<PAGE> 1
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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Section 240.14a-11(c)
or Section 240.14a-12
/ / Confidential, for Use of the Commissioner Only (as
permitted by Rule 14a-6(e)(2))
HUMANA INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
HUMANA INC.
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(1)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which the filing
fee is calculated and state how it was determined.)
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[HUMANA INC. LOGO]
March 30, 1995
DEAR STOCKHOLDER:
You are cordially invited to attend the 1995 Annual Meeting of Stockholders
of Humana Inc. (the "Company") to be held on Thursday, May 11, 1995, in the
Auditorium on the 25th Floor of the Humana Building, 500 West Main Street,
Louisville, Kentucky at 10:00 a.m.
At the Annual Meeting stockholders will be asked to elect eight directors
of the Company. The Board of Directors of the Company unanimously recommends
that stockholders vote FOR each of the Company's nominees for election as a
director.
The Notice of Meeting and Proxy Statement enclosed herewith describe the
matters to be presented at the Annual Meeting. The Proxy Statement is first
being mailed to the Company's stockholders on or about March 30, 1995.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING AND REGARDLESS OF THE
NUMBER OF SHARES OF COMPANY COMMON STOCK YOU OWN, WE REQUEST THAT YOU COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU MAY, OF
COURSE, ATTEND THE ANNUAL MEETING AND VOTE IN PERSON, EVEN IF YOU HAVE
PREVIOUSLY RETURNED YOUR PROXY CARD.
Sincerely,
/s/ David A. Jones /s/ Wayne T. Smith
DAVID A. JONES WAYNE T. SMITH
Chairman of the Board and President and
Chief Executive Officer Chief Operating Officer
<PAGE> 3
[HUMANA INC. LOGO]
500 WEST MAIN STREET
LOUISVILLE, KENTUCKY 40202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 1995
TO THE STOCKHOLDERS:
The 1995 Annual Meeting of Stockholders (the "Annual Meeting") of Humana
Inc. (the "Company") will be held in the Auditorium on the 25th Floor of the
Humana Building, 500 West Main Street, Louisville, Kentucky, on Thursday, May
11, 1995, at 10:00 a.m. for the following purposes:
1. To elect eight directors of the Company to serve for the ensuing
year and until their successors are elected and qualified; and
2. To transact such other business as may properly come before the
Annual Meeting.
The Board of Directors of the Company has fixed the close of business on
March 17, 1995, as the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. Only stockholders of record at the close of business on that date will
be entitled to notice of and to vote at the Annual Meeting.
This Proxy Statement is first being mailed to the Company's Stockholders on
or about March 30, 1995.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED STAMPED
ENVELOPE. A STOCKHOLDER ATTENDING THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF
HE OR SHE HAS PREVIOUSLY SENT A PROXY CARD.
By Order of the Board of Directors,
/s/ Joan O. Kroger
JOAN O. KROGER
Secretary
Louisville, Kentucky
March 30, 1995
<PAGE> 4
[HUMANA INC. LOGO]
500 WEST MAIN STREET
LOUISVILLE, KENTUCKY 40202
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1995
GENERAL INFORMATION
This Proxy Statement is being furnished to stockholders of Humana Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company (the "Board") from holders of
record of the Company's outstanding shares of common stock, par value $.16 2/3
per share (the "Common Stock"), as of the close of business on March 17, 1995,
(the "Annual Meeting Record Date"), for use at the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held on Thursday, May
11, 1995, at 10:00 a.m. in the Auditorium on the 25th Floor of the Humana
Building, 500 West Main Street, Louisville, Kentucky, and at any adjournment or
postponement thereof. This Proxy Statement is first being mailed to the
Company's stockholders on or about March 30, 1995. The principal executive
offices of the Company are located at 500 West Main Street, Louisville, Kentucky
40202.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, holders of shares of Common Stock will be asked to
consider and to vote upon the following matters:
(i) The election of eight directors of the Company for 1995; and
(ii) To transact such other business as may properly come before the
meeting.
The Board unanimously recommends that stockholders vote FOR the election of
the Board's nominees for election as directors of the Company. As of the date of
this Proxy Statement, the Board knows of no other business to come before the
Annual Meeting.
VOTING RIGHTS AND PROXY INFORMATION
Only holders of record of shares of Common Stock as of the close of
business on the Annual Meeting Record Date will be entitled to notice of and to
vote at the Annual Meeting or any adjournment or postponement thereof. Such
holders of shares of Common Stock are entitled to one vote per share on any
matter which may properly come before the Annual Meeting. The presence, either
in person or by properly executed proxy, of the holders of a majority of the
outstanding shares of Common Stock as of the Annual Meeting Record Date is
necessary to constitute a quorum at the Annual Meeting. As of the Annual Meeting
Record Date, there were 161,680,695 shares of Common Stock outstanding and
entitled to vote at the Annual Meeting. The affirmative vote of a plurality of
the shares of Common Stock represented in person or by properly executed proxy
at the Annual Meeting is required to approve the election of each of the
Company's nominees for election as a director.
<PAGE> 5
All shares of Common Stock that are represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting and not
revoked will be voted at the Annual Meeting in accordance with the instructions
indicated in such proxies. If no instructions are indicated, such proxies will
be voted for approval of the election of the Board's eight nominees for election
as directors of the Company, and thus there can be no abstentions or broker
non-votes.
If there were any abstentions or broker non-votes, they would be counted as
shares present in the determination of whether shares of Common Stock
represented at the meeting constitute a quorum. Abstentions and broker non-votes
are tabulated separately. Since only a plurality is required for the election of
directors, abstentions or broker non-votes will have no effect on the election
of directors (except for purposes of determining whether a quorum is present at
the Annual Meeting).
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with Mid-America Bank of Louisville & Trust Company in its capacity as transfer
agent for the Company (the "Transfer Agent"), at or before the Annual Meeting, a
written notice of revocation bearing a date later than the proxy, (ii) duly
executing a subsequent proxy relating to the same shares of Common Stock and
delivering it to the Transfer Agent at or before the Annual Meeting, or (iii)
attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute a revocation of a proxy).
