents that are reinvested in stock units. Stock units do not have voting rights. Also includes 50,084 RSUs which vest on February 14, 2009 and earn dividend equivalents which are reinvested. Additionally includes 85,650 RSUs which vest on February 10, 2009 and 67,184 RSUs which vest in two equal annual installments on February 9, 2009 and February 9, 2010. These RSUs do not earn dividend equivalents. The RSUs have no voting rights. Also includes 84,813 performance stock units (“PSUs”) which vest on February 8, 2010 if the Company meets a two-year performance goal set at the time of grant. The PSUs do not earn dividend equivalents and have no voting rights. |
(17) | Includes 13,744 RSUs which vest on February 10, 2009, 15,027 RSUs which vest on June 30, 2009 and 14,094 RSUs which vest in two equal annual installments on February 9, 2009 and February 9, 2010. The RSUs do not earn dividend equivalents and have no voting rights. Also includes 25,444 PSUs which vest on February 8, 2010 if the Company meets a two-year performance goal set at the time of grant. The PSUs do not earn dividend equivalents and have no voting rights. |
(18) | Includes 10,678 RSUs which vest on February 10, 2009, and 8,222 RSUs which vest in two equal annual installments on February 9, 2009 and February 9, 2010. The RSUs do not earn dividend equivalents and have no voting rights. Also includes 10,651 PSUs which vest on February 8, 2010 if the Company meets a two-year performance goal set at the time of grant. The PSUs do not earn dividend equivalents and have no voting rights. |
(19) | Includes 71,611 RSUs which vest in two substantially equal annual installments on February 28, 2009 and February 28, 2010. These RSUs do not earn dividend equivalents and have no voting rights. Also includes 17,752 PSUs which vest on February 8, 2010 if the Company meets a two-year performance goal set at the time of grant. The PSUs do not earn dividend equivalents and have no voting rights. |
(20) | Includes 19,989 RSUs which vest on November 9, 2008, and 8,745 RSUs which will be forfeited on November 9, 2008. |
(21) | Includes 409,623 stock units issued to Directors, 12,276 unvested RSUs issued to Directors, 554,887 vested deferred stock units issued to Mr. Williams and 531,910 unvested RSUs and PSUs issued to executive officers as a group. |
A. | Executive Summary |
• | We reported increased revenue (10% increase over 2006), operating earnings per share (20% increase over 2006) and organic net membership growth (4.7% increase over 2006 — growth of 730,000 members). Our total medical membership at the end of 2007 was 16.85 million members (including members from our strategic acquisitions, a 9.2% increase over 2006). | |
• | Our market capitalization increased in 2007 by $6.4 billion (29% increase over 2006), and over the last four years it has increased by $18.38 billion (a 179% increase). | |
• | Over the past 5 years our total shareholder return has exceeded both the S&P 500 and the average of the returns of our health care competitors. |
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• | We have invested in important initiatives focused on racial and ethnic health care equality, genetic testing and counseling, health literacy and care at the end of life, each of which appears to be making a positive contribution to the healthcare system. For example, our recently completed study of the Compassionate Care Program showed a significant increase in hospice use and a significant decrease in acute hospital utilization at the end of life as a result of our programs. | |
• | Our industry-leading effort to develop consumerism in healthcare is demonstrating success in helping employers and the employees who participate in their plans address affordability. In particular, our recent in-depth study of employers who experienced extraordinary results with their Aetna HealthFund® plans showed that sustained savings are possible through an appropriate mix of culture change, education and benefits design. These employers achieved annualized health care cost trends that were 50 percent lower than the Aetna HealthFund average, resulting in a combined employer and employee savings of $15 million per 10,000 employees enrolled in an Aetna plan over a four year period. | |
• | We also continue to be actively involved in the ongoing national health care debate, with a concerted effort to engage in a constructive dialogue with elected officials and policymakers at the state and federal level, sharing our experience in the private sector and proposing specific and workable private/public policy health care solutions designed to enhance the quality of care, lower costs and extend coverage to those who are uninsured. Last year, we developed a 10-point plan called “To Your Health!,” which laid out our views on how to transform the United States health care system. The beliefs we laid out in the plan will serve as the foundation of our efforts to drive positive change. |
• | support our business strategy, be competitive, and provide both significant rewards for outstanding financial performance and clear financial consequences for underperformance; |
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• | include a significant portion of executive compensation that is “at risk” in the form of annual and long-term incentive awards that are paid, if at all, based on individual and Company performance; | |
• | align with shareholders by linking a significant portion of executive compensation to the value of our Common Stock; and | |
• | attract, motivate and retain highly qualified executives. |
B. | 2007 Compensation Decisions/Alternative Compensation Table |
Percent | ||||||||||||||||||||||||||||||
Cash | Long Term | Increase in Cash | Off-Cycle | |||||||||||||||||||||||||||
Year | Salary(2) | Annual Bonus | RSUs(3) | SARs(4) | & Equity | Equity (5) | ||||||||||||||||||||||||
Ronald A. Williams | 2007 | $ | 1,100,000 | $ | 1,900,000 | $ | 4,290,034 | $ | 10,010,014 | 1.7 | % | |||||||||||||||||||
2006 | 1,100,000 | 1,612,500 | 4,300,487 | 10,000,058 | ||||||||||||||||||||||||||
Mark T. Bertolini | 2007 | 900,000 | 889,884 | 900,015 | 2,100,004 | 45.5 | % | $ | 5,000,139 | |||||||||||||||||||||
2006 | 526,000 | 465,261 | 690,086 | 1,610,027 | 2,000,035 | |||||||||||||||||||||||||
William J. Casazza(1) | 2007 | 481,275 | 385,583 | 525,016 | 1,225,005 | n/a | ||||||||||||||||||||||||
Timothy A. Holt | 2007 | 498,750 | 516,468 | 750,041 | 1,750,013 | 2.1 | % | |||||||||||||||||||||||
2006 | 475,000 | 469,434 | 750,137 | 1,750,029 | ||||||||||||||||||||||||||
Joseph M. Zubretsky(1) | 2007 | 700,000 | 770,000 | 1,250,011 | 1,250,005 | n/a | 6,500,079 | |||||||||||||||||||||||
(1) | Messrs. Casazza and Zubretsky were not Named Executive Officers prior to 2007. | |
(2) | The amounts shown are the annual salaries in effect at December 31 of the applicable year. Because salary increases are effective mid-year, the amounts in this column do not reflect the actual amount paid in the calendar year. | |
(3) | The amounts shown in this column represent the estimated grant effective date fair value relating to restricted stock units (“RSUs”) granted to each Named Executive Officer for performance year 2007 and 2006, as applicable. The number of RSUs granted is determined by dividing the dollar value approved by the Compensation Committee by the closing stock price on the effective date of the grant. | |
(4) | The amounts shown in this column represent the estimated grant effective date fair value relating to Stock Appreciation Rights (“SARs”) granted for performance year 2007 and 2006, as applicable. The number of SARs granted is determined by dividing the dollar value approved by the Compensation Committee by a SAR valuation factor. The SAR valuation factor is the product of the estimated Black-Scholes value (33.3% for 2007) times the closing stock price on the effective date of the grant. The actual grant date fair value used to determine accounting expense may differ. | |
