<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 Rule 14a-11(c) or Rule 14a-12
CIGNA Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(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), or 14a-6(j)(2).
/ / $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 transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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- ---------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE> 2
[LOGO]
CIGNA Corporation
One Liberty Place
1650 Market Street
Philadelphia, PA
19192-1550
March 21, 1994
NOTICE OF 1994 ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of CIGNA Corporation:
The Annual Meeting of Shareholders of CIGNA Corporation will be held at The
Conference Center at Eagle Lodge, Ridge Pike & Manor Road, Lafayette Hill,
Pennsylvania on Wednesday, April 27, 1994, at 10:00 a.m. local time, for the
following purposes:
1. to elect two Directors for terms to expire in 1996 and four Directors
for terms to expire in 1997;
2. to ratify the appointment of independent accountants for 1994; and
3. to transact any other business that may properly come before the
meeting.
Shareholders of record at the close of business on March 3, 1994 are
entitled to notice of and to vote at the meeting or any adjournment thereof.
Directions to The Conference Center at Eagle Lodge are provided on the back
cover of the attached Proxy Statement.
Sincerely,
/s/ W. H. TAYLOR
--------------------
WILSON H. TAYLOR
Chairman and Chief
Executive Officer
By order of the Directors
/s/ CAROL J. WARD
- -----------------------------------
CAROL J. WARD, Corporate Secretary
EVEN THOUGH YOU MAY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE EXECUTE
THE ENCLOSED PROXY AND MAIL IT PROMPTLY. A RETURN ENVELOPE WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED FOR YOUR CONVENIENCE.
<PAGE> 3
CIGNA CORPORATION
ONE LIBERTY PLACE
1650 MARKET STREET
PHILADELPHIA, PA 19192-1550
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information..................................................................... 1
Ownership of CIGNA Corporation Common Stock
by Directors and Executive Officers........................................... 2
by Certain Beneficial Owners.................................................. 4
Item 1. Election of Directors........................................................... 4
Nominees for Election......................................................... 5
Incumbent Directors to Continue in Office..................................... 6
Board of Directors and Committees............................................. 7
Compensation of Directors..................................................... 8
Certain Transactions.......................................................... 9
Item 2. Ratification of Appointment of Independent Accountants.......................... 10
Item 3. Other Matters................................................................... 10
Vote Required........................................................................... 10
Executive Compensation.................................................................. 11
Performance Graph....................................................................... 17
Compliance With Section 16(a) of the Securities Exchange Act............................ 18
Additional Information.................................................................. 18
1995 Annual Meeting..................................................................... 18
</TABLE>
GENERAL INFORMATION
This Proxy Statement and the enclosed proxy card, which are first being
sent to Shareholders with the 1993 Annual Report on or about March 21, 1994,
relate to the Annual Meeting of Shareholders of CIGNA Corporation (the
"Corporation" or "CIGNA") to be held on Wednesday, April 27, 1994 (the "Annual
Meeting"). The Board of Directors of the Corporation (the "Board") is soliciting
your proxy for use at the Annual Meeting and at any adjournment thereof by
asking you to sign, date, and return the enclosed proxy card in the envelope
provided.
Shares represented at the Annual Meeting or any adjournment thereof by
valid proxies received pursuant to this solicitation will be voted in accordance
with each Shareholder's instructions. If the proxy card is signed and returned
without specific instructions, the shares will be voted as recommended by the
Board. A Shareholder may revoke a proxy at any time before its use by giving
written notice of revocation to the Corporate Secretary, by submitting a
subsequent proxy or by voting in person at the meeting.
It is the Corporation's policy that all voted proxies be handled in a
manner which protects those Shareholders who request voting privacy, and that
neither the identity of such Shareholder nor such Shareholder's votes will be
disclosed except: as necessary to meet any legal requirements; in limited
circumstances such as a contested election to the Board; to permit the
independent inspectors of election ("the Inspectors") to tabulate and certify
the vote; and to respond to Shareholders who have written comments on their
proxy cards. On an ongoing basis, the Inspectors will apprise the Corporation of
the total number of shares voted for, voted against or abstaining from voting on
each proposal and may tell the Corporation whether or not a particular account
has voted. The Inspectors may tell the Corporation how each account not
instructing confidentiality has voted. Except pursuant to one of the exceptions
described above, the Inspectors may not tell the Corporation how any account
instructing confidentiality has voted. Following the Annual Meeting, the
Inspectors will retain all proxy cards.
As of March 3, 1994, CIGNA had 72,064,338 shares of Common Stock
outstanding and entitled to vote. Each holder of Common Stock is entitled to one
vote for every share of Common Stock registered in that person's name on the
books of the Corporation at the close of business on March 3, 1994.
Each share of Common Stock includes a right to acquire Junior Participating
Preferred Stock, Series D.
<PAGE> 4
OWNERSHIP OF CIGNA CORPORATION COMMON STOCK
BY DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the beneficial ownership as of March 14, 1994, of
Common Stock, including shares as to which a right to acquire ownership exists
(e.g., stock options) within the meaning of Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934, as amended, by each Director and Nominee, by
the Chief Executive Officer and the four other Executive Officers named in the
table, and by all such persons and other Executive Officers (within the meaning
of Rule 3b-7) as a group. In addition to Common Stock ownership, the following
table also shows Equivalents held by non-employee Directors, as of March 14,
1994, under CIGNA's Deferred Compensation Plan for Directors as described in
footnote (10) to the table.
<TABLE>
<CAPTION>
NAME SHARES OF COMMON (1) EQUIVALENTS (10)
- ----------------------------------------------------- ------------------- ---------------
<S> <C> <C>
Directors and Nominee
Robert P. Bauman..................................... 2,762 (2) 2,373
Evelyn Berezin....................................... 3,552 (2) 600
Robert H. Campbell................................... 1,500 (2) 126
Alfred C. DeCrane, Jr................................ 2,320 (2) 4,248
James F. English, Jr................................. 3,500 (2) 1,612
Bernard M. Fox (Nominee)............................. 0 n/a
Frank S. Jones....................................... 1,500 (2) 1,921
Robert D. Kilpatrick................................. 7,466 (3) 277
Gerald D. Laubach.................................... 1,650 (2) 638
Marilyn W. Lewis..................................... 131 0
Paul F. Oreffice..................................... 4,316 (2,4) 198
Charles R. Shoemate.................................. 3,199 (2) 0
Louis W. Sullivan, M.D............................... 1,648 (2) 0
Wilson H. Taylor..................................... 113,969 (3,5) n/a
Hicks B. Waldron..................................... 3,414 (2) 600
Ezra K. Zilkha....................................... 57,653 (2,6) 0
Named Executive Officers
Lawrence P. English.................................. 37,540 (3,5) n/a
Gerald A. Isom....................................... 21,789 (3,5) n/a
James G. Stewart..................................... 53,216 (3,5) n/a
George R. Trumbull................................... 52,180 (3,5) n/a
Directors and Executive Officers as a group (27
persons)........................................... 500,187 (7,8,9) 12,593 (10)
</TABLE>
- ---------------
<TABLE>
<S> <C>
1 The percentage of shares beneficially owned by any Director or Nominee, or by all
Directors and Executive Officers as a group, does not exceed 1% of the outstanding shares
of Common Stock.
2 Includes 1,500 shares of restricted Common Stock awarded pursuant to the Restricted Stock
Plan for Non-Employee Directors of CIGNA Corporation.
3 Includes shares which may be acquired within 60 days upon the exercise of outstanding
stock options as follows: Mr. Kilpatrick -- 7,250, Mr. Taylor -- 37,500, Mr. L.P.