Any executed proxy or written notice revoking a proxy should be sent to
Mid-America Bank of Louisville & Trust Company, Securities Transfer Department,
500 West Broadway, Louisville, Kentucky 40202.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of Common Stock and will reimburse them for their reasonable expenses in
so doing. Certain directors, officers and other employees of the Company, not
specially employed for this purpose, may solicit proxies, without additional
remuneration therefor, by personal interview, mail, telephone, facsimile or
other electronic means. In addition, the Company has retained D.F. King & Co.,
Inc., to assist in the solicitation for a fee of $8,500 plus expenses.
ELECTION OF DIRECTORS OF THE COMPANY FOR 1995
A Board of Directors of the Company consisting of eight members is to be
elected at the Annual Meeting, each director to serve, subject to the provisions
of the Company By-laws, until his or her successor is duly elected and
qualified.
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF
EACH OF THE COMPANY'S NOMINEES FOR ELECTION AS A DIRECTOR.
2
<PAGE> 6
Listed below is a description of positions held by each nominee for
director for the last five years. The names of the nominees proposed for
election as directors, all of whom are presently directors of the Company, are
set forth below:
<TABLE>
<CAPTION>
FIRST ELECTED
NAME AGE POSITION DIRECTOR
-------------------------------- --- ------------------------ -------------
<S> <C> <C> <C>
David A. Jones(3)(4) 63 Chairman of the Board 09/64
and Chief Executive
Officer
Wayne T. Smith(3) 49 President and Chief 09/91
Operating Officer and
Director
K. Frank Austen, M.D.(1)(5)(6) 67 Director 01/90
Michael E. Gellert(1)(2)(3)(5) 63 Director 02/68
John R. Hall(1)(2)(6) 62 Director 05/92
David A. Jones, Jr.(2)(6) 37 Director 05/93
Irwin Lerner(1)(5) 64 Director 11/93
W. Ann Reynolds, Ph.D.(2)(5)(6) 57 Director 01/91
</TABLE>
---------------
(1) Member of the Audit Committee, of which Mr. Gellert is Chairman.
(2) Member of the Investment Committee, of which Dr. Reynolds is Chairwoman.
(3) Member of the Executive Committee, of which Mr. Jones is Chairman.
(4) A director and chief executive officer of a predecessor corporation since
1961.
(5) Member of the Compensation Committee, of which Dr. Austen is Chairman.
(6) Member of the Nominating Committee, of which Mr. Hall is Chairman.
David A. Jones has been Chairman of the Board and Chief Executive Officer
of the Company since August 1969.
Wayne T. Smith has been President and Chief Operating Officer of the
Company since March 1, 1993. From June 1991 to March 1993, he was Executive Vice
President -- Health Care Operations. From April 1986 until June 1991, he was
Executive Vice President and President -- Health Care Division. Mr. Smith has
been an officer of the Company since 1978.
K. Frank Austen, M.D., is Chairman of the Department of Rheumatology and
Immunology at Brigham and Women's Hospital in Boston, Massachusetts, having held
that position since 1980. He also serves as a professor of medicine on the
faculty of Harvard Medical School. In addition, Dr. Austen is a member of the
Board of Trustees of Amherst College.
Michael E. Gellert is general partner of Windcrest Partners, a private
investment partnership in New York, New York, having held that position since
April 1967. From 1976 until his retirement in October 1989, Mr. Gellert was a
director of Drexel Burnham Lambert Group and served in executive capacities for
its wholly-owned subsidiary, Drexel Burnham Lambert Incorporated, from 1972
until October 1989. Drexel Burnham Lambert Group Incorporated filed for Chapter
11 bankruptcy reorganization proceedings in February 1990.
John R. Hall is Chairman of the Board of Directors and Chief Executive
Officer of Ashland, Inc., in Ashland, Kentucky, positions he has held since
1981. He is also a member of American Petroleum Institute Executive Committee, a
member of Transylvania University Board of Trustees and Vanderbilt University
Board of Trust.
3
<PAGE> 7
David A. Jones, Jr., is a principal of Chrysalis Ventures, Inc., a venture
capital firm in Louisville, Kentucky, and is the son of David A. Jones, Chairman
of the Board and Chief Executive Officer of the Company. From October 1992 to
December 1993, Mr. Jones, Jr., was an attorney with the law firm now known as
Hirn Doheny Reed & Harper in Louisville, Kentucky. He previously served with the
U.S. Department of State from 1988 to 1992, most recently as an attorney-advisor
to the Bureau of East Asian and Pacific Affairs.
Irwin Lerner retired on September 1, 1993, as Chairman of the Board and
Executive Committee of Hoffmann-La Roche Inc. From April 1, 1980 to December 30,
1992, Mr. Lerner was Hoffmann-La Roche Inc.'s President and Chief Executive
Officer. He presently serves on the boards of Project Hope, Rutgers University,
the New Jersey Chamber of Commerce, the U.S. Advisory Board of the Zurich
Insurance Company and is Chairman of the Board of the New Jersey Governor's
Council for a Drug Free Workplace. In addition, he is Chairman of the Board of
Sequana Therapeutics, Inc. and a principal and director of Physicians Television
Network, both private companies. He is a Distinguished Executive-in-Residence at
the Rutgers University Graduate School of Management in Newark, New Jersey.
W. Ann Reynolds, Ph.D., is Chancellor-City University of New York, in New
York, New York, having held that position since September 1990. She previously
served for eight years as Chancellor of the California State University system.
Shares of Common Stock represented by proxies executed and received in the
accompanying form will be voted for the election of all of the nominees
hereinabove named as directors of the Company to serve for the ensuing year and
until their successors are elected and qualified. The Board does not contemplate
that any of the nominees will be unable to accept election as a director for any
reason. However, in the event that one or more of such nominees is unable or
unwilling to serve, the persons named in the proxies or their substitutes shall
have authority, according to their judgment, to vote or to refrain from voting
for other individuals as directors.
The following is a list of directorships held by directors of the Company
in other companies registered under Section 12 or subject to the requirements of
Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") or
registered as an investment company under the Investment Company Act of 1940:
<TABLE>
<S> <C>
David A. Jones Abbott Laboratories
K. Frank Austen, M.D. Abbott Laboratories and Applied Immune Sciences, Inc.
Michael E. Gellert Devon Energy Corporation; Premier Parks, Inc.; Putnam Trust
Company; Regal Cinemas, Inc.; Seacor Holdings, Inc.; The Harvey
Group, Inc.