(5) | The amounts shown represent off-cycle equity award (hire, promotion or retention). |
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Salary | $ | 1,100,000 | No change | |||||
Annual Bonus | $ | 1,900,000 | ||||||
Long-term Incentive Opportunity | $ | 14,300,048 | ||||||
Target Bonus Opportunity | 150 | % | No change |
Salary | $ | 900,000 | ||
Annual Bonus Award | $ | 889,884 | ||
Long-term Incentive Opportunity | $ | 3,000,019 | ||
Target Bonus Opportunity | 120 | % | ||
Promotion SAR Grant | $ | 5,000,139 |
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Salary | $ | 481,275 | ||||||
Annual Bonus | $ | 385,583 | ||||||
Long-term Incentive Opportunity | $ | 1,750,021 | ||||||
Target Bonus Opportunity | 80 | % | No change |
Salary | $ | 498,750 | ||||||
Annual Bonus | $ | 516,468 | ||||||
Long-term Incentive Opportunity | $ | 2,500,054 | ||||||
Target Bonus Opportunity | 80 | % | No change |
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Salary | $ | 700,000 | ||
Annual Bonus | $ | 770,000 | ||
Long-term Incentive Opportunity | $ | 2,500,016 | ||
Target Bonus Opportunity | 100 | % | ||
Equity Grant on Hire | $ | 6,500,079 |
C. | 2007 Compensation Policies |
• | base salary; | |
• | performance-based annual bonus; | |
• | long-term incentive equity awards (stock appreciation rights and restricted stock units); and | |
• | health, welfare and retirement benefits. |
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• | financial performance (55% — measured by attaining a specific level of cash operating earnings, return on capital and expense reduction as a percentage of total revenue); | |
• | health cost management (16% — measured primarily by the medical benefit ratio); | |
• | profitable growth (16% — measured by growth of net membership and total revenue); and | |
• | constituent focus (13% — measured externally by member, hospital, plan sponsor and broker/consultant satisfaction survey results and internally by achievement of diversity milestones and employee survey results). |
Earnings Per Share | Medical | Net Membership | ||||||||||||||||||||||||||||||||||||
1 yr Total | Growth “EPS” | Benefit Ratio | Growth Rate | |||||||||||||||||||||||||||||||||||
Shareholder Return | Plan | Plan | Plan | Annual Bonus | ||||||||||||||||||||||||||||||||||
Year | Rank(1) | Result | Rank(1) | Performance(2) | Rank(1) | Performance(2) | Rank(1) | Performance(2) | Plan Funding | |||||||||||||||||||||||||||||
2007 | 2 | 34.54 | % | 3 | Target + | 2 | Superior - | 2 | Below Target | 104.8% of target | ||||||||||||||||||||||||||||
2006 | 4 | -7.88 | % | 3 | xxx(3) | 2 | Target - | 3 | Below Threshold | 93.0% of target | ||||||||||||||||||||||||||||
2005 | 3 | 51.84 | % | 4 | xxx(3) | 2 | Superior + | 2 | Threshold | 117.7% of target | ||||||||||||||||||||||||||||
(1) | Rank is determined by comparing our performance against the publicly reported companies in the Healthcare Comparison Group. | |
(2) | Plan Performance reflects our performance against the internal target established for purposes of funding the ABP. | |
(3) | ABP measure was Operating Income Growth for these years, performance against this measure was superior in both years. |
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2007 ABP | Bonus Paid | |||||||||||
Target % | 2007 Bonus Paid | (as a % of Target) | ||||||||||
Mr. Williams | 150 | % | $ | 1,900,000 | 115 | % | ||||||
Mr. Bertolini | 113 | %* | $ | 889,884 | 107 | % | ||||||
Mr. Casazza | 80 | % | $ | 385,583 | 101 | % | ||||||
Mr. Holt | 80 | % | $ | 516,468 | 131 | % | ||||||
Mr. Zubretsky | 100 | % | $ | 770,000 | 110 | % | ||||||
* | Pro-rated to reflect mid-year pay adjustment (full year target bonus opportunity for Mr. Bertolini is currently 120%). |
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Position | Multiple of Salary | |
Chief Executive Officer | 5x | |
President | 4x | |
Other Named Executive Officers | 3x | |
Other Executives | 1/2x to 2x | |
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D. | Governance |
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E. | Comparison Group Company List |
Named Executive Officer | Comparison Group | |
Mr. Williams | Healthcare/General Industry & Financial Services | |
Mr. Bertolini | Healthcare/General Industry & Financial Services | |
Mr. Casazza | Healthcare/General Industry & Financial Services | |
Mr. Holt | General Industry & Financial Services/ McLagan Investment Management Survey | |
Mr. Zubretsky | Healthcare/General Industry & Financial Services | |
CIGNA Corporation | Coventry Health Care, Inc. | Humana Inc. | ||
UnitedHealth Group | Wellpoint, Inc. | |||
Incorporated |
Group, Inc.
* | If pay data for a comparable position is not available from a company on this list, the company is not included in the Comparison Group for that position. |
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America
Capital Management)
Services
Advisors, Inc.
Company
(Munich RE)
Management
Management LLC
Insurance Co.
(Hanover Insurance)
Company
Limited
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Change in | ||||||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||||||
Non-Equity | Nonqualified | |||||||||||||||||||||||||||||||
Incentive | Deferred | |||||||||||||||||||||||||||||||
Stock | Option | Plan | Compensation | All Other | ||||||||||||||||||||||||||||
Name and | Awards | Awards | Compensation | Earnings | Compensation | |||||||||||||||||||||||||||
Principal Position | Year | Salary | (6) | (7) | (8) | (9) | (10) | Total | ||||||||||||||||||||||||
Ronald A. Williams | 2007 | $ | 1,095,785 | (5) | $ | 5,309,197 | $ | 12,887,276 | $ | 1,900,000 | $ | 1,749,414 | $ | 104,162 | $ | 23,045,834 | ||||||||||||||||
Chairman and Chief | 2006 | 1,073,077 | (5) | 3,665,157 | 5,962,927 | 7,732,500 | 1,298,160 | 70,655 | 19,802,476 | |||||||||||||||||||||||
Executive Officer | ||||||||||||||||||||||||||||||||
Mark T. Bertolini | 2007 | 711,847 | 705,020 | 2,764,762 | 889,884 | 14,522 | 26,317 | 5,112,352 | ||||||||||||||||||||||||
President | 2006 | 513,185 | 367,507 | 1,096,768 | 1,365,261 | 47,281 | 20,339 | 3,410,341 | ||||||||||||||||||||||||
William J. Casazza | 2007 | 475,066 | 339,117 | 1,259,410 | 385,583 | 0 | 18,942 | 2,478,118 | ||||||||||||||||||||||||
Senior Vice President and | ||||||||||||||||||||||||||||||||
General Counsel(1) | ||||||||||||||||||||||||||||||||
Timothy A. Holt | 2007 | 490,469 | 479,200 | 1,787,274 | 516,468 | 985,908 | 17,025 | 4,276,344 | ||||||||||||||||||||||||
Senior Vice President and | 2006 | 468,269 | 229,186 | 1,116,822 | 1,810,434 | 254,638 | 16,875 | 3,896,224 | ||||||||||||||||||||||||
Chief Investment Officer(2) | ||||||||||||||||||||||||||||||||
Joseph M. Zubretsky | 2007 | 584,757 | 1,319,451 | 1,246,143 | 770,000 | 0 | 19,485 | 3,939,836 | ||||||||||||||||||||||||
Executive Vice President and | ||||||||||||||||||||||||||||||||
Chief Financial Officer(3) | ||||||||||||||||||||||||||||||||
Alan M. Bennett | 2007 | 188,130 | 75,006 | 58,269 | 0 | 146,814 | 13,443 | 481,662 | ||||||||||||||||||||||||
Former Senior Vice President | 2006 | 568,269 | 275,023 | 1,340,186 | 1,971,150 | 391,948 | 14,798 | 4,561,374 | ||||||||||||||||||||||||
and Chief Financial Officer(3) | ||||||||||||||||||||||||||||||||
Craig R. Callen | 2007 | 617,625 | 927,666 | 1,860,860 | 386,880 | 0 | 12,961 | 3,805,992 | ||||||||||||||||||||||||
Former Senior Vice President, | 2006 | 611,923 | 275,023 | 1,107,767 | 2,036,500 | 48,647 | 15,183 | 4,095,043 | ||||||||||||||||||||||||
Strategic Planning and | ||||||||||||||||||||||||||||||||
Business Development(4) | ||||||||||||||||||||||||||||||||
(1) | Mr. Casazza was not named as an NEO in the Company’s 2007 Proxy Statement. As a result, his 2006 compensation as an employee of Aetna is not included in the 2007 Summary Compensation Table. |
(2) | Mr. Holt retired from Aetna on February 22, 2008. |
(3) | Mr. Zubretsky, who joined Aetna on February 28, 2007, succeeded Mr. Bennett as Chief Financial Officer effective April 20, 2007. |