English -- 17,395, Mr. Isom -- 10,000, Mr. Stewart -- 18,695, and Mr. Trumbull -- 15,165.
Does not include shares subject to options which become exercisable on February 24, 1995
or thereafter.
4 Includes 500 shares held in a trust for his spouse.
5 Includes shares of restricted Common Stock awarded pursuant to the Executive Stock
Incentive Plan and CIGNA Corporation Stock Plan, the restrictions on which had not lapsed
as of March 14, 1994, as follows: Mr. Taylor -- 45,350, Mr. L.P. English -- 16,114, Mr.
Isom -- 11,789, Mr. Stewart -- 22,014, and Mr. Trumbull -- 21,474.
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C>
6 Includes 6,139 shares of Common Stock held by his spouse, of which shares Mr. Zilkha
disclaims beneficial ownership.
7 As of March 14, 1994, the CIGNA Pension Plan (the "Pension Plan") held a total of 897,500
shares of Common Stock, or approximately 1.24% of the then-issued and outstanding Common
Stock. The shares held by the Pension Plan are voted in accordance with the instructions
of an advisory committee consisting of members of CIGNA's management.
8 As of March 14, 1994, the CIGNA Stock Fund (the "Stock Fund") of the Corporation's
Savings and Investment Plus Plan (the "Savings Plan") held a total of 682,511 shares of
Common Stock, or approximately 0.94% of the then-issued and outstanding Common Stock. No
Executive Officers currently have any portion of their Savings Plan accounts invested in
the Stock Fund. All shares in the Stock Fund are owned by the Savings Plan Trustee;
however, each Stock Fund participant has pass-through voting rights for the number of
shares equivalent to the participant's interest in the Stock Fund. If participants do not
exercise their voting rights, the Savings Plan Trustee votes the shares in accordance
with the instructions of an advisory committee consisting of members of CIGNA's
management.
9 The Directors and Executive Officers as a group have sole voting and investment power
over all the shares of Common Stock they own beneficially, except shares held in trust
for immediate family members, or as described elsewhere in these notes. Shares
beneficially owned by Directors and Executive Officers include 159,177 shares of Common
Stock which may be acquired upon exercise of stock options and 196,725 shares which are
restricted as to disposition.
10 As of March 14, 1994, Directors also held 12,593 Common Stock equivalent units
("Equivalents") under CIGNA's Deferred Compensation Plan for Directors. Deferred
compensation that otherwise would be paid in shares of Common Stock is hypothetically
invested in an equal number of Equivalents. An amount equal to cash dividends that would
have been paid on Common Stock is deemed to have been paid on such Equivalents and deemed
to be invested as if it were deferred cash compensation. Equivalents track the economic
performance of Common Stock, but carry no voting rights. At a future date or dates
selected by each participant prior to deferral, deferred compensation is payable only in
cash.
</TABLE>
3
<PAGE> 6
OWNERSHIP OF CIGNA CORPORATION
COMMON STOCK BY CERTAIN BENEFICIAL OWNERS
The Corporation has no information that any person or concern beneficially
owns more than five percent of its outstanding Common Stock except as reported
on three Schedules 13G (reporting December 31, 1993 ownership) filed pursuant to
the Securities Exchange Act of 1934, as amended, and received by the Corporation
during February 1994. The following table and footnotes are prepared in reliance
upon such filings:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT OF
REPORTED ON SCHEDULES CLASS AS OF
NAME AND ADDRESS OF BENEFICIAL OWNER 13G AS OF 12/31/93 12/31/93
- --------------------------------------------------------- ------------------------ -----------
<S> <C> <C>
Wellington Management Company ("Wellington") 6,846,500(1) 9.51%
75 State Street
Boston, MA 02109
Sanford C. Bernstein & Co., Inc. ("Bernstein") 6,319,407(2) 8.78%
One State Street Plaza
New York, NY 10004
The Windsor Funds, Inc. ("Windsor") 6,050,100(3) 8.40%
Vanguard Financial Center (also included in
Valley Forge, PA 19482 Wellington total above)
</TABLE>
- ---------------
1 Wellington reported that as of December 31, 1993 these shares were
beneficially owned by its investment advisory clients, including Windsor.
Wellington also reported shared dispositive power as to 6,846,500 of these
shares (which includes the 6,050,100 shares reported by Windsor) and shared
voting power as to 230,400 of these shares.
2 Bernstein reported that as of December 31, 1993 it held these shares for the
accounts of discretionary clients who have the right to receive dividends on
these shares and any proceeds from the sale of these shares. Bernstein also
reported sole voting power as to 3,508,910, and sole dispositive power as to
6,319,407, of these shares.
3 Windsor reported that as of December 31, 1993, it had shared dispositive power
and sole voting power as to these shares.
In their Schedules 13G, Bernstein, Wellington and Windsor represented that
the shares reported were acquired in the ordinary course of business, and that
they were not acquired for the purpose of, and do not have the effect of,
changing or influencing the control of the Corporation.
ITEM 1. ELECTION OF DIRECTORS
The Board is divided into three classes of Directors. The By-laws of the
Corporation provide that at each annual election, Directors shall be chosen by
class for a term of three years, or for such shorter term as the Shareholders
may specify to preserve, as evenly as practicable, the division of Directors
into classes. Pursuant to the By-laws, the Board has set two as the number of
Directors to be elected at the Annual Meeting for terms ending in April 1996 and
four as the number of Directors to be elected for terms ending in April 1997 or,
in each case, until their respective successors shall have been elected and
qualified.
The Board recommends election of the five incumbent Nominees and one
additional Nominee identified below for terms to expire in 1996 and 1997 as
indicated below. All of the incumbent Nominees' current terms will expire on the
date of the 1994 Annual Meeting. The Board knows of no reason why any Nominee
will be unavailable or unable to serve. If any Nominee should become unavailable
or unable to serve, the persons named as proxies on the proxy card will vote for
the person or persons the Board recommends, if any.
The Board has set 70 years as the retirement age for non-employee Directors
and for any Director serving as the Chief Executive Officer of the Corporation.
In addition, each non-employee Director is required to submit a resignation to
the Board upon discontinuing the principal position or identification which
prevailed at the time of such Director's most recent election to the Board.
4
<PAGE> 7
Set forth below is information about each Nominee and continuing Director,
including business history for at least five years, age as of the date of this
Proxy Statement, other directorships held and period of service as a Director of
the Corporation or a predecessor company, including Connecticut General
Corporation ("CGC"), Connecticut General Life Insurance Company ("CG Life"), INA
Corporation ("INA") and Insurance Company of North America ("ICNA").
NOMINEES FOR ELECTION FOR TERMS EXPIRING IN APRIL 1996
BERNARD M. FOX, 51 Nominee
Trustee and President of Northeast Utilities since 1986, and its Chief
Executive Officer since 1993. Mr. Fox served Northeast Utilities as Chief
Operating Officer from 1987 to 1993 and as Chief Financial Officer from 1986 to
1989. He also serves as a Director and CEO of its principal subsidiaries. In
addition, Mr. Fox serves as a Director and as President of Connecticut Yankee
Atomic Power Company, as Chairman of the Board of The Institute of Living, and
as a Director of Shawmut Bank Connecticut, N.A., Shawmut Bank, N.A., Shawmut
National Corp., The Dexter Corporation, Mount Holyoke College and The
Connecticut Business and Industry Association.