John R. Hall Ashland, Inc.; Banc One Corporation; Canada Life Assurance
Company; CSX Corporation; and Reynolds Metals Company
Irwin Lerner Public Service Enterprise Group and its wholly-owned subsidiary,
Public Service Electric and Gas Company
W. Ann Reynolds, Ph.D. Abbott Laboratories; Maytag Corporation; and Owens-Corning
Fiberglas Corporation
</TABLE>
The information given in this Proxy Statement concerning the nominees is
based upon statements made or confirmed to the Company by or on behalf of such
nominees.
Since January 1, 1994, directors who were not officers of the Company are
paid an annual retainer fee of $38,000 for serving on the Board plus an
attendance fee of $2,000 per regular and special meeting. During 1994, there
were six regular Board meetings. The Board has Audit, Compensation, Executive,
Investment and Nominating Committees. Michael E. Gellert receives an additional
$5,000 annually for serving on the Executive Committee of the Board. Each
committee chairperson is paid an annual amount of $3,000. Committee members
receive no additional compensation for their service on committees or for
attending committee meetings.
4
<PAGE> 8
In addition, the Company matches, on an annual basis, up to $20,000 in
charitable contributions made by each non-employee director.
The Company also maintains the 1989 Stock Option Plan for Non-Employee
Directors (the "Directors Plan") pursuant to which 15,000 shares of the Common
Stock are granted at 100% of the fair market value to each non-employee director
upon his or her initial election to the Board.
In addition, options to purchase 5,000 shares of the Common Stock are
granted on the first business day of each January at 100% of the fair market
value to each non-employee director who has been a director continuously for at
least the full calendar year prior thereto.
In 1994, the awards under the Directors Plan were as follows:
<TABLE>
<S> <C>
K. Frank Austen, M.D. 5,000
Michael E. Gellert 5,000
John R. Hall 5,000
David A. Jones, Jr. -0-
Irwin Lerner -0-
W. Ann Reynolds, Ph.D. 5,000
</TABLE>
Under the Company's Directors' Retirement Policy (the "Policy"), a director
who is not an employee must retire at the annual meeting following his or her
seventieth birthday, except for the Chairman of the Executive Committee, who
must retire at the annual meeting following his or her seventy-second birthday.
The retiring director is entitled to receive until death the basic retainer fee
in effect at the time of retirement plus an annual matching charitable
contribution benefit of 50% of the basic retainer fee in effect at the time of
retirement (which benefits are prorated for any retiring director who has not
served at least ten years on the Board). Currently, the Company is paying
benefits under the Policy to two former directors and has a separate letter
agreement with one other former director that was executed prior to the adoption
of the Company's Policy. The benefits under the letter agreement are comparable
to those under the Policy.
The Audit Committee of the Board held six meetings during 1994. The members
of the Audit Committee, none of whom is an employee of the Company, are Michael
E. Gellert, Chairman; K. Frank Austen, M.D.; John R. Hall and Irwin Lerner. Mr.
Lerner was designated a member of the Audit Committee on March 10, 1994. The
functions of the Audit Committee include review of the programs of the Company's
internal auditors, the results of their audits and the adequacy of the Company's
internal control structure. In addition, the Audit Committee reviews prior to
its commencement, the scope of the annual audit by the Company's independent
auditors, Coopers & Lybrand L.L.P., the results of this audit, and the types of
services for which the Company retains Coopers & Lybrand L.L.P.
The Compensation Committee of the Board held four meetings during 1994. The
members of the Compensation Committee, none of whom is an employee of the
Company, are K. Frank Austen, M.D., Chairman; Michael E. Gellert; W. Ann
Reynolds, Ph.D.; and Irwin Lerner. Mr. Lerner became a member of the
Compensation Committee on March 10, 1994. David A. Jones, Jr., was a member of
the Compensation Committee from May 13, 1993, until March 1, 1994, when he
resigned. The functions of the Compensation Committee are to establish the
compensation of executive officers, including establishment of annual goals
under the Company's incentive compensation program, and to administer the stock
option, stock bonus, incentive compensation and retirement plans in which
executive officers of the Company participate.
The Investment Committee of the Board held two meetings during 1994. The
members of the Investment Committee, none of whom is an employee of the Company,
are W. Ann Reynolds, Ph.D., Chairwoman; Michael E. Gellert; John R. Hall and
David A. Jones, Jr. The functions of the Investment Committee are to establish
objectives and policies, ratify investments, and analyze the investment
performance decisions of the various funds, assets and portfolios of the
Company.
The Nominating Committee of the Board did not meet during 1994. The members
of the Nominating Committee, none of whom is an employee of the Company, are
John R. Hall, Chairman; K. Frank Austen, M.D.; David A. Jones, Jr. and W. Ann
Reynolds, Ph.D. The functions of the Nominating Committee include
5
<PAGE> 9
developing general criteria regarding the qualifications of nominees and
recommending to the full Board such nominees for election as directors. The
Nominating Committee will consider suggestions from stockholders regarding
possible director candidates. Such suggestions, together with appropriate
biographical information, should be submitted to the Secretary of the Company in
accordance with the provisions outlined in the Company's By-laws.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All members of the Compensation Committee are non-employee directors and
none has any direct or indirect material interest in or a relationship with the
Company, other than stockholdings as discussed above and as related to his or
her position as director. David A. Jones, Jr., is the son of David A. Jones,
Chairman of the Board and Chief Executive Officer of the Company. During 1994,
no member of the Compensation Committee had a relationship that would constitute
an interlocking relationship with executive officers or directors of another
entity.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who beneficially own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the "Commission") and the New York Stock Exchange,
reports of ownership and changes in ownership of Common Stock and other equity
securities of the Company. Executive officers, directors and greater than ten
percent stockholders are required to furnish the Company with copies of all such
forms they file. To the Company's knowledge, based solely upon review of copies
of such reports and written representations by such persons furnished to the
Company that no other reports were required during the year ended December 31,
1994, all executive officers, directors and greater than ten percent beneficial
owners of the Company's Common Stock complied with Section 16(a) filing
requirements applicable to the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS OF COMPANY COMMON STOCK
PRINCIPAL STOCKHOLDERS OF THE COMPANY
As of the Annual Meeting Record Date, the Company knows of no person who
may be deemed to own beneficially more than 5% of the outstanding Common Stock
except for:
<TABLE>
<S> <C> <C>
David A. Jones 8,416,752 shares 5.2%(2)
Chairman of the Board
and Chief Executive Officer
FMR Corp. 9,542,800 shares(1) 5.9%(2)
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
See "SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS," below.