(4) | Mr. Callen terminated employment with Aetna on November 9, 2007. |
(5) | During 2007, Mr. Williams mandatorily deferred $99,617 into an interest account in order to preserve the tax deductibility of such amounts under Section 162(m) of the Code. During 2006, Mr. Williams mandatorily deferred $74,302 into an interest account for the same reason. The amounts deferred during 2007 are included in the 2007 Nonqualified Deferred Compensation Table on page 57. |
(6) | Amounts shown in this column represent the grant date fair value of our Common Stock, which is used for accounting purposes, relating to RSUs granted to each Named Executive Officer in 2007 and prior years, which were expensed in 2007. |
(7) | Amounts shown in this column represent the grant date fair value, for accounting purposes, relating to stock options and SARs granted in 2007 and prior years, which were expensed in 2007. The stock option and SAR values are calculated using a modified Black-Scholes Model for pricing options. Refer to page 67 of Aetna’s 2007 Annual Report, Financial Report to Shareholders for all relevant valuation assumptions used to determine the grant date fair value of the 2007 SARs included in this column and page 72 of Aetna’s 2006 Annual Report, Financial Report to Shareholders for all relevant valuation assumptions used to determine the grant date fair value of the 2006 SARs and the 2005 and 2004 stock option grants included in this column. |
(8) | Amounts shown in this column represent 2007 bonus awards under the Annual Bonus Plan. For 2007, bonus pool funding under the Annual Bonus Plan depended upon Aetna’s performance against certain measures discussed in “Compensation Discussion and Analysis” beginning on page 34. |
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(9) | Amounts in this column only reflect pension values and do not include earnings on deferred compensation amounts because such earnings are non-preferential. Refer to “2007 Nonqualified Deferred Compensation Table” and “Deferred Compensation Narrative” beginning on page 57 for a discussion of deferred compensation. The following table represents the change in present value of accumulated benefits under the Pension Plan and the Supplemental Pension Plan from September 30, 2006 through December 31, 2007 on an annualized basis. Historically, the Company used September 30th as the measurement date for its Pension Plan and Supplemental Pension Plan. However, in 2007, the Company adopted certain provisions of Statement of Financial Accounting Standards (“FAS”) No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,” that require the measurement of the funded status of the Pension Plan and Supplemental Pension Plan to occur at the end of the Company’s fiscal year, which is December 31. Accordingly, the figures below have been annualized by adjusting the 15 month period from September 30, 2006 to December 31, 2007 to a 12 month period. See “Pension Plan Narrative” on page 56 for a discussion of pension benefits and the economic assumptions behind the figures in this table. |
Supplemental | ||||||||
Named Executive Officer | Pension Plan | Pension Plan | ||||||
Ronald A. Williams | $ | 12,421 | $ | 1,736,993 | ||||
Mark T. Bertolini | 7,181 | 7,341 | ||||||
William J. Casazza | 1,939 | (36,684 | )(a) | |||||
Timothy A. Holt | 211,538 | 774,370 | ||||||
Joseph M. Zubretsky | 0 | 0 | ||||||
Alan M. Bennett | (41,193 | )(a) | 188,007 | |||||
Craig R. Callen | (13,472 | )(a) | (33,112 | )(a) | ||||
(a) | The decrease in Mr. Casazza’s Supplemental Pension Plan benefit is attributable to the increase in the discount rate used to measure the present value of his accumulated benefit. The decrease in Mr. Bennett’s Pension Plan benefit is attributable to his retirement prior to the age of 62 as well as an increase in the discount rate used to measure the present value of his accumulated benefit. The decrease in Mr. Callen’s Pension Plan and Supplemental Pension Plan benefits is attributable to his departure from Aetna prior to the date on which his benefits vested under the plans. |
(10) | All Other Compensation consists of the following for 2007: |
Ronald A. | Mark T. | William J. | Timothy A. | Joseph M. | Alan M. | Craig R. | ||||||||||||||||||||||
Williams | Bertolini | Casazza | Holt | Zubretsky | Bennett | Callen | ||||||||||||||||||||||
Personal Use of Corporate Aircraft(a) | $ | 77,098 | $ | 18,511 | $ | 2,346 | $ | 0 | $ | 17,853 | $ | 4,515 | $ | 0 | ||||||||||||||
Personal Use of Corporate Vehicles | 10,314 | 1,056 | 0 | 0 | 1,211 | 0 | 62 | |||||||||||||||||||||
Professional Association Dues | 0 | 0 | 1,906 | 275 | 421 | 0 | 0 | |||||||||||||||||||||
Financial Planning | 10,000 | 0 | 7,940 | 10,000 | 0 | 2,500 | 8,000 | |||||||||||||||||||||
Company Matching Contributions under 401(k) Plan | 6,750 | 6,750 | 6,750 | 6,750 | 0 | 6,428 | 4,899 | |||||||||||||||||||||
Total | $ | 104,162 | $ | 26,317 | $ | 18,942 | $ | 17,025 | $ | 19,485 | $ | 13,443 | $ | 12,961 | ||||||||||||||
(a) | The calculation of incremental cost for personal use of Company aircraft includes only those variable costs incurred as a result of personal use, such as fuel and allocated maintenance costs, and excludes non-variable costs which the Company would have incurred regardless of whether there was any personal use of the aircraft. |
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All Other | All Other | |||||||||||||||||||||||||||||||||||
Stock | Option | |||||||||||||||||||||||||||||||||||
Awards: | Awards: | Grant Date | ||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under | Number of | Number of | Exercise or | Fair | ||||||||||||||||||||||||||||||||
Non-Equity Incentive Plan | Shares of | Securities | Base Price of | Value of Stock | ||||||||||||||||||||||||||||||||
Approval | Awards(5) | Stock or | Underlying | Option Awards | And Option | |||||||||||||||||||||||||||||||
Name | Grant Date(1) | Date | Threshold | Target | Maximum | Units | Options | (9) | Awards(10) | |||||||||||||||||||||||||||
Ronald A. Williams | 2/9/2007 | 1/26/2007 | (2) | — | — | — | 100,776 | (6) | $ | 4,290,034 | ||||||||||||||||||||||||||
2/9/2007 | 1/26/2007 | (2) | — | — | — | 706,124 | (7) | $ | 42.57 | 10,784,632 | ||||||||||||||||||||||||||
$0 | $ | 1,650,000 | $ | 3,000,000 | ||||||||||||||||||||||||||||||||
Mark T. Bertolini | 2/9/2007 | 1/25/2007 | (2) | — | — | — | 21,142 | (6) | 900,015 | |||||||||||||||||||||||||||
2/9/2007 | 1/25/2007 | (2) | — | — | — | 148,138 | (7) | $ | 42.57 | 2,262,512 | ||||||||||||||||||||||||||
7/27/2007 | 7/23/2007 | (3) | — | — | — | 308,642 | (3) | $ | 48.65 | 5,240,433 | ||||||||||||||||||||||||||
0 | 831,667 | 3,000,000 | ||||||||||||||||||||||||||||||||||
William J. Casazza | 2/9/2007 | 1/25/2007 | (2) | — | — | — | 12,333 | (6) | 525,016 | |||||||||||||||||||||||||||
2/9/2007 | 1/25/2007 | (2) | — | — | — | 86,414 | (7) | $ | 42.57 | 1,319,801 | ||||||||||||||||||||||||||
0 | 381,765 | 3,000,000 | ||||||||||||||||||||||||||||||||||
Timothy A. Holt | 2/9/2007 | 1/25/2007 | (2) | — | — | — | 17,619 | (6) | 750,041 | |||||||||||||||||||||||||||
2/9/2007 | 1/25/2007 | (2) | — | — | — | 123,449 | (7) | $ | 42.57 | 1,885,437 | ||||||||||||||||||||||||||
0 | 394,250 | 3,000,000 | ||||||||||||||||||||||||||||||||||
Joseph M. Zubretsky | 2/28/2007 | 1/18/2007 | (4) | — | — | — | 107,418 | (4) | 4,750,024 | |||||||||||||||||||||||||||
2/28/2007 | 1/18/2007 | (4) | — | — | — | 288,626 | (4) | $ | 44.22 | 4,486,114 | ||||||||||||||||||||||||||
0 | 700,000 | 3,000,000 | ||||||||||||||||||||||||||||||||||
Alan M. Bennett | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Craig R. Callen | 2/9/2007 | 1/25/2007 | (2) | — | — | — | 16,209 | (6) | 690,017 | |||||||||||||||||||||||||||
2/9/2007 | 1/25/2007 | (2) | — | — | — | 113,573 | (7) | $ | 42.57 | 1,734,600 | ||||||||||||||||||||||||||
2/9/2007 | 1/25/2007 | (2) | — | — | — | 65,226 | (8) | $ | 42.57 | 388,734 | ||||||||||||||||||||||||||
0 | 496,000 | 3,000,000 | ||||||||||||||||||||||||||||||||||