MARILYN W. LEWIS, 50 Director since October, 1993
Chairman of American Water Works Company, Inc. (an investor-owned water
supplier) since 1988 and a director since 1982. Prior to her election as
Chairman, Ms. Lewis served for four years as Vice Chairman. From 1987 until
January 1992, Ms. Lewis served as President of KLS Educational Systems, Inc.
(specialized education consultants). She is also a Director of Penn Fuel Gas
Company, Inc. and South Jersey Industries, Inc.
NOMINEES FOR ELECTION FOR TERMS EXPIRING IN APRIL 1997
ALFRED C. DECRANE, JR., 62 Director since 1980
Chairman of the Board (since 1987) and Chief Executive Officer (effective
April 1993) of Texaco Inc. (integrated oil, gas and chemical manufacturer),
having served Texaco Inc. as a Director since 1977, and as its President from
1983 through 1986. Between 1970 and 1983, Mr. DeCrane served Texaco Inc. in
various other positions. He also serves as a Director of Dean Witter, Discover &
Co.
FRANK S. JONES, 65 Director since 1975
Ford Professor Emeritus of Urban Affairs, Massachusetts Institute of
Technology (educational institution); Ford Professor of Urban Affairs from 1970
to 1992. Professor Jones also serves as a Director of Capital Cities/ABC, Inc.,
Polaroid Corporation and Scientific Games Holdings Corporation.
PAUL F. OREFFICE, 66 Director since 1979
Retired Chairman of the Board of The Dow Chemical Company (manufacturer of
chemicals, metals, plastics and other products). Mr. Oreffice served as Chairman
of the Board of Dow Chemical from 1986 through November 1992, as President and
Chief Executive Officer from 1978 to 1987, and as a Director from 1971 through
November 1992. Mr. Oreffice also serves as a Director of The Coca-Cola Company,
Morgan Stanley Group Inc. and Northern Telecom, Ltd., and as a member of the
International Advisory Board of Marsh & McLennan.
WILSON H. TAYLOR, 50 Director since 1988
Chairman of the Board, Chief Executive Officer and President of the
Corporation. Mr. Taylor has served as Chairman of the Board since November 1989,
as Chief Executive Officer since November 1988, and as President since May 1988.
Between 1964 and 1988, he held various positions with the Corporation and its
predecessor and subsidiary companies.
5
<PAGE> 8
INCUMBENT DIRECTORS TO CONTINUE IN OFFICE
FOR TERMS EXPIRING IN APRIL 1995
ROBERT P. BAUMAN, 62 Director since 1990
Chief Executive and a Director of SmithKline Beecham plc (manufacturer of
pharmaceuticals and healthcare products) since 1989. Mr. Bauman was Chairman of
the Board and Chief Executive Officer of Beecham Group plc from 1986 to 1989,
and was Vice Chairman of Textron, Inc. (aerospace technology, commercial
products and financial services) from 1985 to 1986. He is a Director of Capital
Cities/ABC, Inc., Reuters Holdings, p1c and Union Pacific Corporation. (British
Aerospace plc has announced that Mr. Bauman will assume the position of chairman
of that company effective May, 1994 following his retirement from SmithKline
Beecham plc.)
ROBERT H. CAMPBELL, 56 Director since 1992
Chairman, Chief Executive Officer and President of Sun Company, Inc.
(domestic refining and marketing of branded petroleum products) since 1992. Mr.
Campbell was elected a Director and an Executive Vice President in 1988. He
became Group Vice President, Refining and Marketing, and President of Sun
Company's domestic refining and marketing subsidiary in 1983, having previously
served in various capacities at Sun since 1960. Mr. Campbell is also a Director
of CoreStates Financial Corp.
CHARLES R. SHOEMATE, 54 Director since 1991
Chairman of the Board, President and Chief Executive Officer of CPC
International, Inc. (consumer foods) since 1990. Mr. Shoemate has served as a
Director of CPC International since 1988. Prior to his election as President in
1988, Mr. Shoemate served as Vice President of CPC International and President
of the Corn Refining Division. Mr. Shoemate joined CPC International in 1962 and
progressed through a variety of positions in manufacturing, finance and business
management.
LOUIS W. SULLIVAN, M.D., 60 Director since 1993
President, Morehouse School of Medicine (educational institution). Dr.
Sullivan became the first President of Morehouse School of Medicine in 1981 when
it became independent from Morehouse College, and has held that position since
1981 except for March 1989 to January 1993, when he served as Secretary of
Health and Human Services of the United States. Dr. Sullivan is a Director of
Bristol-Myers Squibb Company, General Motors Corporation, Household
International, Inc., Medical Review Systems, Inc., Minnesota Mining &
Manufacturing Co. and Georgia Pacific Company.
INCUMBENT DIRECTORS TO CONTINUE IN OFFICE
FOR TERMS EXPIRING IN APRIL 1996
EVELYN BEREZIN, 68 Director since 1977
Venture Capital Consultant since 1987. President of Greenhouse Management
Corporation (venture capital investment fund) from 1981 to 1987. Previously, Ms.
Berezin had two years of service with Burroughs Corporation and nine years of
service as President of Redactron Corporation, now part of Unisys Corporation.
She also is a Director of DNA Plant Technology Corporation, Moltech Corporation
and Standard Microsystems Corporation.
JAMES F. ENGLISH, JR., 67 Director since 1962
President Emeritus of Trinity College (educational institution). Mr.
English was President of Trinity College from 1981 until 1989 and Vice President
for Finance and Planning from 1977 to 1981. Before that he had twenty-six years
of service with CBT Corporation and its affiliates. He also serves as a Director
of Connecticut Natural Gas Corporation and Fleet Bank of Connecticut, N.A.
6
<PAGE> 9
GERALD D. LAUBACH, 68 Director since 1974
Retired President of Pfizer Inc. (pharmaceutical manufacturer). Dr. Laubach
was President of Pfizer Inc. from 1972 to 1991 and a Director from 1968 to 1991.
He serves as a Director of Affymax, N.V., DNA Plant Technology Corporation and
Millipore Corporation.
EZRA K. ZILKHA, 68 Director since 1968
President and Director of Zilkha & Sons, Inc. (investment company) since
1956. He was President and Director of Zilkha Corporation (consulting firm) from
1979 to 1988. Mr. Zilkha also serves as President of 3555 Intermediate Corp. He
is a Director of Cambridge Associates, Chicago Milwaukee Corporation, Fortune
Bancorp, Milwaukee Land Company and Newhall Management Company (a California
limited partnership).
BOARD OF DIRECTORS AND COMMITTEES
The Board held eight meetings during 1993. All of the incumbent Directors
attended at least 88% of the total number of meetings of the Board and
committees on which they served.
The Board has seven standing committees:
EXECUTIVE COMMITTEE
Wilson H. Taylor (Chairman), Robert D. Kilpatrick, Gerald D. Laubach and
Hicks B. Waldron are members of the Executive Committee, which did not meet
during 1993. The function of the Committee is to exercise the authority of the
Board of Directors in the management of the business of the Corporation between
regular meetings of the Board.
AUDIT COMMITTEE
The members of the Audit Committee are James F. English, Jr. (Chairman),
Robert P. Bauman, Frank S. Jones, Marilyn W. Lewis (since January 1994) and
Charles R. Shoemate. The Audit Committee met five times in 1993. The Committee's
responsibilities include: reviewing and reporting to the Board on the
appropriateness of the Corporation's accounting policies, the adequacy of its
financial controls and the reliability of the Corporation's financial
information reported to the public; recommending independent accountants for
appointment by the Board; reviewing and approving the plans for audits by the
independent accountants and the Corporation's internal auditors; reviewing and
advising the Board concerning the work of internal auditors and independent
accountants; reviewing and approving the Corporation's Annual Report on Form
10-K; and reviewing and advising the Board with respect to the Corporation's
special exposures.