---------------
(1) Based upon a Form 13G filed with the Commission for the period ended
December 31, 1994, FMR Corp. has sole power to vote 113,000 shares and sole
power to invest 9,542,800 shares.
(2) The percentage based on shares outstanding at March 17, 1995.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 1, 1995, certain information
with respect to the beneficial ownership of Common Stock by each director of the
Company, by each executive officer named in the
6
<PAGE> 10
Summary Compensation Table (see "EXECUTIVE COMPENSATION OF THE COMPANY"), and by
the Company's directors and executive officers as a group.
<TABLE>
<CAPTION>
COMPANY
COMMON STOCK
BENEFICIALLY
OWNED AS OF PERCENT
MARCH 1, 1995(1) OF CLASS(2)
---------------- -----------
<S> <C> <C>
K. Frank Austen, M.D.(3) 20,300
Michael E. Gellert(4) 125,700
John R. Hall(5) 21,788
David A. Jones, Jr.(6) 144,841
Irwin Lerner(7) 7,000
W. Ann Reynolds, Ph.D.(8) 22,400
David A. Jones(9) 8,416,752 5.2
Wayne T. Smith(10) 647,467
W. Roger Drury(11) 143,238
Karen A. Coughlin(12) 118,981
W. Larry Cash(13) 143,828
All directors and executive officers as a group
(15 in number, including those named above)(14) 10,140,050 6.2
</TABLE>
---------------
(1) Beneficial ownership of shares, for purposes of this Proxy Statement, as
determined in accordance with applicable Commission rules, includes shares
as to which a person has or shares voting and/or investment power. Except
as set forth in the next sentence and in the accompanying footnotes, these
individuals have sole voting power and sole investment power over the
shares beneficially owned by them. The number of shares shown does not
include: (i) the interest of certain persons in shares held by family
members in their own right, and (ii) shares held for the benefit of such
individuals by the Humana Retirement and Savings Plan (the "Retirement and
Savings Plan") on February 1, 1995, (the latest date for which such
information is available), over which the employee participant generally
has no voting or investment power. The number of shares shown, however,
does include: (i) shares held for the benefit of such individuals in the
Retirement and Savings Plan as of February 1, 1995, over which the employee
participant has no voting power but does have investment power, and (ii)
shares which may be acquired by such individuals through the exercise of
options, which are exercisable currently or within 60 days after March 1,
1995, under the Company's 1981 Non-Qualified Stock Option Plan, the 1989
Stock Option Plan for Employees and the 1989 Stock Option Plan for
Non-Employee Directors (collectively, the "Stock Option Plans"). In certain
circumstances such as a merger or reorganization, voting rights on all
shares pass to the individual plan participants in which case all
Retirement & Savings Plan shares could be deemed to be beneficially owned.
(2) Except for Mr. Jones, no individual director or executive officer owns more
than 1% of such class.
(3) Includes 19,600 shares that may be acquired by Dr. Austen through the
exercise of options which are currently exercisable or become exercisable
within 60 days after March 1, 1995, pursuant to the Company Stock Option
Plans.
(4) Includes 5,000 shares that may be acquired by Mr. Gellert through the
exercise of options which are currently exercisable or become exercisable
within 60 days after March 1, 1995, pursuant to the Company Stock Option
Plans. Excludes the following, over which Mr. Gellert has no voting or
investment power: 20,800 shares held by members of Mr. Gellert's family,
shares owned by Mr. Gellert's son who is past the age of majority, and
42,000 shares held in trusts for the benefit of Mr. Gellert's children.
7
<PAGE> 11
(5) Includes 15,000 shares that may be acquired by Mr. Hall through the
exercise of options which are currently exercisable or become exercisable
within 60 days after March 1, 1995, pursuant to the Company Stock Option
Plans. Also includes 200 shares held by Mr. Hall's wife.
(6) Includes 5,000 shares that may be acquired by Mr. Jones, Jr. through the
exercise of options which are currently exercisable or become exercisable
within 60 days after March 1, 1995, pursuant to the Company Stock Option
Plans. Also includes 2,000 shares held by Mr. Jones, Jr. as custodian for
his minor children over which he has sole voting and investment power.
Excludes 72 shares held by Mr. Jones, Jr.'s wife over which he has no
voting or investment power.
(7) Includes 5,000 shares that may be acquired by Mr. Lerner through the
exercise of options which are currently exercisable or become exercisable
within 60 days after March 1, 1995, pursuant to the Company Stock Option
Plans. Excludes 1,000 shares held by Mr. Lerner's wife over which he has no
voting or investment power.
(8) Includes 20,000 shares that may be acquired by Dr. Reynolds through the
exercise of options which are currently exercisable or become exercisable
within 60 days after March 1, 1995, pursuant to the Company Stock Option
Plans. Excludes 87 shares held by Dr. Reynolds' husband over which she has
no voting or investment power.
(9) Includes 38,000 shares that may be acquired by Mr. Jones through the
exercise of options which are currently exercisable or become exercisable
within 60 days after March 1, 1995, pursuant to the Company Stock Option
Plans. Excludes 652,175 shares held by Mr. Jones' wife over which Mr. Jones
has no voting or investment power. Also excludes shares owned by other
children of Mr. Jones who are past the age of majority over which Mr. Jones
has no voting or investment power. Also includes 196,822 shares held for
the benefit of Mr. Jones by the Retirement and Savings Plan on February 1,
1995, over which Mr. Jones has no voting power but does have investment
power, but excludes 72,894 shares held for his benefit by the Retirement
and Savings Plan on February 1, 1995, over which he has no voting or
investment power.