(1) | This table does not include dividend equivalents credited in 2007 for a minimal amount for RSUs granted in 2006. |
(2) | Except for Mr. Williams, the Compensation Committee approved the grant of the non-equity incentive compensation plan awards (RSUs and SARs) at its meeting on January 25, 2007 with an effective grant date of February 9, 2007. With respect to Mr. Williams, the Board approved the grant of his non-equity incentive compensation plan awards (RSUs and SARs) at its meeting on January 26, 2007 with an effective grant date of February 9, 2007. As discussed in “What is the Company’s policy on the grant date of equity awards?” on page 44, the Company’s annual equity awards are made at the closing price of the Common Stock on the second stock market trading day after the release of Aetna’s full year earnings. In 2007, Aetna announced its full year 2006 earnings on February 8, 2007, and the grants of equity awards were made effective at the close of business on February 9, 2007. |
(3) | The Compensation Committee approved the grant of these SARs at its meeting on July 23, 2007 with an effective grant date of July 27, 2007, in connection with Mr. Bertolini’s appointment as President of Aetna. These SARs were granted under the Aetna Inc. 2000 Stock Incentive Plan (the “2000 Stock Plan”) and will vest in three substantially equal installments on July 27, 2008, July 27, 2009 and July 27, 2010. The strike price of these SARs is $48.65, the closing price of the Common Stock on July 27, 2007. When exercised, these SARs will be settled in Common Stock. |
(4) | The Compensation Committee approved the grant of these RSUs and SARs at its meeting on January 18, 2007 with an effective grant date of February 28, 2007, the date Mr. Zubretsky joined Aetna. The RSUs and SARs were granted under the 2000 Stock Plan. The RSUs vest in three substantially equal installments on February 28, 2008, February 28, 2009 and February 28, 2010. Each vested RSU represents one share of Common Stock and will be paid in shares of the Common Stock. These RSUs are not credited with dividend equivalents. The SARs will vest in three substantially equal installments on February 28, 2008, February 28, 2009 and February 28, 2010. The strike price of these SARs is $44.22, the closing price of our Common Stock on February 28, 2007. When exercised, these SARs will be settled in Common Stock. |
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(5) | Represents the range of bonus amounts available for 2007 under the Annual Bonus Plan. See “Compensation Discussion and Analysis” beginning on page 34 for a discussion of bonus metrics and payouts. |
(6) | Represents RSUs granted effective February 9, 2007 under the 2000 Stock Plan in the respective amounts listed. These RSUs vest in three substantially equal installments on February 9, 2008, February 9, 2009 and February 9, 2010. Each vested RSU represents one share of our Common Stock and will be paid on the vesting date in shares of our Common Stock. These RSUs are not credited with dividend equivalents. |
(7) | Represents SARs granted effective February 9, 2007 under the 2000 Stock Plan in the respective amounts listed. These SARs vest in three substantially equal installments on February 9, 2008, February 9, 2009 and February 9, 2010. The strike price of these SARs is $42.57, the closing price of our Common Stock on February 9, 2007. When exercised, these SARs will be settled in Common Stock. |
(8) | Aetna granted Mr. Callen 65,226 SARs in exchange for all of his 2006 bonus which was paid in 2007. These SARs vested on August 9, 2007 and will expire on February 9, 2012. When exercised, these SARs will be settled in Common Stock. |
(9) | The strike price of SARs is equal to the closing price of our Common Stock on the date of grant. |
(10) | Refer to page 67 of Aetna’s 2007 Annual Report, Financial Report to Shareholders for all relevant valuation assumptions regarding the 2007 SARs included in this column. |
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Option Awards | Stock Awards | |||||||||||||||||||||||
Number of | Number of | Market Value | ||||||||||||||||||||||
Securities | Securities | Number of | of Shares or | |||||||||||||||||||||
Underlying | Underlying | Shares or | Units of Stock | |||||||||||||||||||||
Unexercised | Unexercised | Option | Option | Units of Stock | That Have | |||||||||||||||||||
Options | Options | Exercise | Expiration | That Have | Not Vested | |||||||||||||||||||
Name | Exercisable | Unexercisable | Price | Date | Not Vested | (14) | ||||||||||||||||||
Ronald A. Williams | 1,600,000 | 0 | $ | 9.35 | 3/15/2011 | 286,594 | (8) | $ | 16,545,072 | |||||||||||||||
400,000 | 0 | 10.7525 | 3/15/2011 | |||||||||||||||||||||
400,000 | 0 | 12.1550 | 3/15/2011 | |||||||||||||||||||||
1,080,000 | 0 | 10.47 | 2/27/2013 | |||||||||||||||||||||
900,000 | 0 | 19.375 | 2/13/2014 | |||||||||||||||||||||
496,276 | 248,136 | (1) | 33.375 | 2/11/2015 | ||||||||||||||||||||
201,808 | 403,614 | (1) | 50.205 | 2/10/2016 | ||||||||||||||||||||
0 | 706,124 | (1) | 42.57 | 2/09/2017 | ||||||||||||||||||||
Mark T. Bertolini | 100,000 | 0 | 10.4125 | 2/24/2013 | 49,913 | (9) | 2,881,477 | |||||||||||||||||
100,000 | 0 | 10.47 | 2/27/2013 | |||||||||||||||||||||
112,000 | 0 | 19.375 | 2/13/2014 | |||||||||||||||||||||
86,848 | 43,424 | (2) | 33.375 | 2/11/2015 | ||||||||||||||||||||
32,492 | 64,982 | (2) | 50.205 | 2/10/2016 | ||||||||||||||||||||
35,524 | 71,046 | (2) | 39.93 | 6/30/2016 | ||||||||||||||||||||
0 | 148,138 | (2) | 42.57 | 2/9/2017 | ||||||||||||||||||||
0 | 308,642 | (2) | 48.65 | 7/27/2017 | ||||||||||||||||||||
William J. Casazza | 12,666 | 0 | 10.47 | 2/27/2013 | 23,011 | (10) | 1,328,425 | |||||||||||||||||
40,000 | 0 | 19.375 | 2/13/2014 | |||||||||||||||||||||
15,200 | 7,600 | (3) | 33.375 | 2/11/2015 | ||||||||||||||||||||
15,890 | 7,944 | (3) | 42.35 | 9/29/2015 | ||||||||||||||||||||
25,226 | 50,452 | (3) | 50.205 | 2/10/2016 | ||||||||||||||||||||
0 | 86,414 | (3) | 42.57 | 2/9/2017 | ||||||||||||||||||||
Timothy A. Holt | 180,000 | 0 | 19.375 | 2/13/2014 | 32,559 | (11) | 1,879,631 | |||||||||||||||||
108,560 | 54,280 | (4) | 33.375 | 2/11/2015 | ||||||||||||||||||||
35,317 | 70,633 | (4) | 50.205 | 2/10/2016 | ||||||||||||||||||||
0 | 123,449 | (4) | 42.57 | 2/9/2017 | ||||||||||||||||||||
Joseph M. Zubretsky | 0 | 288,626 | (5) | 44.22 | 2/28/2017 | 107,418 | (12) | 6,201,241 | ||||||||||||||||
Alan M. Bennett | 124,068 | 62,036 | (6) | 33.375 | 4/28/2012 | 0 | 0 | |||||||||||||||||
84,760 | 0 | 50.205 | 4/28/2012 | |||||||||||||||||||||
Craig R. Callen | 272 | 65,136 | (7) | 33.375 | 2/11/2015 | 34,137 | (13) | 1,970,729 | ||||||||||||||||
42,380 | 84,760 | (7) | 50.205 | 2/10/2016 | ||||||||||||||||||||
0 | 113,573 | (7) | 42.57 | 2/9/2017 | ||||||||||||||||||||
65,226 | 0 | 42.57 | 2/9/2012 | |||||||||||||||||||||
(1) | Consists of 248,136 options that vest in one installment on February 11, 2008; 403,614 SARs that vest in two equal installments on February 10, 2008 and February 10, 2009; and 706,124 SARs that vest in three substantially equal installments on February 9, 2008, February 9, 2009 and February 9, 2010. | |
(2) | Consists of 43,424 options that vest in one installment on February 11, 2008; 64,982 SARs that vest in two equal installments on February 10, 2008 and February 10, 2009; 71,046 SARs that vest in two equal installments on June 30, 2008 and June 30, 2009; 148,138 SARs that vest in three substantially equal installments on February 9, 2008, February 9, 2009 and February 9, 2010; and 308,642 SARs that vest in three substantially equal installments on July 27, 2008, July 27, 2009 and July 27, 2010. | |
(3) | Consists of 7,600 options that vest in one installment on February 11, 2008; 7,944 options that vest in one installment on September 29, 2008; 50,452 SARs that vest in two equal installments on February 10, 2008 and February 10, 2009; and 86,414 SARs that vest in three substantially equal installments on February 9, 2008, February 9, 2009 and February 9, 2010. |