COMMITTEE ON DIRECTORS
Hicks B. Waldron (Chairman), Robert P. Bauman, Alfred C. DeCrane, Jr., and
Gerald D. Laubach are members of the Committee on Directors, which held four
meetings and acted once by written unanimous consent in 1993. The Committee
reviews, reports to the Board and makes recommendations, as appropriate, with
respect to the structure, membership, organization, effectiveness, performance
and compensation of the Board. It also makes recommendations to the Board
concerning nominations of persons for election to the Board to be made by or at
the direction of the Board. The Committee considers suggestions from
Shareholders and other sources as to possible nominees. Such suggestions should
be submitted to the Corporate Secretary not later than November 21, 1994 for the
Committee's consideration in advance of the 1995 Annual Meeting.
FINANCE COMMITTEE
The members of the Finance Committee are Paul F. Oreffice (Chairman),
Evelyn Berezin, Robert D. Kilpatrick and Ezra K. Zilkha. The Committee held four
meetings in 1993. The Committee reviews, advises and reports to the Board on the
management of the Corporation's financial resources, and on the Corporation's
annual capital plan and budget, Shareholder dividends and capital position. It
also acts upon proposed capital commitments of such amounts as are established
by the Board.
7
<PAGE> 10
INVESTMENT COMMITTEE
Ezra K. Zilkha (Chairman), James F. English, Jr., Frank S. Jones, Robert D.
Kilpatrick and Hicks B. Waldron are members of the Investment Committee, which
held seven meetings in 1993. The Committee reviews and reports to the Board on
the management of and has the authority to approve or provide for approval
through delegation to management or investment advisers or both the investments
of the Corporation, its subsidiaries, and investment advisory clients, as well
as investments for syndication, and approves and monitors the implementation of
applicable investment policies and guidelines.
PEOPLE RESOURCES COMMITTEE
The members of the People Resources Committee are Alfred C. DeCrane, Jr.
(Chairman), Robert H. Campbell, Paul F. Oreffice and Louis W. Sullivan, M.D. The
Committee held six meetings in 1993. The Committee reviews and reports to the
Board on the management of the Corporation's human resources, including
personnel policies and policy controls, the development of people, and
compensation and benefit programs and plans. It reviews and approves, subject to
Board ratification, executive compensation plans and targets and payouts
thereunder, any compensation plans which involve the issuance of equity
securities of the Corporation, and as required by law, adoption of and changes
to qualified benefit plans. It sets the compensation of the CEO, subject to
Board ratification, approves the compensation of other senior executives, and
makes stock-related awards. The Committee also reviews succession plans for the
Corporation's principal Executive Officers.
PUBLIC ISSUES COMMITTEE
The members of the Public Issues Committee are Gerald D. Laubach
(Chairman), Evelyn Berezin, Robert H. Campbell, Marilyn W. Lewis (since January
1994), Charles R. Shoemate and Louis W. Sullivan, M.D. The Committee held three
meetings and acted once by written unanimous consent in 1993. The Committee
oversees the Corporation's positions on significant issues in community affairs,
government relations, corporate public affairs and other matters of public
interest. The Committee also approves the Corporation's contributions policy and
budget. In addition, the Committee approves policies and procedures governing
the voting on socio-political proposals received by the Corporation and its
subsidiaries as shareholders of other companies.
COMPENSATION OF DIRECTORS
Each non-employee Director receives an annual retainer of $26,000 for
service on the Board, $8,000 of which is either paid in shares of Common Stock
or deferred into Equivalents as described in footnote (10) on page 3 and
ultimately paid in cash. The Chairman of each standing committee (except the
Executive Committee) receives an additional $7,500 annual retainer, except for
the Chairman of the Investment Committee, who receives an annual retainer of
$17,500. Non-employee members, but not the Chairman, of each Committee of the
Board receive an additional $2,500 annual retainer for service on each Committee
(except the Executive Committee), and are also paid $1,250 for each Board
meeting and $1,250 for each committee meeting attended.
In addition to the $8,000 which is either paid in shares of Common Stock or
deferred, Directors may elect to receive payment of retainers and meeting fees
in cash or in shares of Common Stock, or partially in cash and partially in
shares of Common Stock, and may also elect to defer all or part of their
compensation under CIGNA's Deferred Compensation Plan for Directors. Currently,
deferred cash compensation is credited with interest at the same rate paid on
participant contributions to the Fixed Income Fund of the Savings Plan.
Compensation deferred into Equivalents is invested as described in footnote
(10), page 3.
Non-employee Directors are eligible to participate in the financial
planning services available to CIGNA executives, in life insurance,
medical/dental care, and property/casualty personal lines insurance programs and
matching gift programs similar to those available to CIGNA employees.
Non-employee Directors also receive travel accident coverage of $100,000.
Directors who elected to do so prior to December 20, 1982
8
<PAGE> 11
participate in a life insurance program which was available to CGC employees
prior to the combination of CGC and INA.
Pursuant to the terms of the Restricted Stock Plan for Non-Employee
Directors of CIGNA Corporation, which was approved by the Shareholders in 1989,
each non-employee Director who has served for at least six months and was not an
officer or employee of the Corporation or any of its subsidiaries during the ten
preceding years receives a one-time grant of 1,500 shares of Common Stock. The
shares are subject to transfer restrictions until the later of 1) six months
after the date of grant or 2) the date on which service as a Director of the
Corporation terminates due to death, disability, retirement or a change of
control. The shares are forfeited if the Director's service terminates for any
other reason, except as may be otherwise provided by a majority of the other
members of the Board. If one of the termination of service conditions has been
met, the former Director or his or her estate receives all such shares of Common
Stock without restriction. During the restricted period, stock certificates are
held in custody by the Corporation. However, commencing on the date of grant,
the Director has other rights and privileges of a Shareholder as to such Common
Stock, including the right to receive dividends and to vote the shares.
Directors are covered by a Directors' Retirement and Consulting Plan
("Retirement and Consulting Plan"). The Retirement and Consulting Plan provides
Directors who retire at age 60 or older with at least five years of service
annual payments equal to the annual retainer in effect at the time of the
Director's retirement. Payment is conditioned on the Director's not competing
with CIGNA and being available to provide consulting services. A Director who
retires at the mandatory retirement age, currently age 70, will receive such
payments for the remainder of the Director's life. A Director who retires prior
to the mandatory retirement age will receive such payments for a period equal to
the number of months such Director served as a Director of CIGNA or a
predecessor company, or such Director may request the Committee on Directors'
approval to receive such payments in a lump sum equal to the discounted value of
such payments. In all cases, payments will be reduced by any other pension or
retirement benefits on account of service as a Director or employee of CIGNA or
a predecessor company.
CERTAIN TRANSACTIONS
In the ordinary course of business, various CIGNA companies: provided a
variety of insurance coverages, health care services, pension contracts, and
related products and services to; purchased, held, and sold debt instruments
issued or guaranteed by; and engaged in other transactions with corporations (or
their subsidiaries) of which CIGNA Directors were executive officers or major
shareholders during 1993. It is expected that similar transactions involving
varying amounts will occur in 1994. In addition, various CIGNA Directors and
Executive Officers have purchased insurance products or interests in investment
vehicles marketed by CIGNA companies in the ordinary course of business.
