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EXHIBIT 10.20
[AETNA LETTERHEAD]
April 28, 1999
Mr. L. Edward Shaw, Jr.
9 Carriage House Lane
Mamaroneck, NY 10543
Dear Ed:
On behalf of Aetna, I am pleased to offer you the position of Senior Vice
President and General Counsel. The specifics of the offer are as follows:
1. Starting Date: To be determined, but as soon as possible.
2. Base Salary: Your base salary will be $450,000 per annum payable in
accordance with Aetna's regular payroll practices (currently biweekly).
This will be reviewed on the basis of your performance during our annual
salary review process in April, 2000 and annually thereafter. The Company
may also from time to time review and adjust salaries to reflect
appropriate compensation for each position.
3. Annual Incentive Program: You will be eligible for consideration for an
award under the Company's annual incentive program beginning with the 1999
performance year (payable in 2000) as long as the plan is in effect. Your
target bonus is 80% of base salary with a 160% payout for maximum
performance. For performance year 1999, you will receive a minimum
guaranteed bonus of 80% of your base salary. Each year thereafter, while
you are employed by the Company, you will be eligible for consideration for
additional awards under the annual incentive program while the plan remains
in effect.
4. Long-Term Incentive Program: We will recommend that you be awarded 8,000
ACEShares for a performance cycle ending December 31, 2002. This award will
vest, if at all, only upon attainment of performance objectives determined
by the Company's Board Committee on Compensation and Organization as set
forth in the ACEShares Award Agreement. You will be eligible for
consideration of additional awards under the Company's long-term incentive
program while that program remains in effect.
5. Stock Options: We will recommend that you be granted options to purchase
50,000 shares of Aetna common stock. The option for 25,000 shares will be
based on the closing price of Aetna common stock and the option for the
remaining 25,000 shares will be based on 110% of the closing price of Aetna
common stock each on the effective date of the grant (no earlier than the
date you begin work), in accordance with Company option grant practices.
These options are not exercisable for the first year after the date of
grant and will vest in three equal annual installments as set forth in each
Stock Option Award Agreement. Beginning in 2000
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Mr. L. Edward Shaw, Jr.
April 28, 1999
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and thereafter while employed by Aetna, you will be eligible for
consideration for periodic stock option grants while the plan remains in
effect.
6. Retirement Benefits: You will automatically participate in the Company's
non-contributory cash balance pension plan. Service will be credited from
your date of hire when you meet the plan's eligibility and vesting
requirements. You will also be eligible to enroll in the Company's 401(k)
plan once you begin work. An enrollment kit will be sent to your home
within two to three weeks of your employment start date. Under the plan,
the Company will match 5% of your regular base pay and annual bonus
amounts.
7. Other Benefit Plans: You will be eligible to participate in our
contributory flexible welfare benefit plan. Coverage for medical, dental,
life, dependent life, spending accounts and accident benefits will become
effective on the first of the month following the date you begin. If you
begin work on the first of the month, your benefits will become effective
immediately.
8. Financial Planning: You will be eligible to participate in our executive
financial planning program, including tax preparation, through one of two
recognized vendors, up to the limit of the program ($7,500 first year).
9. Severance Pay: If your employment is involuntarily terminated under
circumstances that would call for benefits under the Company's severance
and salary continuation plan then in effect, you will receive payment for
52 weeks of salary continuation in lieu of amounts payable under such
severance and salary continuation plan upon delivery of a release of any
employment-related claims and covenants in form and substance satisfactory
to the Company.
10. Change in Control: In the event your employment is terminated under
circumstances that would call for severance pay benefits after a Change in
Control of the Company, as defined in the Company's severance and salary
continuation benefits plan, you will receive 156 weeks of salary
continuation (instead of the 52 weeks referenced in Paragraph 9 above) in
lieu of amounts payable under the plan upon delivery of a release of any
employment-related claims and covenants in form and substance satisfactory
to the Company. In addition, all of your unvested stock options will vest.
11. Paid Time Off (PTO) Bank: For the purpose of PTO Bank accrual only, you
will earn PTO Bank days assuming you have 10 years of service. This means
you will earn an annual PTO Bank of 28 days (8 days deposited on January 1
and 2 days per month for the period February through November). In your
first calendar year of employment, you will earn 19 PTO Bank days. The PTO
Bank includes time out of the office for vacation, personal time, family
illness and individual sick days.
12. Sign-On Bonus: A one-time gross payment of $50,000, less applicable taxes
and withholding, will be made as soon as possible after you begin work at
Aetna in recognition of your career move. In the event of your voluntary
departure of your termination for misconduct within 12 months of your start
date, you will be responsible to repay a prorated portion of the sign-on
bonus.
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Mr. L. Edward Shaw, Jr.
April 28, 1999
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13. The Company will assist you with relocation expenses associated with your
move from New York to Connecticut. A counselor from Cendant Mobility will
be in touch with you directly. This benefit will remain available to you
for 24 months from your employment date. In the event of your voluntary
departure or your termination for misconduct within 12 months of your start
date, you will be responsible to repay a prorated portion of the relocation
expenses related to your move.
14. Contingencies: This offer is made based on your representation that you are
not subject to any restrictive covenants with any present and/or former
employers and is contingent upon (1) completion of the enclosed job
application form; (2) receipt of documents which show you are legally
entitled to work in the United States (bring with you on first day); (3)
successful completion of a pre-employment urinalysis drug test (more
information to follow upon acceptance); (4) execution and delivery to the
Company of the enclosed Restrictive Covenant Agreement on or before your
start date; and (5) successful completion of a background review.
You should understand that this letter is not an employment contract. Your
employment is at-will and may be terminated by you or the Company without cause
or notice and reflects our expectation that this employment relationship will be
mutually beneficial. The enclosed "Employee Benefits Handbook and Summary Plan
Descriptions" describes the Company benefit programs including those referred to
earlier in this offer letter.
I am delighted to extend this offer to you and look forward to your acceptance.
As we discussed, this offer is subject to the approval of Aetna's Board of
Directors and its Committee on Compensation and Organization. Please acknowledge
your acceptance of this offer by initialing the enclosed copy of this letter,
completing the enclosed employment application and returning both to me. If you
have any questions or would like to discuss the terms of our offer, please do
not hesitate to call me. I will advise you as soon as our Board and Committee
have met.
Sincerely,
/s/ Richard L. Huber
Enclosures
Accepted:
/s/ L. Edward Shaw, Jr. 4-28-99
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L. Edward Shaw, Jr. Date