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(4) | Consists of 54,280 options that vest in one installment February 11, 2008; 70,633 SARs that vest in two substantially equal installments on February 10, 2008 and February 10, 2009; and 123,449 SARs that vest in three substantially equal installments on February 9, 2008, February 9, 2009 and February 9, 2010. | |
(5) | Consists of 288,626 SARs that vest in three substantially equal installments on February 28, 2008, February 28, 2009 and February 28, 2010. | |
(6) | Consists of 62,036 options that vest in one installment on February 11, 2008. | |
(7) | Consists of 65,136 options that vest in one installment on February 11, 2008; 84,760 SARs that vest in two equal installments on February 10, 2008 and February 10, 2009; and 113,573 SARs that vest in three substantially equal installments on February 9, 2008, February 9, 2009 and February 9, 2010. | |
(8) | Consists of 85,650 RSUs that will vest in one installment on February 10, 2009; 100,000 RSUs that vest in two equal installments on February 14, 2008 and February 14, 2009; 168 dividend equivalents that vest in two equal installments on February 14, 2008 and February 14, 2009; and 100,776 RSUs that vest in three equal installments on February 9, 2008, February 9, 2009 and February 9, 2010. | |
(9) | Consists of 13,744 RSUs that will vest in one installment on February 10, 2009; 15,027 RSUs that will vest in one installment on June 30, 2009; and 21,142 RSUs that will vest in three substantially equal installments on February 9, 2008, February 9, 2009 and February 9, 2010. | |
(10) | Consists of 10,678 RSUs that will vest in one installment on February 10, 2009; and 12,333 RSUs that will vest in three equal installments on February 9, 2008, February 9, 2009 and February 9, 2010. | |
(11) | Consists of 14,940 RSUs that will vest in one installment on February 10, 2009; and 17,619 RSUs that will vest in three equal installments on February 9, 2008, February 9, 2009 and February 9, 2010. | |
(12) | Consists of 107,418 RSUs that will vest in three substantially equal installments on February 28, 2008, February 28, 2009 and February 28, 2010. | |
(13) | Consists of 17,928 RSUs that will vest in one installment on February 10, 2009; and 16,209 RSUs that will vest in three equal installments on February 9, 2008, February 9, 2009 and February 9, 2010. | |
(14) | Market value calculated using December 31, 2007 closing price of our Common Stock of $57.73. |
Option Awards | Stock Awards | |||||||||||||||
Number of | Number of | |||||||||||||||
Shares Acquired | Value Realized | Shares Acquired | Value Realized | |||||||||||||
Name | on Exercise | on Exercise(1) | on Vesting | on Vesting(3) | ||||||||||||
Ronald A. Williams | 800,000 | $ | 32,833,142 | 50,048 | (2) | $ | 2,184,095 | |||||||||
Mark T. Bertolini | 0 | 0 | 0 | 0 | ||||||||||||
William J. Casazza | 12,666 | 529,094 | 0 | 0 | ||||||||||||
Timothy A. Holt | 399,812 | 16,285,203 | 0 | 0 | ||||||||||||
Joseph M. Zubretsky | 0 | 0 | 0 | 0 | ||||||||||||
Alan M. Bennett | 0 | 0 | 6,972 | 326,847 | ||||||||||||
Craig R. Callen | 350,000 | 9,483,114 | 0 | 0 | ||||||||||||
(1) | Calculated by multiplying (a) the difference between (i) the market price of our Common Stock at the time of exercise and (ii) the exercise price of the stock options, and (b) the number of stock options exercised. | |
(2) | Mr. Williams elected to defer the value of these shares, net of applicable withholding taxes, into his deferred Stock Account. Refer to footnote 1 of the 2007 Nonqualified Deferred Compensation Table on page 57 for a list of all deferral contributions by the Named Executive Officers during 2007. | |
(3) | Calculated by multiplying the number of shares acquired on vesting by the closing stock price of the Common Stock on the vesting date. |
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Number of Years | Present Value of | Payments During | ||||||||||||||
Name | Plan Name | Credited Service | Accumulated Benefit(2) | Last Fiscal Year | ||||||||||||
Ronald A. Williams | Pension Plan | 6.83 | $ | 116,612 | ||||||||||||
Supplemental Pension Plan(1 | ) | 4,449,381 | (3) | $ | 0 | |||||||||||
Mark T. Bertolini | Pension Plan | 8.08 | 63,288 | |||||||||||||
Supplemental Pension Plan(1 | ) | 147,043 | 0 | |||||||||||||
William J. Casazza | Pension Plan | 15.25 | 319,440 | |||||||||||||
Supplemental Pension Plan(1 | ) | 592,001 | 0 | |||||||||||||
Timothy A. Holt | Pension Plan | 30.50 | 1,014,778 | |||||||||||||
Supplemental Pension Plan(1 | ) | 4,248,161 | 0 | |||||||||||||
Joseph M. Zubretsky | Pension Plan | 0 | 0 | |||||||||||||
Supplemental Pension Plan(1 | ) | 0 | 0 | |||||||||||||
Alan M. Bennett | Pension Plan | 13.83 | 298,121 | |||||||||||||
Supplemental Pension Plan(1 | ) | 1,923,259 | (4) | 549,516 | ||||||||||||
Craig R. Callen | Pension Plan | 3.5 | 0 | |||||||||||||
Supplemental Pension Plan(1 | ) | 0 | 0 | |||||||||||||
(1) | The Supplemental Pension Plan is no longer used to accrue benefits that exceed the Code limits, but interest continues to accrue on the outstanding cash balance accruals. In addition, the Supplemental Pension Plan may continue to be used to credit benefits for special pension agreements. | |
(2) | Refer to pages 63 and 64 of Aetna’s 2007 Annual Report, Financial Report to Shareholders for a discussion of the valuation methods used to calculate the amounts in this column. In calculating the present value of the accumulated benefit under the Pension Plan and the Supplemental Pension Plan, the following economic assumptions were used: |
Pension | Supplemental | |||||||
Plan | Pension Plan | |||||||
Discount Rate | 6.57 | % | 6.31 | % | ||||
Future Cash Balance Interest Rate | 4.75 | % | 4.75 | % | ||||
5-Year Average Cost of Living Adjustment | 2.40 | % | 2.40 | % | ||||
(3) | Includes $2,991,434 which represents the present value of the additional pension benefit provided to Mr. Williams pursuant to his employment agreement. Under his employment agreement, Mr. Williams has received and will receive, for each of calendar years 2005 through 2010, an additional fully vested pension accrual in an amount equal to his base salary for such year. This additional pension accrual will not be credited if Mr. Williams is not actively employed by Aetna and will be offset by the value of Mr. Williams’ vested benefit under his prior employer’s pension plan. The remaining $1,457,947 represents the present value of Mr. Williams’ benefit under the Supplemental Pension Plan. Beginning in 2007, future benefit accruals in the Supplemental Pension Plan have been eliminated, however, Mr. Williams will continue to be credited with additional supplemental pension accruals under his employment agreement. | |
(4) | Includes $1,037,375 which represents two additional years of service that Mr. Bennett was credited with under his employment arrangement because he remained employed by Aetna until March 30, 2007. The remaining $885,884 represents the present value of Mr. Bennett’s benefit under the Supplemental Pension Plan. |
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Executive | Aggregate | Aggregate | ||||||||||||||
Contributions | Earnings | Aggregate | Balance | |||||||||||||
in Last | in Last FY | Withdrawals/ | at Last FYE | |||||||||||||
Name | FY(1) | (2) | Distributions | (3) | ||||||||||||
Ronald A. Williams | $ | 2,230,947 | $ | 7,645,900 | $ | 0 | $ | 34,252,502 | ||||||||
Mark T. Bertolini | 0 | 75,505 | 0 | 1,485,857 | ||||||||||||
William J. Casazza | 47,507 | 32,895 | 0 | 714,936 | ||||||||||||
Timothy A. Holt | 49,047 | 48,481 | 0 | 1,043,672 | ||||||||||||
Joseph M. Zubretsky | 2,800,000 | 131,955 | 0 | 2,931,955 | ||||||||||||
Alan M. Bennett | 0 | 45,730 | 0 | 954,729 | ||||||||||||
Craig R. Callen | 0 | 3,128 | 0 | 65,695 | ||||||||||||