Also in the ordinary course of business, various CIGNA companies engaged in
transactions with beneficial owners of more than five percent of the
Corporation's outstanding Common Stock (please see page 4 for information about
these entities). An affiliate of Windsor paid The Conference Center at Eagle
Lodge, a CIGNA facility, approximately $175,000 for the use of those facilities.
CIGNA companies provided Windsor with pension services for which CIGNA companies
were paid approximately $41,000. On various occasions and in various amounts (up
to approximately $64,020,000), Bernstein purchased short-term negotiable
unsecured promissory notes ("commercial paper") issued by the Corporation. CIGNA
companies paid Bernstein approximately $79,000 in brokerage commissions. CIGNA
companies provided Wellington a variety of health care and pension services for
which CIGNA companies were paid approximately $64,000.
Management believes that the above transactions were on terms as favorable
to the Corporation as if the transactions had involved unaffiliated persons or
organizations.
9
<PAGE> 12
ITEM 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The Board, on the recommendation of its Audit Committee, has appointed
Price Waterhouse as independent accountants for 1994. Although ratification by
the Shareholders is not required, the Board requests that Shareholders ratify
this appointment. If ratification is not obtained, the Board will reconsider the
appointment.
Price Waterhouse has served as independent accountants for CIGNA and its
subsidiaries since 1983, and for CGC and its subsidiaries since 1967.
The Corporation has been advised that representatives of Price Waterhouse
will be present at the Annual Meeting. They will be afforded the opportunity to
make a statement, should they desire to do so, and to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
ITEM 3. OTHER MATTERS
The Board of Directors knows of no matters other than the election of
Directors and ratification of the appointment of independent public accountants
for 1994 to be brought before the Annual Meeting. If other matters are properly
presented to Shareholders for a vote at the meeting, it is intended that the
persons named as proxies on the proxy card will have discretionary authority, to
the extent permitted by law, to vote on such matters in accordance with their
best judgment.
VOTE REQUIRED
The Corporation's By-laws provide that the holders of two-fifths of the
issued and outstanding stock of the Corporation entitled to vote at the Annual
Meeting present in person or represented by proxy will constitute a quorum and
that the vote of such Shareholders who hold a majority of the voting power at
the Annual Meeting will decide any question brought before the Annual Meeting,
unless otherwise provided by statute or the Corporation's Restated Certificate
of Incorporation or By-laws.
The Nominees for election as Directors at the Annual Meeting who receive
the greatest number of votes cast will be elected as Directors. The appointment
of auditors will be ratified by the affirmative vote of a majority of the shares
present in person or represented by proxy at the meeting and entitled to vote
thereon.
Where the quorum requirements set forth above are met, broker non-votes
will have no effect on the outcome of the election of Directors or the
ratification of the appointment of auditors, and abstentions will have no effect
on the outcome of such election but will have the same effect as a negative vote
with respect to the ratification of the appointment of auditors.
10
<PAGE> 13
EXECUTIVE COMPENSATION
The following information is furnished for the Company's Chief Executive
Officer ("CEO") and each of the four most highly compensated Executive Officers
other than the CEO at the end of 1993 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------------
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
---------------------------- -------------------------- ---------
(a) (b) (c) (d) (f) (g) (h) (i)
SECURITIES
NAME RESTRICTED UNDERLYING ALL OTHER
AND STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL SALARY BONUS AWARD(S) SARS PAYOUTS SATION
POSITION YEAR ($) ($) ($)(2) (#) ($) ($)(3)
- ------------------------------------- ---- ------- ------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Wilson H. Taylor..................... 1993 790,000 0 1,271,581 18,000 0 53,567
Chairman and 1992 774,400 265,000 166,406 25,000 1,130,300 55,300
Chief Executive Officer 1991 708,500 500,000 326,231 0 698,500 33,300
Lawrence P. English.................. 1993 413,500 300,000 570,625 6,950 0 25,104
President, CIGNA 1992 350,900 220,000 83,336 12,520 498,400 24,400
HealthCare 1991 242,300 155,000 74,494 0 110,000 11,700
George R. Trumbull................... 1993 385,000 185,000 570,625 6,950 0 27,178
President, CIGNA Individual 1992 385,000 125,000 83,336 9,390 498,400 26,500
Insurance 1991 382,300 165,000 172,106 0 322,850 14,200
Gerald A. Isom (4).................... 1993 387,300 175,000 654,372 20,000 0 50,000
President, CIGNA
Property & Casualty
James G. Stewart..................... 1993 450,000 0 570,625 6,950 0 32,051
Executive Vice President 1992 440,900 130,000 83,336 12,520 498,400 31,500
and Chief Financial Officer 1991 405,600 285,000 172,106 0 322,850 17,300
</TABLE>
- ---------------
1 Pursuant to SEC rules, column (e) has been omitted because there was no "Other
Annual Compensation" to report.
2 Of the restricted stock shown in column (f) for 1993, the following numbers of
shares were granted in 1993 and will vest in 1998: Mr. Taylor, 2,780 shares;
each of Messrs. L.P. English, Trumbull and Stewart, 1,390 shares; and Mr.
Isom, 2,780 shares. In addition, the following numbers of shares were awarded
in 1994 under the Performance Plan described on page 13 for the three year
performance period ended in 1993, and will vest in March of 1995: Mr. Taylor,
17,595 shares; and each of Messrs. L. P. English, Trumbull, Isom, and Stewart,
7,759 shares. The Named Executive Officers held the following aggregate shares
of restricted stock, with the following values, at December 31, 1993: Mr.
Taylor, 24,455 shares valued at $1,534,551; Mr. L.P. English, 7,105 shares at
$445,839; each of Messrs. Trumbull and Stewart, 12,505 shares at $784,689; and
Mr. Isom, 2,780 shares at $174,445. Dividends are paid on shares of restricted
stock.
3 Includes the value of benefits under CIGNA's Financial Services Program
(covering financial planning, tax preparation and legal services related to
financial and estate planning) and CIGNA's contributions under its savings
plans, which, for 1993, were as follows: Mr. Taylor, $14,150 and $39,417; Mr.
L.P. English $9,458 and $15,646; Mr. Trumbull, $10,168 and $17,010; and Mr.
Stewart, $9,600 and $22,451, respectively. The amount shown for Mr. Isom was
in connection with commencement of his employment with CIGNA.
4 Mr. Isom's employment with CIGNA began on March 11, 1993. He will be paid a
salary at no less than the rate shown in the table, annualized, until March
1996.
11
<PAGE> 14
OPTION GRANTS TABLE
The following table provides additional information about the stock options
shown in column (g) of the Summary Compensation Table on page 11, which were
granted in 1993 to the Named Executive Officers.
OPTION GRANTS IN FISCAL YEAR 1993(1)
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
- -------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS EXERCISE GRANT
UNDERLYING GRANTED TO OR BASE EXPIRA- DATE
OPTIONS EMPLOYEES PRICE TION PRESENT
NAME GRANTED(#)(2) IN 1993 ($/SH) DATE VALUE($)(3)
- -------------------------------------------------- ------------- ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C>
Wilson H. Taylor.................................. 18,000 9.9% 59.6250 2/24/03 202,860
Lawrence P. English............................... 6,950 3.8% 59.6250 2/24/03 78,327
George R. Trumbull................................ 6,950 3.8% 59.6250 2/24/03 78,327
Gerald A. Isom.................................... 20,000 11.0% 59.6250 2/24/03 225,400
James G. Stewart.................................. 6,950 3.8% 59.6250 2/24/03 78,327
</TABLE>
- ---------------
1 Stock appreciation rights ("SARs") were not granted in 1993.
2 Options on one half of the shares granted to each executive became exercisable
on February 24, 1994; options on the remainder become exercisable on February
24, 1995.