(10) Includes 380,714 shares that may be acquired by Mr. Smith through the
exercise of options which are currently exercisable or become exercisable
within 60 days after March 1, 1995, pursuant to the Company Stock Option
Plans. Excludes 2,550 shares held in trust for Mr. Smith's daughter over
which Mr. Smith has no voting or investment power, 105,000 shares held by
Mr. Smith's wife and 10,000 shares held by Mr. Smith's wife as custodian
for Mr. Smith's daughter over which Mr. Smith has no voting or investment
power. Also includes 54,200 shares held for the benefit of Mr. Smith by the
Retirement and Savings Plan on February 1, 1995, over which Mr. Smith has
no voting power but does have investment power, but excludes 22,441 shares
held for his benefit by the Retirement and Savings Plan on February 1,
1995, over which he has no voting or investment power.
(11) Includes 119,500 shares that may be acquired by Mr. Drury through the
exercise of options which are currently exercisable or become exercisable
within 60 days after March 1, 1995, pursuant to the Company Stock Option
Plans. Excludes 1,000 shares held by Mr. Drury's daughter over which Mr.
Drury has no voting or investment power. Also includes 6,738 shares held
for the benefit of Mr. Drury by the Retirement and Savings Plan on February
1, 1995, over which Mr. Drury has no voting power but does have investment
power, but excludes 7,999 shares held for his benefit by the Retirement and
Savings Plan on February 1, 1995, over which he has no voting or investment
power.
(12) Includes 105,250 shares that may be acquired by Ms. Coughlin through the
exercise of options which are currently exercisable or become exercisable
within 60 days after March 1, 1995, pursuant to the Company Stock Option
Plans. Excludes 500 shares held by Ms. Coughlin's daughter over which Ms.
Coughlin has no voting or investment power. Also includes 10,661 shares
held for the benefit of Ms. Coughlin by the Retirement and Savings Plan on
February 1, 1995, over which Ms. Coughlin has no voting power but does have
investment power, but excludes 2,144 shares held for her benefit by the
Retirement and Savings Plan on February 1, 1995, over which she has no
voting or investment power.
8
<PAGE> 12
(13) Includes 127,250 shares that may be acquired by Mr. Cash through the
exercise of options, which are currently exercisable or become exercisable
within 60 days after March 1, 1995, pursuant to the Company Stock Option
Plans. Also includes 9,078 shares held for the benefit of Mr. Cash by the
Retirement and Savings Plan on February 1, 1995, over which Mr. Cash has no
voting power but does have investment power, but excludes 11,800 shares
held for his benefit by the Retirement and Savings Plan on February 1,
1995, over which he has no voting or investment power.
(14) Includes 1,066,813 shares that may be acquired by all executive officers
and directors as a group upon the exercise of options which are currently
exercisable or become exercisable within 60 days after March 1, 1995,
pursuant to the Company Stock Option Plans. Also includes 301,627 shares
held for the benefit of all executive officers as a group by the Retirement
and Savings Plan on February 1, 1995, over which the executive officers
individually have no voting power but do have investment power, but
excludes 132,594 shares held for their benefit by the Retirement and
Savings Plan on February 1, 1995, over which they have no voting or
investment power.
9
<PAGE> 13
EXECUTIVE COMPENSATION OF THE COMPANY
CASH COMPENSATION
The following Summary Compensation Table sets forth the cash compensation
for services in all capacities earned for the past three calendar years to (i)
the Chairman of the Board and Chief Executive Officer of the Company at December
31, 1994, and (ii) each of the four other highest compensated executive officers
of the Company serving at December 31, 1994, (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION NUMBER OF
-------------------------------------- SECURITIES ALL
NAME AND OTHER ANNUAL UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION(1)
---------------------------------- ---- --------- --------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
David A. Jones 1994 $ 900,000 $ 900,000 $141,045(2) $ 362,038
Chairman of the Board and 1993 790,600 790,126 160,388(2) 569,597
Chief Executive Officer 1992 747,426 250,009 144,317(2) 126,866
Wayne T. Smith 1994 675,000 675,000 110,161(3) 117,306
President and Chief Operating 1993 484,615 483,849 82,452(3) 500,000 195,306
Officer 1992 404,615 135,329 71,025(3) 68,233
W. Roger Drury 1994 275,000 290,818 20,691(4) 35,000
Chief Financial Officer 1993 195,800 187,217 15,153(4) 250,000 49,586
1992 169,439 70,899 10,003(4) 25,724
Karen A. Coughlin 1994 275,000 275,000 12,721(5) 42,920
Senior Vice President -- 1993 223,269 216,227 88,008(5) 250,000 71,425
Region II 1992 214,289 130,817 53,461(5) 35,482
W. Larry Cash 1994 275,000 275,000 14,779(6) 35,059
Senior Vice President -- 1993 195,746 186,834 11,094(6) 250,000 54,441
Finance and Operations 1992 174,334 41,158 10,118(6) 26,176
</TABLE>
---------------
(1) All other compensation represents amounts contributed or accrued to the
Retirement and Savings Plan, Supplemental Executive Retirement Plan and
Thrift Excess Plan as follows:
<TABLE>
<CAPTION>
JONES SMITH DRURY COUGHLIN CASH
--------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1994
Retirement and Savings Plan............................... $ 14,076 $ 14,076 $ 14,076 $ 14,076 $ 14,076
Supplemental Executive Retirement Plan.................... 282,649 82,032 15,756 23,627 16,080
Thrift Excess Plan........................................ 65,313 21,198 5,168 5,217 4,903
--------- --------- -------- -------- --------
TOTAL 1994.............................................. $ 362,038 $ 117,306 $ 35,000 $ 42,920 $ 35,059
======== ======== ======= ======= =======
1993
Retirement and Savings Plan............................... $ 15,919 $ 15,919 $ 15,931 $ 20,609 $ 16,174
Supplemental Executive Retirement Plan.................... 492,306 149,250 27,035 40,119 31,503
Thrift Excess Plan........................................ 61,372 30,137 6,620 10,697 6,764
--------- --------- -------- -------- --------
TOTAL 1993.............................................. $ 569,597 $ 195,306 $ 49,586 $ 71,425 $ 54,441
======== ======== ======= ======= =======
1992
Retirement and Savings Plan............................... $ 16,534 $ 16,534 $ 16,557 $ 18,239 $ 17,043
Supplemental Executive Retirement Plan.................... 70,105 36,731 8,250 13,896 7,729
Thrift Excess Plan........................................ 40,227 14,968 917 3,347 1,404
--------- --------- -------- -------- --------
TOTAL 1992.............................................. $ 126,866 $ 68,233 $ 25,724 $ 35,482 $ 26,176
======== ======== ======= ======= =======
</TABLE>
(2) Other annual compensation for Mr. Jones includes Company-provided
transportation of $93,354, $120,675, and $108,605 for 1994, 1993, and 1992,
respectively. Mr. Jones also received Company-provided executive insurance
of $45,622, $38,018, and $34,152 in 1994, 1993 and 1992, respectively.