(1) | The following table provides additional information about contributions by Named Executive Officers to their nonqualified deferred compensation accounts during 2007. Except for Mr. Zubretsky, the contributions during 2007 came from the base salary, annual bonus and/or RSUs that are reported for the Named Executive Officer in the “Salary,” “Non-Equity Incentive Plan Compensation” and “Stock Awards” columns of the 2007 Summary Compensation Table on page 49. All amounts contributed by a named executive officer and by us in prior years have been reported in the Summary Compensation Tables in our previously filed proxy statements in the year earned to the extent such person was a named executive officer for purposes of the SEC’s executive compensation disclosure. |
2007 Cash | ||||||||||||||||
2007 Stock | 2007 Cash | Contributions into | ||||||||||||||
Contributions into | Contributions into | Supplemental | Total 2007 | |||||||||||||
Stock Unit Account | Interest Account | 401(k) Plan | Contributions | |||||||||||||
Ronald A. Williams | $ | 2,131,330 | $ | 99,617 | $ | 0 | $ | 2,230,947 | ||||||||
Mark T. Bertolini | 0 | 0 | 0 | 0 | ||||||||||||
William J. Casazza | 0 | 0 | 47,507 | 47,507 | ||||||||||||
Timothy A. Holt | 0 | 0 | 49,047 | 49,047 | ||||||||||||
Joseph M. Zubretsky | 0 | 2,800,000 | (a) | 0 | 2,800,000 | |||||||||||
Alan M. Bennett | 0 | 0 | 0 | 0 | ||||||||||||
Craig R. Callen | 0 | 0 | 0 | 0 | ||||||||||||
(a) | In recognition of Mr. Zubretsky’s forfeiture of his supplemental executive retirement plan from his previous employer, a $2,800,000 deferred compensation interest account was established for him bearing interest at same rate as the fixed value fund of the Company’s 401(k) Plan. This account, together with accrued interest thereon, will vest in increments of 25% per year on the anniversary of Mr. Zubretsky’s date of hire, February 28, 2007. If Mr. Zubretsky’s employment is involuntarily terminated by the Company other than for cause on or before the second anniversary of his hire date, his account will vest as follows: $2,800,000 (together with interest thereon) multiplied by a fraction the numerator of which shall be the number of months from his hire date until his termination date and the denominator shall be forty-eight (48). If Mr. Zubretsky’s employment is involuntarily terminated by the Company other than for cause after the second anniversary of his hire date, the amount that would have vested in the current year and the next year will become immediately vested as of his termination date. The vested amount will be paid to Mr. Zubretsky six (6) months following his termination of employment with the Company. |
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(2) | The following table details the aggregate earnings on nonqualified deferred compensation accrued to each Named Executive Officer during 2007. |
Appreciation | Dividend | |||||||||||||||||||
(Depreciation) | Equivalents on | Interest on | ||||||||||||||||||
on Stock | Earnings on | Stock Unit | Supplemental | |||||||||||||||||
Unit Account | Interest Account | Account | 401(k) Plan | Total | ||||||||||||||||
Ronald A. Williams | $ | 7,387,039 | $ | 183,338 | $ | 20,226 | $ | 55,297 | $ | 7,645,900 | ||||||||||
Mark T. Bertolini | 0 | 73,977 | 0 | 1,528 | 75,505 | |||||||||||||||
William J. Casazza | 0 | 1,224 | 0 | 31,671 | 32,895 | |||||||||||||||
Timothy A. Holt | 0 | 0 | 0 | 48,481 | 48,481 | |||||||||||||||
Joseph M. Zubretsky | 0 | 131,955 | 0 | 0 | 131,955 | |||||||||||||||
Alan M. Bennett | 0 | 12,366 | 0 | 33,364 | 45,730 | |||||||||||||||
Craig R. Callen | 0 | 0 | 0 | 3,128 | 3,128 | |||||||||||||||
(3) | The reported aggregate nonqualified deferred compensation account balances of each Named Executive Officer at December 31, 2007 consist of the following: |
Supplemental 401(k) | ||||||||||||||||
Stock Unit Account | Interest Account | Plan Account | Total | |||||||||||||
Ronald A. Williams | $ | 29,272,961 | $ | 3,818,271 | $ | 1,161,270 | $ | 34,252,502 | ||||||||
Mark T. Bertolini | 0 | 1,453,766 | 32,091 | 1,485,857 | ||||||||||||
William J. Casazza | 0 | 25,149 | 689,787 | 714,936 | ||||||||||||
Timothy A. Holt | 0 | 0 | 1,043,672 | 1,043,672 | ||||||||||||
Joseph M. Zubretsky | 0 | 2,931,955 | 0 | 2,931,955 | ||||||||||||
Alan M. Bennett | 0 | 254,061 | 700,668 | 954,729 | ||||||||||||
Craig R. Callen | 0 | 0 | 65,695 | 65,695 | ||||||||||||
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Termination | ||||||||||||||||||||
by Aetna | ||||||||||||||||||||
Retirement or | without Cause | Termination | ||||||||||||||||||
Voluntary | or by | after | Termination | |||||||||||||||||
Termination by Mr. | Mr. Williams | Change- | by Aetna | Death or | ||||||||||||||||
Payment Type | Williams | for Good Reason | in-Control | for Cause | Disability | |||||||||||||||
Base Salary | $ | 0 | $ | 2,200,000 | (1) | $ | 3,300,000 | (2) | $ | 0 | $ | 0 | ||||||||
Bonus | 0 | 4,950,000 | (1) | 6,600,000 | (2) | 0 | 0 | |||||||||||||
Long-term Incentive | ||||||||||||||||||||
Options | 0 | 0 | 6,043,352 | (3) | 0 | (4) | 6,043,352 | (3) | ||||||||||||
SARs | 3,568,285 | (5) | 10,173,750 | (6) | 13,742,035 | (3) | 0 | (4) | 13,742,035 | (3) | ||||||||||
RSUs | 1,616,094 | (7) | 16,212,200 | (8) | 16,535,373 | (3) | 0 | (4) | 16,535,373 | (3) | ||||||||||
Total | $ | 5,184,379 | $ | 33,535,950 | $ | 46,220,760 | $ | 0 | $ | 36,320,760 | ||||||||||
(1) | Represents 104 weeks base salary and annual bonus at target plus pro-rata bonus at target for the year in which termination of employment occurs. Amounts would be paid bi-weekly during the severance period. | |
(2) | Represents 156 weeks base salary and annual bonus at target plus pro-rata bonus at target for the year in which achange-in-control occurs. Amounts would be paid in a lump sum. These amounts would only be payable if both of the following events occur: (a) a Change in Control (as defined in Mr. Williams’ employment agreement); and (b) a termination of employment by the Company other than for Cause (as defined in Mr. Williams’ employment agreement) or by Mr. Williams for Good Reason (as defined in Mr. Williams’ employment agreement). | |
(3) | Represents accelerated vesting of all outstanding unvested equity awards. | |
(4) | Vested and unvested options and SARs and unvested RSUs are subject to forfeiture if there is a termination by Aetna for Cause. | |
(5) | Represents partial accelerated vesting of a SAR grant awarded February 9, 2007. | |
(6) | Represents accelerated vesting of a SAR grant awarded February 10, 2006 and partial accelerated vesting of a SAR grant awarded February 9, 2007. | |
(7) | Represents partial accelerated vesting of a RSU grant awarded February 9, 2007. | |
(8) | Represents accelerated vesting of RSU grants awarded February 10, 2006 and February 14, 2006 and partial accelerated vesting of a RSU grant awarded February 9, 2007. |
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Termination by | ||||||||||||||||||||
Retirement or | Aetna without | |||||||||||||||||||
Voluntary | Cause or by Mr. | Termination | Termination | |||||||||||||||||
Termination by Mr. | Bertolini for Good | after Change- | by Aetna | Death or | ||||||||||||||||
Payment Type | Bertolini | Reason | in-Control | for Cause | Disability | |||||||||||||||
Base Salary | $ | 0 | $ | 1,800,000 | (1) | $ | 1,800,000 | (1) | $ | 0 | $ | 0 | ||||||||
Bonus | 0 | 3,240,000 | (1) | 3,240,000 | (1) | 0 | 0 | |||||||||||||
Payment Related to Tax Regulation | 0 | 0 | 2,024,994 | 0 | 0 | |||||||||||||||
Long-term Incentive | ||||||||||||||||||||
Options | 0 | 0 | 1,057,592 | (2) | 0 | (3) | 1,057,592 | (2) | ||||||||||||
SARs | 0 | 0 | 6,801,850 | (2) | 0 | (3) | 6,801,850 | (2) | ||||||||||||
RSUs | 0 | 1,257,764 | (4) | 2,881,477 | (2) | 0 | (3) | 2,881,477 | (2) | |||||||||||
Total | $ | 0 | $ | 6,297,764 | $ | 17,805,913 | $ | 0 | $ | 10,740,919 | ||||||||||
(1) | Represents 104 weeks base salary and annual bonus at target plus pro-rata bonus at target for the year in which termination of employment occurs. Amounts would be paid bi-weekly during the severance period. | |