3 Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The following assumptions were used in calculating
the grant date present value: price volatility for CIGNA stock of .2909, an
annualized risk-free interest rate of 6.26%, a dividend yield of 5.79%, with
exercise at the end of the 10 year term. The calculation also reflects a 3%
discount per year for risk of forfeiture over the two year vesting schedule.
The actual value, if any, an executive may realize will depend on the excess
of the stock price on the date the option is exercised over the exercise
price, so that there is no assurance the value realized by an executive will
be at or near the value estimated by the Black-Scholes model. The Company
believes that no model accurately predicts the future price of CIGNA's stock
or places an accurate present value on stock options.
OPTION/SAR EXERCISES AND
FISCAL YEAR-END VALUE TABLE
The following table provides information about SARs exercised during 1993
and about unexercised stock options and SARs held by the Named Executive
Officers at the end of 1993.
AGGREGATED OPTIONS/SAR EXERCISES IN FISCAL YEAR 1993 AND
1993 FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF SECURITIES
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
SECURITIES OPTIONS/SARS AT 1993 THE-MONEY OPTIONS/SARS AT
UNDERLYING YEAR-END(#) 1993 YEAR-END($)
OPTIONS/SARS VALUE ---------------------------- ----------------------------
NAME EXERCISED(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Wilson H. Taylor............... 7,000 $ 103,250 16,000 30,500 $ 113,250 $ 167,969
Lawrence P. English............ 0 0 7,660 13,210 55,949 77,668
George R. Trumbull............. 2,300 28,175 6,995 11,645 41,962 63,680
Gerald A. Isom................. 0 0 0 20,000 0 62,500
James G. Stewart............... 2,600 32,013 8,960 13,210 57,130 77,668
</TABLE>
12
<PAGE> 15
LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS TABLE
The following table provides information about long-term incentive awards
granted in 1993 to the Named Executive Officers.
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL YEAR 1993
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE BASED PLANS
-----------------------------------
(a) (b) (c) (d) (e) (f)
Number of Period Until Threshold Target Maximum
Name Units Maturation ($) ($) ($)
- ----------------------------------------------------- --------- ------------ --------- ------- ---------
<S> <C> <C> <C> <C> <C>
Wilson H. Taylor..................................... 6,265 3 years 0 469,875 1,253,000
Lawrence P. English.................................. 2,800 3 years 0 210,000 560,000
George R. Trumbull................................... 2,800 3 years 0 210,000 560,000
Gerald A. Isom....................................... 2,800 1 year 0 210,000 560,000
2,800 2 years 0 210,000 560,000
2,800 3 years 0 210,000 560,000
James G. Stewart..................................... 2,800 3 years 0 210,000 560,000
</TABLE>
CIGNA's Strategic Performance Plan (the "Performance Plan") provides
long-term incentives to Executive Officers and other key employees. The
Performance Plan is designed to reward them for achievement by CIGNA of
long-term financial and strategic performance objectives in comparison to a
group of competitors that have a similar product mix. Financial performance is
evaluated over a three-year period based on return on equity (for years prior to
1993 based on return on equity and return on tangible equity measures)
("Return").
The earned value of each unit for the three-year period depends on CIGNA's
relative financial performance and any adjustments that the People Resources
Committee may make based on its assessment of the factors that affected
strategic and financial performance during the period. The maximum possible
cumulative adjustments that the Committee may make for any three-year
performance period total $75 per unit. The earned value will range from zero to
$200 per unit, with a target value of $75 per unit. The earned value is based on
points that are accumulated for each of the three performance years, with zero
points earned if CIGNA's Return for each year is five percentage points below
the competitors and a maximum number of points earned if five percentage points
above the competitors.
The Named Executive Officers were awarded units in 1993 with a three year
period until maturation. The earned value, if any, on these units will be based
on relative competitive performance during 1993 through 1995. Mr. Isom received
two additional awards to provide interim incentive compensation opportunity for
the two years before maturation of the regular 1993 award.
LTIP units for the 1991 to 1993 performance period were valued, and
restricted stock that will vest in March of 1995 was granted. The value of this
restricted stock is included in column (f) of the Summary Compensation Table for
1993. The amounts shown in the LTIP Payouts column (column h) of the Summary
Compensation Table for 1992 and 1991 were based on relative competitive
performance during 1990 through 1992 and 1987 through 1991, respectively.
If a change of control of CIGNA occurs, payouts for the most recently
awarded outstanding units are guaranteed at not less than $100 each to persons
terminated within two years following the change of control.
13
<PAGE> 16
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------
REMUNERATION 15 20 25 30
- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 200,000 $ 60,000 $ 80,000 $100,000 $120,000
400,000 120,000 160,000 200,000 240,000
600,000 180,000 240,000 300,000 360,000
800,000 240,000 320,000 400,000 480,000
1,000,000 300,000 400,000 500,000 600,000
1,200,000 360,000 480,000 600,000 720,000
1,400,000 420,000 560,000 700,000 840,000
</TABLE>
The table shows annual retirement benefits (before application of the
Social Security offset of 50% of annual primary Social Security benefit) under a
straight life annuity, computed assuming retirement at age 65 after specified
years of service and earnings. Mr. Isom's benefits would approximate 84% of the
amounts shown in the table.
Annual retirement benefits for the Named Executive Officers are based upon
the Executive's earnings (generally, average annual earnings over the final 36
months of service), an annual accrual rate of 2%, length of credited service (up
to a maximum of 30 years) and age at retirement. For Mr. Isom and other
employees hired after January 1, 1989, the calculation is based on average
annual earnings over the final 60 months of service, an annual accrual rate of
1.67% and maximum credited service up to 35 years.
Covered earnings include salary and bonuses, as set forth in columns (c)
and (d) of the Summary Compensation Table on page 11, but not long-term
incentive plan payouts or any other incentive awards.
As of January 1, 1994, credited years of service were as follows: Mr.
Taylor, 30 years; Mr. L.P. English, 30 years; Mr. Trumbull, 23 years; Mr. Isom,
9 months; and Mr. Stewart, 28 years. Because of Mr. Isom's proximity to
retirement age when he was hired, CIGNA will supplement his pension benefits.
For each year of service at CIGNA, Mr. Isom is receiving additional credit
toward the supplement; CIGNA estimates that, if he retires from CIGNA at age 65,
the annual supplement will approximate $100,000.
If a change of control of CIGNA occurs, the pension plan cannot be
terminated, or benefit accruals reduced, for a three year period. If the Pension
Plan is terminated in the fourth or fifth year following a change of control,
additional benefits will be provided to participants, including an immediate 10%
increase to persons receiving benefits and an annual 3% increase in benefits
beginning at age 65. In addition, employees terminated, other than for cause,
within three years following a change of control will receive up to three years
of additional service credit and a floor amount of final average earnings based
on their level of earnings when a change of control occurred.
14
<PAGE> 17
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph on page 17 shall not be incorporated by reference into any
such filings.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The People Resources Committee (the "Committee") of the Board of Directors
reviews and approves, subject to Board ratification, executive compensation
plans and targets and payouts thereunder, as well as any compensation plans
which involve the issuance of securities of the Corporation. It sets the
compensation of the CEO, subject to Board ratification, and approves
compensation of other senior executives, including those named in the Summary
Compensation Table, and makes stock-related awards. The Committee is composed
entirely of outside directors.
SUMMARY
The primary objective of CIGNA's executive compensation program is to pay
for performance that increases shareholder value. The program has three key
elements: (1) base salary; (2) annual bonus; and (3) long-term incentives.