(3) Other annual compensation for Mr. Smith includes Company-provided
transportation of $62,903, $43,242, and $35,855 for 1994, 1993, and 1992,
respectively. Mr. Smith also received Company-provided executive insurance
of $45,622, $38,018, and $34,152 in 1994, 1993 and 1992, respectively.
10
<PAGE> 14
(4) Other annual compensation for Mr. Drury includes Company-provided
transportation of $19,776, $14,299, and $10,003 for 1994, 1993, and 1992,
respectively.
(5) Other annual compensation for Ms. Coughlin includes Company-provided
transportation of $11,806 for 1994. Ms. Coughlin also received tax
reimbursement related to Company-provided housing in the amount of $75,576
and $41,200 for 1993 and 1992, respectively.
(6) Other annual compensation for Mr. Cash includes Company-provided
transportation of $13,864, $10,241, and $10,118 for 1994, 1993, and 1992,
respectively.
1994 STOCK OPTION GRANTS
No stock options were granted to the Named Executive Officers during the
year ended December 31, 1994. Options totalling 2,466,500 shares were granted on
January 12, 1995 to key employees of the Company, excluding Mr. Jones, but
including the Named Executive Officers.
1994 OPTION EXERCISES AND YEAR-END VALUES
The following table provides information as to the year-end values of
unexercised options at December 31, 1994, by the Named Executive Officers. No
stock options were exercised in 1994 by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED "IN-THE-MONEY" OPTIONS
OPTIONS AT YEAR END AT YEAR END(1)
----------------------------- -----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David A. Jones 38,000 0 $ 521,178 $ 0
Wayne T. Smith 255,714 500,000 3,878,273 8,031,250
W. Roger Drury 57,000 250,000 830,986 4,015,625
Karen A. Coughlin 42,750 250,000 660,530 4,015,625
W. Larry Cash 64,750 250,000 929,391 4,015,625
</TABLE>
---------------
(1) The Value of Unexercised "In-the-Money" Options is based on the difference
between the December 30, 1994 (the last trading day of 1994), closing price
of the Company's Common Stock of $22.625, as reported on the New York Stock
Exchange Composite Tape, and the exercise price of the options.
OFFICERS' TARGET RETIREMENT PLAN
The Company also has in effect the Officers' Target Retirement Plan
("OTRP"), which is a non-qualified, unfunded plan providing supplemental
retirement benefits to each Company officer and other designated key employees.
11
<PAGE> 15
The following table illustrates the estimated maximum annual benefit which
would be payable at age 65 to a participant, at various average compensation
levels for specified years of credited service, under the OTRP:
ESTIMATED OTRP MAXIMUM ANNUAL BENEFIT AT AGE 65
FOR YEARS OF CREDITED SERVICE SHOWN(1)(2)
<TABLE>
<CAPTION>
AVERAGE RATE
OF
COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 75,000 $ 12,525 $ 18,788 $ 25,050 $ 31,313 $ 37,500
100,000 16,700 25,050 33,400 41,750 50,000
200,000 33,400 50,100 66,800 83,500 100,000
300,000 50,100 75,150 100,200 125,250 150,000
400,000 66,800 100,200 133,600 167,000 200,000
500,000 83,500 125,250 167,000 208,750 250,000
600,000 100,200 150,300 200,400 250,500 300,000
700,000 116,900 175,350 233,800 292,250 350,000
1,000,000 167,000 250,500 334,000 417,500 500,000
1,500,000 250,500 375,750 501,000 626,250 750,000
</TABLE>
---------------
(1) These estimates are based on the assumption that (a) the OTRP will be
continued under its present terms; (b) the participant will continue with
the Company until, and retire at, age 65; and (c) the participant elected to
receive an annual distribution instead of a lump sum payment.
(2) The amounts shown are subject to reductions with respect to benefits
received under the Retirement Account in the Retirement and Savings Plan,
the Supplemental Executive Retirement Plan and Social Security benefits.
Under the OTRP, the benefits will be based on salary and incentive
compensation. The maximum years of service credited under the OTRP is 30 years.
The years of service for each of the Named Executive Officers are as follows:
David A. Jones -- 33; Wayne T. Smith -- 21; W. Roger Drury -- 15; Karen A.
Coughlin -- 15; W. Larry Cash -- 21.
CERTAIN AGREEMENTS
Since April 1987, Mr. Jones has had an agreement, which in the event of
termination of employment other than for cause, the Company will continue to pay
him his base salary for one year following termination and any amounts earned
prior to such termination under any of the Company's Incentive Compensation
Plans. He is also entitled to continued coverage at the Company's expense during
the one-year period under the Company's life, health and disability plans.
Mr. Smith had a similar agreement. In November 1994, the Board deemed it in
the best interest of the Company to amend Mr. Smith's agreement. Mr. Smith's
agreement provides in the event of termination other than for cause or a Change
in Control (as defined in the agreement), that he will receive one times his
then current base salary, immediate vesting of any Company stock options,
immediate vesting under the OTRP, and continuation of life and health insurance
coverage to age 65. In the event of a Change in Control, Mr. Smith will receive
the benefit described above, however, any payments received under the Change in
Control Agreement will be offset by certain payments received under this
agreement.
The Company has entered into agreements with all officers, including the
Named Executive Officers, and key management employees which for a three year
period following a Change in Control provide certain benefits upon termination.