(2) | Represents accelerated vesting of all outstanding unvested equity awards. | |
(3) | Vested and unvested options and SARs and unvested RSUs are subject to forfeiture if there is a termination by Aetna for Cause. | |
(4) | Represents partial accelerated vesting of RSUs. |
Retirement or | ||||||||||||||||||||
Voluntary | Termination by | Termination | Termination | |||||||||||||||||
Termination by Mr. | Aetna without | after Change- | by Aetna | Death or | ||||||||||||||||
Payment Type | Casazza | Cause | in-Control | for Cause | Disability | |||||||||||||||
Base Salary | $ | 0 | $ | 481,275 | (1) | $ | 481,275 | (1) | $ | 0 | $ | 0 | ||||||||
Bonus | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Long-term Incentive | ||||||||||||||||||||
Options | 0 | 0 | 307,277 | (2) | 0 | (3) | 307,277 | (2) | ||||||||||||
SARs | 626,509 | (4) | 626,509 | (4) | 1,689,688 | (2) | 0 | (3) | 1,689,688 | (2) | ||||||||||
RSUs | 574,529 | (5) | 574,529 | (5) | 1,328,425 | (2) | 0 | (3) | 1,328,425 | (2) | ||||||||||
Total | $ | 1,201,038 | $ | 1,682,313 | $ | 3,806,665 | $ | 0 | $ | 3,325,390 | ||||||||||
(1) | Represents 52 weeks of base salary continuation. Amounts would be paid bi-weekly during the severance period. | |
(2) | Represents accelerated vesting of all outstanding unvested equity awards. | |
(3) | Vested and unvested options and SARs and unvested RSUs are subject to forfeiture if there is a termination by Aetna for cause. | |
(4) | Represents partial accelerated vesting of SARs. | |
(5) | Represents partial accelerated vesting of RSUs. |
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Payment Type | Retirement | |||
Base Salary | $ | 0 | ||
Long-term Incentive | ||||
Options | 0 | |||
SARs | 438,430 | (1) | ||
RSUs | 516,227 | (2) | ||
Total | $ | 954,657 | ||
(1) | Represents partial accelerated vesting of SARs. | |
(2) | Represents partial accelerated vesting of RSUs. |
Retirement or | Termination | |||||||||||||||||||
Voluntary | Termination | after | Termination | |||||||||||||||||
Termination by Mr. | by Aetna | Change- | by Aetna | Death or | ||||||||||||||||
Payment Type | Zubretsky | without Cause | in-Control | for Cause | Disability | |||||||||||||||
Base Salary | $ | 0 | $ | 1,400,000 | (1) | $ | 1,400,000 | (1) | $ | 0 | $ | 0 | ||||||||
Bonus | 0 | 1,400,000 | (1) | 1,400,000 | (1) | 0 | 0 | |||||||||||||
Payment Related to Tax Regulations | 0 | 0 | 1,672,042 | 0 | 0 | |||||||||||||||
Long-term Incentive | ||||||||||||||||||||
SARs | 0 | 2,752,473 | (2) | 3,899,337 | (3) | 0 | (4) | 3,899,337 | (3) | |||||||||||
RSUs | 0 | 5,022,683 | (5) | 6,201,241 | (3) | 0 | (4) | 6,201,241 | (3) | |||||||||||
Total | �� | $ | 0 | $ | 10,575,156 | $ | 14,572,620 | $ | 0 | $ | 10,100,578 | |||||||||
(1) | Represents 104 weeks of base salary and annual bonus at 100% of base salary. Amounts would be paid bi-weekly during the severance period. | |
(2) | Represents partial accelerated vesting of 203,736 sign-on SARs granted February 28, 2007. | |
(3) | Represents accelerated vesting of all outstanding unvested equity awards. | |
(4) | Vested and unvested SARs and unvested RSUs are subject to forfeiture if there is a termination by Aetna for Cause. | |
(5) | Represents partial accelerated vesting of 79,150 sign-on RSUs granted February 28, 2007. |
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Payment Type | Retirement | |||
Options | $ | 1,675,538 | ||
SARs | 0 | (1) | ||
RSUs | 326,847 | |||
Total | $ | 2,002,385 | ||
(1) | SAR value is zero because the exercise price is above the closing price of our Common Stock on April 30, 2007. |
Payment Type | Termination of Employment | |||
Base Salary | $ | 620,000 | (1) | |
Bonus | 386,880 | (2) | ||
Long-term Incentive | ||||
Options | 1,383,814 | |||
SARs | 643,297 | |||
RSUs | 1,386,911 | |||
Total | $ | 4,420,902 | ||
(1) | Represents 52 weeks of base salary continuation. Amounts are paid bi-weekly during the severance period. | |
(2) | Represents prorated bonus payment for performance year 2007. |
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2007 | 2006 | |||||||
Audit Fees(1) | $ | 8,445,000 | $ | 8,040,000 | ||||
Audit-Related Fees(2) | ||||||||
Servicing Reports | 717,000 | 695,000 | ||||||
Employee Benefit Plan Audits | 145,000 | 140,000 | ||||||
Audit/Attest Services Not Required by Statute or Regulation | 322,400 | 10,000 | ||||||
1,184,400 | 845,000 | |||||||
Tax Fees(3) | 38,000 | 32,000 | ||||||
All Other Fees | 0 | 0 | ||||||
Total Fees | $ | 9,667,400 | $ | 8,917,000 | ||||
(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 integrated audit of the Company’s consolidated financial statements and the effectiveness of internal control over financial reporting, quarterly reviews, statutory audits of the Company’s subsidiaries required by statute or regulation, attest services required by applicable law, comfort letters in connection with debt issuances, consents and assistance with and review of documents filed with the SEC. |
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(2) | Audit-Related Fees are for audit and related attestation services that traditionally are performed by the Independent Accountants, and include servicing reports, employee benefit plan audits, due diligence assistance provided to the Company in connection with acquisitions, and audit and special procedures services that are not required by applicable law. Servicing reports represent reviews of the Company’s claim administration functions that are provided to customers. The increase over the prior year relates primarily to due diligence and related audits of an acquired business. |
(3) | Tax Fees include all services performed by professional staff in the Independent Accountants’ tax division for tax return and related compliance services, except for those tax services related to the audit. |
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(a) | An Aetna Director is not independent if: |
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. NNNNNNNNNNNN 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 Electronic Voting Instructions ADD 2 ADD 3 You can vote by Internet or telephone! ADD 4 Available 24 hours a day, 7 days a week! ADD 5 Instead of mailing your proxy, you may choose one of the two voting ADD 6 methods outlined below. NNNNNNNNN VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Time, on May 29, 2008. Vote by Internet• Log on to the Internet and go to www.investorvote.com• Follow the steps outlined on the secure website. Vote by telephone• Within the US, Canada or Puerto Rico, call toll free1-800-652-VOTE (8683) at any time on a touch tone telephone. There is NO CHARGE to you for the call. Using a black ink pen, mark your votes with an X as shown in• Outside the US, Canada or Puerto Rico, call1-781-575-2300 on a touch tone telephone. X Standard rates will apply. this example. Please do not write outside the designated areas.• Follow the instructions provided by the recorded message. Annual Meeting Proxy Card 123456 C0123456789 12345 3 IF YOU HAVE NOT VOTED BY INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 A Proposals — 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 EACH NOMINEE LISTED IN ITEM 1, FOR ITEM 2 AND AGAINST ITEMS 3 AND 4. 1. Election of Directors: For Against Abstain For Against Abstain For Against Abstain + 01 — Frank M. Clark 02 — Betsy Z. Cohen 03 - Molly J. Coye, M.D. 04 — Roger N. Farah 05 — Barbara Hackman Franklin 06 — Jeffrey E. Garten 07 - Earl G. Graves 08 — Gerald Greenwald 09 — Ellen M. Hancock 10 — Edward J. Ludwig 11 — Joseph P. Newhouse 12 — Ronald A. Williams For Against Abstain For Against Abstain 2. Approval of Independent Registered Public Accounting Firm 3. Shareholder Proposal on Cumulative Voting 4. Shareholder Proposal on Nominating a Retired Aetna B Non-Voting Items Executive to the Board Change of Address — Please print your new address below. Comments — Please print your comments below. Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting. C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. If a corporation or other form of entity, please sign in the full name of the entity, by a duly authorized officer. The signer hereby revokes all proxies heretofore given by the signer to vote at the 2008 Annual Meeting of Aetna Inc. and any adjournment or postponement thereof. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND NNNNNNN1 U P X 0 1 6 3 1 3 1 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + <STOCK#> 00U1JG |