Long-term incentives for the Named Executive Officers are in the form of
restricted stock and options, including restricted stock awarded pursuant to a
performance plan. Annual bonus and long-term incentives are variable
compensation elements that are at risk because they are tied to corporate
business results. The annual bonus recognizes short-term business results and
individual performance, while long-term incentives recognize sustained
corporate-wide results.
PROGRAM DESCRIPTION
The program provides pay opportunity targets for total pay (as well as for
base salary and for short and long-term incentive elements) that equal the
median pay levels of comparable positions in similarly sized companies. A
significant number of companies are used in this comparison, including all of
the companies in the S&P Multi-line Insurance Index, used in the Performance
Graph on page 17. The Committee reviews data on these companies' compensation
programs in determining the appropriate levels of compensation for each of the
most senior executives.
Once total pay opportunity targets are set, the Committee determines the
appropriate pay elements to use in motivating the executives to achieve the
Corporation's performance and strategic objectives. Tax considerations, such as
the newly enacted $1 million deductibility limit, do not automatically cause the
Committee to modify the executive compensation program. However, the program is
continually monitored relative to CIGNA's own strategic goals as well as
industry practices and trends, and it is modified when considered appropriate to
better support shareholder interests. For example, as a result of an independent
Board sponsored study in 1993, the executive compensation program was modified,
effective in 1994, primarily by increasing stock-based compensation and reducing
long-term cash compensation for all executives. For CIGNA's Executive Officers,
all long-term incentives are now stock-based.
Base Salary
Base salary is intended to provide a fixed level of compensation reflecting
the scope and nature of basic job responsibilities. The Committee grants salary
increases, if appropriate, after a review of individual performance and an
assessment of the relative competitiveness of the current salary.
Annual Bonus
Annual bonus awards recognize an executive's contribution to each year's
annual business results as measured against competitors and against CIGNA's
operational plans. Corporate-wide, business unit and
15
<PAGE> 18
individual performance are assessed in relation to the following major factors,
listed in order of importance: earnings; revenue growth and customer service;
and cost management.
Performance, as measured by these factors, which meets operational plans
and equals the results of the competition, provides for bonus payments that are
equal to the target. Better or worse performance results in payments that are
higher or lower than target. An individual's bonus, reflecting personal
contribution to business results, can range from 0 to 200% of the bonus target
for the individual's job.
Long-Term Incentives
The Strategic Performance Plan (the "Performance Plan") provides incentive
opportunity based on CIGNA's long-term financial and strategic performance
relative to a group of peer companies whose product mixes in total are
comparable to CIGNA's. The Committee first evaluates competitive performance by
comparing CIGNA's financial results over a three-year period to the average
financial results of the peers. (For years prior to 1993, the financial measure
was return on equity and tangible equity; for 1993 and later years, the measure
is return on equity.) For an additional one-year performance period, incentive
opportunity is tied to the increase or decrease in the value of CIGNA's stock.
The Performance Plan peer group includes nine companies. Because this plan
rewards executives in all of the Company's operating and corporate staff
divisions for overall consolidated performance, the companies in the peer group
reflect a composite product mix that is comparable to CIGNA's. All of the
companies in the S&P Multi-line Insurance Index (used in the Performance Graph),
except for CNA, are included in this peer group. CNA is excluded because more
than 80 percent is owned by Loews Corporation; therefore, CNA operates more like
a subsidiary than an independent public company.
Grants under the Performance Plan are made annually and the target value of
the grants varies by position responsibility levels. Three years later, these
grants are valued based on CIGNA's comparative financial results during the
intervening three-year period and, at that time, restricted stock with one-year
vesting is awarded. The number of shares awarded is based on CIGNA's three-year
average financial results compared to the average of the peer group. The
Committee has discretion to adjust the number of shares awarded up or down based
on its consideration of financial comparisons and on strategic factors. (The
Performance Plan and individual grants to executives are detailed on page 13.)
Because the Performance Plan has a 3-year performance period based on
comparative financial results plus a one-year performance period based on the
value of the restricted stock over the vesting period, there is a strong link
between the interests of executives and the shareholders.
The other long-term compensation components are normally granted annually
in the form of stock options and restricted stock with five-year vesting. Stock
options provide the right to purchase, at fair market value on grant date, a
fixed number of shares of CIGNA Common Stock during a ten-year period. Beginning
with grants made in 1992, options for half the shares are exercisable after one
year; all are exercisable after two years. The restricted stock, granted
annually since 1987, has restrictions on sale which normally lapse five years
after grant date. These awards further align the interests of management with
shareholders.
PERFORMANCE EVALUATION
For the Chief Executive Officer (CEO), 40% of the total compensation
opportunity target is base salary and 60% is variable compensation that is at
risk and tied to competitive corporate business results. Twenty-five percent of
the CEO's total compensation opportunity is based on annual business performance
and 35% is tied to long-term, sustained corporate-wide results. The CEO's
current base salary approximates the median salary of CEOs of comparably-sized
companies. The CEO's total paid compensation, including the variable components,
for 1993 performance was less than the median compensation for CEOs in
comparable companies. Factors reviewed in the Committee's assessment of the
Corporation's and the CEO's performance include profitability of each business
and profit improvement, growth in revenue from profitable products/services,
expense management, with specific measures that may vary by business activity,
e.g. combined ratio for property and casualty businesses, profit margin and
managed care membership growth in healthcare,
16
<PAGE> 19
and asset growth in the pension business. The Committee reviews all these
factors, considering the relative impact of each in determining the
corporate-wide earnings results. The Committee decided not to grant a bonus to
the CEO based on 1993 consolidated earnings and returns.
For the long-term Performance Plan award, the Committee approved an
above-target value, distributed to the CEO in the form of restricted shares,
reflecting performance against competitors over the 1991-93 performance period.
The higher-than-target value approved by the Committee reflects CIGNA's strong
performance over the three-year performance period compared to the peer group.
For this period, CIGNA's returns averaged 4 percentage points above those of the
peer group.
While the CEO's overall compensation package acknowledges his own
characterization of 1993 earnings as disappointing, the Committee also
recognized the significant progress made in laying the groundwork for Domestic
Property and Casualty improvement, and the superior earnings performance, both
year-over-year and competitively, in the three other major business segments.
For the CEO, the 1993 awards of stock options and restricted stock with
five-year vesting are also shown in the Summary Compensation Table. The
restricted stock award was at target level. The option award was above target to
increase the total number of options held by the CEO and thereby to link more of
the CEO's future compensation opportunity to the creation of additional
shareholder value.
People Resources Committee:
Alfred C. DeCrane, Jr., Chairman
Robert H. Campbell
Paul F. Oreffice
Louis W. Sullivan, M.D.
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in cumulative
total return (change in the year end stock price plus reinvested dividends) to
CIGNA's Shareholders against the cumulative total return of the S&P
Composite-500 Stock Index and the S&P Multi-line Insurance Index for the
preceding five fiscal years measured from December 30, 1988 to December 31,
1993.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN* AMONG CIGNA, S&P 500 INDEX,
AND S&P MULTI-LINE INSURANCE INDEX
<TABLE>
<CAPTION>
Measurement Period S&P
(Fiscal Year Covered) CIGNA S&P 500 Multi-line
<S> <C> <C> <C>
Measurement Pt-12/30/88 100 100 100
FYE 12/29/89 133 132 138
FYE 12/31/90 98 128 113
FYE 12/31/91 155 166 151
FYE 12/31/92 157 179 173
FYE 12/31/93 177 197 193
</TABLE>
* Asumes that the value of the investment in CIGNA Common Stock and each index
was $100.00 on December 30, 1988 and that dividends were reinvested.