Such termination may be involuntary, generally as a result of a change in
responsibilities or compensation, or at the election of the employee during a
30-day period occurring one year after the Change in Control. Pursuant to the
agreements, these individuals, except Mr. Jones, are entitled to receive
severance pay which generally is determined by multiplying such individual's
annual base salary, and
12
<PAGE> 16
for all officers and certain key management employees, the maximum incentive
compensation payable to them, by a multiple which is three for Mr. Smith; two
for all Senior Vice Presidents and one other key employee; and one for all other
covered individuals. Approximately 110 individuals are covered by Change in
Control agreements (including 27 employees covered by Change in Control
agreements that include base salary and maximum incentive compensation). The
agreements also provide that if any funds received by these employees subject
them to a federal excise tax pursuant to Section 4999 of the Internal Revenue
Code, then the payments will be grossed up to permit them to receive a net
amount equal to what would have been received had the excise tax not been
imposed (the "Gross Up Payment"). Mr. Jones' agreement provides only for a Gross
Up Payment, if applicable.
In addition, in the event of a Change in Control of the Company, benefits
are payable under the Company's OTRP, Thrift Excess Plan, Supplemental Executive
Retirement Plan and the Stock Option Plans, and health, life and disability
insurance coverage is available.
CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
Effective May 17, 1994, the Company entered into an agreement with JAPC,
Inc. ("JAPC"), which is owned by David A. Jones, Chairman of the Board and Chief
Executive Officer of the Company. Pursuant to such agreement, the Company
provides hangar space, pilot services and maintenance for an airplane owned by
JAPC, and the Company may also use the JAPC pilots to fly Company-owned
aircraft. The rate paid for the hangar space is at least as favorable to the
Company as market rates for comparable space. The Company is fully reimbursed
for the cost of airplane maintenance. Prior to the execution of the agreement
and before JAPC employed its own pilots, JAPC paid Humana $22,600 for the use of
the Company's pilots. The agreement generally may be terminated by either party
upon 30 days' written notice. During the fiscal year ended December 31, 1994,
pursuant to the agreement, JAPC paid the Company $29,282.
In 1994, the Company made a commitment to invest $1 million in The
African-American Venture Capital Fund, Inc., a Kentucky Limited Liability
Company ("Fund"). This investment, completed in 1995, makes the Company a
greater than 10% owner of the Fund. David A. Jones, Chairman of the Board and
Chief Executive Officer of the Company made a similar investment in the Fund and
is a director, officer and greater than 10% stockholder of the Fund. The Fund
was established to provide capital and management resources to enhance the
growth and development of businesses owned by African-Americans living in the
metropolitan Louisville, Kentucky area.
During 1994, a subsidiary of the Company paid health insurance brokerage
commissions to a brokerage company owned and controlled by a brother-in-law and
a sister-in-law of Philip B. Garmon, Senior Vice President of the Company. The
arrangement with this company is comparable to those with other brokers in the
area. During 1994, the broker received commissions of $141,415.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board has furnished the following report
on executive compensation for 1994:
EXECUTIVE OFFICER COMPENSATION POLICIES AND 1994 RESULTS
The Compensation Committee administers the Company's executive officer
compensation program, which generally consists of base salary, incentive
compensation, other miscellaneous compensation and stock option awards. The
executive officer compensation program rewards executive officers for short and
long-term performance. The compensation program has also been designed to
attract and retain key executive officers. Executive officers are compensated in
the short-term on a performance oriented basis through the use of incentive
compensation which is awarded based on achieving annual Company goals. Stock
options are included in the compensation program to reward executive officers
for longer-term strategic actions which increase Company value. The use of stock
options in the compensation program links executive officer rewards to increases
in stockholder value.
13
<PAGE> 17
The executive officer compensation program is designed to allow the Company
to be competitive in the marketplace. The Compensation Committee considers the
entire compensation package when setting any one component of compensation.
BASE COMPENSATION
The Compensation Committee periodically evaluates Company executive officer
base compensation relative to the marketplace, with the assistance of outside
consultants. Generally, the marketplace is defined as both (1) general industry
companies near the Company's revenue size and (2) specific companies in the
managed care industry. The Compensation Committee believes this definition of
the marketplace reflects the talent pool from which the Company might draw, and
provides the benchmark for competitiveness for the Company's current executives.
Base compensation adjustments consider overall Company performance, executive
officer performance and changes in executive officer responsibilities. In
addition to these tangible performance measurements, the Compensation Committee
also evaluates executive officer contributions in such areas as employee
development, industry leadership and community involvement. The analysis of
executive officer performance is in part subjective, and does not lend itself to
weightings or formulas.
INCENTIVE COMPENSATION
The Company's incentive compensation plans are designed to reward all
officers and designated key employees for the attainment of financial goals and
other performance objectives established annually by the Compensation Committee.
The chief executive officer's and chief operating officer's incentive
compensation for 1994 was based on the attainment of Company consolidated net
income objectives. From 25% to 60% of incentive compensation for other executive
officers was based on the attainment of Company consolidated net income
objectives. In addition, certain officers, including in some cases the executive
officers, are assigned various regional or departmental goals, both financial
and otherwise. The Compensation Committee and management believe all of the
goals used in the determination of incentive compensation are important measures
reflective of the success of the Company.
Incentive compensation was earned for the year ended December 31, 1994.
During this period, the Company performed at its targets, resulting in 1994
payments at maximum for the chief executive officer, chief operating officer and
the other named executive officers.
STOCK OPTIONS
The Company uses stock options to reward executive officers for long-term
performance and as a method to attract and retain key executive officers. The
use of stock options in the executive officer compensation program also
encourages executive officers to obtain and hold Company stock, thus providing a
vital link between executive officers and Company stockholders. The amounts and
term of stock option awards are determined by the Compensation Committee through
review of stock option programs at companies in similar industries with the
assistance of outside consultants.
EXECUTIVE COMPENSATION TAX DEDUCTIBILITY
The Omnibus Budget Reconciliation Act of 1993 (the "Budget Act"), generally
provided that, commencing in 1994, compensation paid by publicly-held
corporations to the chief executive officer and the four most highly paid senior
executive officers in excess of $1 million per year per executive will be
deductible by the Company only if paid pursuant to qualifying performance-based
compensation plans approved by stockholders of the Company. Compensation as
defined by the Budget Act includes, among other things, base salary, incentive
compensation and gains on stock option transactions. The Company establishes
individual compensation based primarily upon Company performance and competitive
considerations in the industry in which the Company operates. As a result,
executive compensation may exceed $1 million in a given year. The Company
believes it has performed the necessary steps to qualify the Company's
performance-based compensation plans for tax deductibility.