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SHAREHOLDER ACCOUNT INQUIRIES Aetna Inc.’s Transfer Agent, Computershare 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 Computershare’s DirectSERVICE Investment Program. Registered shareholders can manage their Aetna account online, enroll in direct deposit of dividends and send secure e-mail inquiries through Computershare’s website at www.computershare.com/investor. Go paperless! You can receive materials for future annual meetings and any special shareholder meetings electronically instead of by mail by registering your delivery preference at www.computershare.com/us/ecomms. TO ATTEND THE ANNUAL MEETING: If you plan to attend the 2008 Annual Meeting, you should either mark the box provided on the reverse side of this proxy card or signify your intention to attend when you access the telephone or Internet voting system. In lieu of issuing an admission ticket, Aetna will place your name on a shareholder attendee list, and you will be asked to register and present government issued photo identification (e.g., a driver’s license or passport) before being admitted to the 2008 Annual Meeting. 3 IF YOU HAVE NOT VOTED BY INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 Proxy — Aetna Inc. 2008 Annual Meeting of Shareholders THIS PROXY IS SOLICITED ON BEHALF OF AETNA’S BOARD OF DIRECTORS. The undersigned hereby appoints Barbara Hackman Franklin, Gerald Greenwald and Ellen M. Hancock, and each of them, the proxies of the undersigned, with full power of substitution, to vote the shares of the undersigned at the 2008 Annual Meeting of Shareholders of Aetna Inc. to be held May 30, 2008 and at any adjournment or postponement thereof, and directs said proxies to vote as specified herein on the four 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. If you vote by telephone or the Internet, please DO NOT mail back this proxy card. THANK YOU FOR VOTING (Items to be voted appear on reverse side of this proxy card.) |
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. NNNNNNNNNNNN NNNNNNNNN Using a black ink pen, mark your votes with an X as shown in X this example. Please do not write outside the designated areas. Annual Meeting Proxy Card 3 PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 A Proposals — 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 EACH NOMINEE LISTED IN ITEM 1, FOR ITEM 2 AND AGAINST ITEMS 3 AND 4. 1. Election of Directors: For Against Abstain For Against Abstain For Against Abstain + 01 — Frank M. Clark 02 — Betsy Z. Cohen 03 — Molly J. Coye, M.D. 04 - Roger N. Farah 05 — Barbara Hackman Franklin 06 — Jeffrey E. Garten 07 — Earl G. Graves 08 — Gerald Greenwald 09 — Ellen M. Hancock 10 — Edward J. Ludwig 11 — Joseph P. Newhouse 12 — Ronald A. Williams For Against Abstain For Against Abstain 2. Approval of Independent Registered Public Accounting Firm 3. Shareholder Proposal on Cumulative Voting 4. Shareholder Proposal on Nominating a Retired Aetna Executive to the Board B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. If a corporation or other form of entity, please sign in the full name of the entity, by a duly authorized officer. The signer hereby revokes all proxies heretofore given by the signer to vote at the 2008 Annual Meeting of Aetna Inc. and any adjournment or postponement thereof. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. 1 U P X 0 1 6 3 1 3 2 + <STOCK#> 00U1KE |
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3 PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 Proxy — Aetna Inc. 2008 Annual Meeting of Shareholders THIS PROXY IS SOLICITED ON BEHALF OF AETNA’S BOARD OF DIRECTORS. The undersigned hereby appoints Barbara Hackman Franklin, Gerald Greenwald and Ellen M. Hancock, and each of them, the proxies of the undersigned, with full power of substitution, to vote the shares of the undersigned at the 2008 Annual Meeting of Shareholders of Aetna Inc. to be held May 30, 2008 and at any adjournment or postponement thereof, and directs said proxies to vote as specified herein on the four 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. THANK YOU FOR VOTING (Items to be voted appear on reverse side of this proxy card.) |
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. NNNNNNNNNNNN 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 Electronic Voting Instructions ADD 2 ADD 3 You can vote by Internet or telephone! ADD 4 Available 24 hours a day, 7 days a week! ADD 5 Instead of mailing your Voting Instruction Card, you may choose one of ADD 6 the two voting methods outlined below. NNNNNNNNN VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Voting Instruction Cards submitted by Internet or telephone must be received by 11:59 p.m., Eastern Time, on May 23, 2008. Vote by Internet• Log on to the Internet and go to www.investorvote.com• Follow the steps outlined on the secure website. Vote by telephone• Within the US, Canada or Puerto Rico, call toll free1-800-652-VOTE (8683) at any time on a touch tone telephone. There is NO CHARGE to you for the call. Using a black ink pen, mark your votes with an X as shown in• Outside the US, Canada or Puerto Rico, call1-781-575-2300 on a touch tone telephone. X Standard rates will apply. this example. Please do not write outside the designated areas.• Follow the instructions provided by the recorded message. Annual Meeting Voting Instruction Card 123456 C0123456789 12345 3 IF YOU HAVE NOT VOTED BY INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 A Proposals 1. Election of Directors: For Against Abstain For Against Abstain For Against Abstain + 01 — Frank M. Clark 02 — Betsy Z. Cohen 03 — Molly J. Coye, M.D. 04 — Roger N. Farah 05 — Barbara Hackman Franklin 06 — Jeffrey E. Garten 07 — Earl G. Graves 08 — Gerald Greenwald 09 — Ellen M. Hancock 10 — Edward J. Ludwig 11 — Joseph P. Newhouse 12 - Ronald A. Williams For Against Abstain For Against Abstain 2. Approval of Independent Registered Public Accounting Firm 3. Shareholder Proposal on Cumulative Voting 4. Shareholder Proposal on Nominating a Retired Aetna Executive to the Board Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting. B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. The signer hereby revokes all voting instructions heretofore given to the Trustee by the signer to vote at the 2008 Annual Meeting of Aetna Inc. and any adjournment or postponement thereof. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND NNNNNNN1 U P X 0 1 6 3 1 3 3 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + <STOCK#> 00U7DH |
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. Note: Participants who received the 2008 Aetna Inc. Notice of Annual Meeting and Proxy Statement, the 2007 Aetna Inc. Annual Report, and the 2007 Aetna Inc. Annual Report, Financial Report to Shareholders over the Internet and who would like a printed copy of these documents may call 1-800-237-4273. 3 IF YOU HAVE NOT VOTED BY INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3 Voting Instruction Card — Aetna Inc. 2008 Annual Meeting of Shareholders THIS VOTING INSTRUCTION CARD IS SOLICITED ON BEHALF OF STATE STREET BANK AND TRUST COMPANY. 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 May 30, 2008 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 held in strictest confidence and 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 May 23, 2008 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. If you vote by telephone or the Internet, please DO NOT mail back this Voting Instruction Card. THANK YOU FOR VOTING (Items to be voted appear on reverse side.) |