17
<PAGE> 20
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's Directors, Executive Officers, Chief Accounting Officer and
persons who own more than 10% of a registered class of the Corporation's equity
securities ("Reporting Persons"), to file reports of securities ownership and
changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange
Commission and the New York Stock Exchange. The Corporation believes that all
Reporting Persons have timely complied with all filing requirements applicable
to them except:
G. Robert O'Brien, who ceased to be an Executive Vice President of the
Corporation effective March 15, 1993, failed to file timely a Form 4 to report
the open market sale of 3,000 shares of Common Stock on August 4, 1993. Mr.
O'Brien subsequently reported the sale.
ADDITIONAL INFORMATION
The Corporation will bear the cost of soliciting proxies from its
Shareholders and will enlist the help of banks and brokerage houses in
soliciting proxies from their customers. The Corporation will reimburse these
institutions for out-of-pocket expenses. In addition to being solicited through
the mails, proxies may also be solicited personally or by telephone by the
Directors, officers and employees of the Corporation or its subsidiaries. The
Corporation has engaged Georgeson & Company, Inc. to assist in soliciting
proxies for a fee of approximately $20,000 plus reasonable out-of-pocket
expenses.
1995 ANNUAL MEETING
The 1995 Annual Meeting of Shareholders will be held on Wednesday, April
26, 1995, at a location to be designated by the Board. The Board is empowered by
the By-laws of the Corporation to change this date if it deems that advisable.
Proposals of Shareholders must be received by the Corporation no later than
November 21, 1994 to be eligible for inclusion under the rules of the Securities
and Exchange Commission in the Corporation's proxy materials for the 1995 Annual
Meeting of Shareholders and must otherwise comply with such rules.
Under the Corporation's By-laws, proposals of Shareholders not included in
the proxy materials may be presented at the 1995 Annual Meeting of Shareholders
only if the Corporate Secretary has been notified of the nature of the proposal
and is provided certain additional information at least sixty days but not more
than ninety days before the 1995 Annual Meeting and the proposal is a proper one
for Shareholder action.
The Corporation's By-laws also require that notice of nominations of
persons for election to the Board, other than those made by or at the direction
of the Board, must be received by the Corporate Secretary at least sixty days
but not more than ninety days before the 1995 Annual Meeting. The notice must
present certain information concerning the nominees and the Shareholder making
the nominations, as set forth in the By-laws. The Corporate Secretary must
receive such nominee's written consent to serve if elected.
CAROL J. WARD, Corporate Secretary
18
<PAGE> 21
DIRECTIONS BY CAR:
FROM THE WEST:
Take the Pennsylvania Turnpike (Interstate 276) to Valley Forge exit #24.
Follow Interstate 76 East (Schuylkill Expressway) to Interstate 476 North
(Plymouth Meeting). Follow 476 North for 2.7 miles to exit 7A Conshohocken. At
end of ramp turn right onto Ridge Pike and proceed for 3.2 miles through six
traffic lights to Manor Road. Turn right onto Manor Road. Proceed 200 yards and
turn right into Eagle Lodge.
FROM THE NORTH:
Take the New Jersey Turnpike to the Pennsylvania Turnpike. Follow 276 West,
exit at #25 Norristown. Bear right when existing the toll booth. Proceed down
ramp to Germantown Pike (East). Follow Germantown Pike 3 traffic lights (1.8
miles). At third traffic light turn right onto Joshua Road. At first traffic
light turn left onto Ridge Pike. Follow Ridge Pike for 1.5 miles and turn right
onto Manor Rd. Proceed 200 yards and turn right into Eagle Lodge.
FROM THE SOUTH:
Take Interstate 95 North to 476 North (Plymouth Meeting). Follow 476 North for
18 miles to exit 7A Conshohocken. At end of ramp turn right onto Ridge Pike and
proceed for 3.2 miles through six traffic lights to Manor Road. Turn right onto
Manor Road. Proceed 200 yards and turn right into Eagle Lodge.
FROM PHILADELPHIA INTERNATIONAL AIRPORT:
Take Interstate 95 South to 476 North (Plymouth Meeting). Follow 476 North for
18 miles to exit 7A Conshohocken. At end of ramp turn right onto Ridge Pike and
proceed for 3.2 miles through six traffic lights to Manor Road. Turn right onto
Manor Road. Proceed 200 yards and turn right into Eagle Lodge.
FROM CENTER CITY PHILADELPHIA
Follow Interstate 76 West (Schuylkill Expressway) to Interstate 476 North
(Plymouth Meeting). Follow 476 North for 2.7 miles to exit 7A Conshohocken. At
end of ramp turn right onto Ridge Pike and proceed for 3.2 miles through six
traffic lights to Manor Road. Turn right onto Manor Road. Proceed 200 yards and
turn right into Eagle Lodge.
[Road map to site of Annual Meeting of Shareholders.]
<PAGE> 22
APPENDIX*
GRAPHIC AND IMAGE MATERIAL OMITTED
FROM ELECTRONIC FILING
ITEM CROSS-REFERENCE OR
NARRATIVE DESCRIPTION
Performance Graph See the Section entitled
"Performance Graph" on
page 17 herein.
Map to Eagle Lodge See the Section entitled
(site of 1994 Annual "Directions by Car" on
Meeting of Shareholders) page 21 herein.
- ------------------------------------
*Submitted pursuant to Sect. 304(a) of Regulation S-T.
<PAGE> 23
<TABLE>
<CAPTION>
CIGNA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
<S> <C>
The undersigned hereby constitutes and appoints Evelyn Berezin; James F.
P English, Jr.; Gerald D. Laubach; and Ezra K. Zilkha or any of them, proxies
R with full power of substitution and each of them is hereby authorized to
O represent the undersigned and to vote all shares of the Corporation held by the
X undersigned at the Annual Meeting of Shareholders, to be held at The Conference
Y Center at Eagle Lodge, Ridge Pike & Manor Road, Lafayette Hill, Pennsylvania on
April 27, 1994, at 10:00 a.m. or at any adjournment thereof, on the matters set
forth below:
1. ELECTION OF DIRECTORS, Nominees for terms expiring:
April 1996: Bernard M. Fox and Marilyn W. Lewis.
April 1997: Alfred C. DeCrane, Jr., Frank S. Jones, Paul F. Oreffice and
Wilson H. Taylor.
2. RATIFICATION OF THE APPOINTMENT of Price Waterhouse As Independent Public
Accountants.
In their discretion, upon such other matters as may properly come before the
meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES.
[SEE REVERSE SIDE], BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
</TABLE>
<PAGE> 24
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. 1671
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 PROPOSALS 1 AND 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
1. Election of Directors. (see reverse)
FOR WITHHELD
/ / / /
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
- ------------------------------------
2. Ratification of Appointment of Accountants.
FOR AGAINST ABSTAIN
/ / / / / /
Mark here if you would like your voting instructions to be confidential
pursuant to the procedures on confidential voting described in the 1994 Proxy
Statement. Marking this box will not absolve you of any independent fiduciary
or other legal obligation to report how you voted nor prevent the inspectors
from disclosing your vote if required by law or if otherwise permitted by the
procedures. / /
Please sign exactly as name appears hereon.
Joint owners should each sign. When signing
as attorney, executor, administrator, trustee
or guardian, please give full title as such.
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SIGNATURE DATE
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SIGNATURE DATE