14
<PAGE> 18
CHIEF EXECUTIVE OFFICER COMPENSATION
David A. Jones, Chairman of the Board and Chief Executive Officer of the
Company, received an increase in base salary to $900,000 effective January 1,
1994. With the assistance of outside consultants, the Compensation Committee
reviewed the base compensation for Mr. Jones by comparing base compensation of
chief executive officers in other managed care companies. The Compensation
Committee considered Mr. Jones' long distinguished leadership of the Company,
including various timely strategic changes in its direction, and the Company's
performance. The Compensation Committee also considered Mr. Jones' leadership at
the national level in formulating health care policy as well as his
distinguished civic involvement.
Mr. Jones' incentive compensation was based on the Company's attaining
consolidated net income objectives. These objectives were exceeded in 1994;
therefore, Mr. Jones earned the maximum possible incentive compensation amount
of 100% of his base compensation. Mr. Jones' base salary and incentive
compensation for 1994 were established by the Compensation Committee while his
son, David A. Jones, Jr., was a member of the Compensation Committee; however,
Mr. Jones, Jr. did not participate in these decisions. Mr. Jones, Jr. was a
member of the Compensation Committee until March 1, 1994, when he resigned.
Compensation Committee
K. Frank Austen, M.D., Chairman
Michael E. Gellert
Irwin Lerner
W. Ann Reynolds, Ph.D.
COMPANY STOCK PERFORMANCE
The following performance graph compares the performance of the Company's
Common Stock to the Standard & Poor's Composite 500 Stock Index and a Peer Group
(described below) for the 22 months ended December 31, 1994. The graph assumes
an investment of $100 in each of the Company's Common Stock, the Standard &
Poor's Composite 500 Stock Index and the Peer Group on March 1, 1993, and
reinvestment of all dividends. The investment in the constituent companies in
the Peer Group is weighted on the basis of the respective market capitalization
of each company as of the beginning of each year.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Humana Inc. S&P 500 Peer Group
<S> <C> <C> <C>
3/1/93 100 100 100
3/31/93 107 102 108
6/30/93 153 102 119
9/30/93 175 104 120
12/31/93 241 105 135
3/31/94 251 101 148
6/30/94 219 100 145
9/30/94 320 104 171
12/31/94 307 104 152
</TABLE>
15
<PAGE> 19
The Peer Group of managed care companies used for the graph above consists
of FHP International Corporation; Foundation Health Corporation; PacifiCare
Health Systems, Inc.; United Healthcare Corporation; U.S. Healthcare, Inc.; and
WellPoint Health Networks Inc.
The Company believes any comparisons of the price of the Company's Common
Stock before March 1, 1993, are misleading since the value of the Company's
Common Stock prior to that date included the value of the hospital business
which was distributed to the Company's stockholders in a spinoff transaction
("the Spinoff") to a separate publicly held company, Galen Health Care, Inc.
("Galen"). On March 1, 1993, the date on which the Spinoff was consummated, the
closing price of the post-Spinoff Common Stock was $7.75 and the closing price
of the common stock of Galen was $12.125. On February 26, 1993, the last trading
day prior to the consummation of the Spinoff, the closing price of historical
combined Humana common stock was $19.375.
OTHER INFORMATION
APPOINTMENT OF INDEPENDENT ACCOUNTANTS TO AUDIT THE COMPANY'S CONSOLIDATED
FINANCIAL STATEMENTS
The Board, in accordance with the recommendation of its Audit Committee,
the members of which are not employees of the Company, has appointed Coopers &
Lybrand L.L.P., as independent accountants to audit the consolidated financial
statements of the Company for the fiscal year ending December 31, 1995.
Representatives of Coopers & Lybrand L.L.P. will be present at the Annual
Meeting and will be afforded the opportunity to make a statement if they desire
to do so and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials relating to the
1996 Annual Meeting of Stockholders must be received by the Company no later
than December 8, 1995.
OTHER MATTERS
The Board of Directors does not intend to present any item of business at
the Annual Meeting other than those specifically set forth in the notice of the
meeting. However, if other matters are presented for a vote, the proxies will be
voted for such matters in accordance with the judgment of the persons acting
under the proxies.
By Order of the Board of Directors,
By: /s/ Joan O. Kroger
--------------------------------------
JOAN O. KROGER, Secretary
16
<PAGE> 20
HUMANA INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR 1995 ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints David A. Jones and Wayne T. Smith, and each of
them, their attorneys and agents, with full power of substitution to vote as
Proxy for the undersigned, as herein stated, at the annual meeting (the
"MEETING") of stockholders of Humana Inc. to be held in the Auditorium on the
25th Floor of the Humana Building, 500 West Main Street, Louisville, Kentucky on
Thursday, the 11th day of May, 1995 at 10 a.m., and at any postponements or
adjournments thereof, according to the number of votes the undersigned would be
entitled to vote if personally present on the proposals set forth below.
The Board of Directors recommends a vote FOR the following proposals:
1. FOR / / the election of K. Frank Austen, M.D., Michael E. Gellert, John R.
Hall, David A. Jones, David A. Jones, Jr., Irwin Lerner, W. Ann Reynolds,
Ph.D. and Wayne T. Smith as Directors except as indicated below, or WITHHOLD
AUTHORITY / / to vote for all nominees in such election. INSTRUCTION: TO
WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME ABOVE .
2. At their discretion, the Proxies are authorized to vote upon such other
matters as may come before the Meeting.
<PAGE> 21
<TABLE>
<C> <S>
THE SHARES COVERED BY THIS PROXY WILL BE VOTED AS SPECIFIED. PLEASE COMPLETE, DATE, SIGN
IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED AND RETURN THIS PROXY IN THE
IN FAVOR OF THE PROPOSALS. ACCOMPANYING ENVELOPE .
The undersigned hereby revokes any proxy heretofore given to vote Date: , 1995
or act with respect to the Meeting. _____________________________________
SIGNATURE
_____________________________________
SIGNATURE (if held jointly)
Signatures of stockholders should
correspond exactly with the names
shown on this proxy card. Attorneys,
trustees, executors, administrators,
guardians and others signing in a
representative capacity should
designate their full titles. When
shares are held by joint tenants,
both should sign. If a corporation,
please sign in full corporate name by
authorized officer. If a partner-
ship, please sign in partnership name
by authorized person.
</TABLE>
