<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 [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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 if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[CIGNA LOGO]
CIGNA Corporation
One Liberty Place
1650 Market Street
Philadelphia, PA
19192-1550
March 22, 2000
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
CIGNA Corporation Shareholders:
The annual meeting of shareholders will be held on Wednesday, April 26, 2000 at
1:00 p.m. at The Conference Center at Eagle Lodge, in Lafayette Hill,
Pennsylvania. Directions to Eagle Lodge are on the back of the attached proxy
statement.
At the meeting, we will ask the shareholders to:
1. Elect four directors for terms expiring in April 2003;
2. Ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for 2000; and
3. Approve the amendment and restatement of the CIGNA Long-Term Incentive Plan.
We plan a brief business meeting focused on these items, then we will attend to
any other proper business that may arise. We also will offer time for your
questions and comments.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF ITEMS 1, 2 AND 3.
All proposals are described in the proxy statement.
CIGNA shareholders of record at the close of business on February 28, 2000 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
Your vote is important, even if you do not own a lot of shares. We urge you to
mark, date, sign and return the enclosed proxy/voting instruction card, or if
you prefer, to vote by telephone or by using the Internet.
CIGNA will begin mailing the proxy statement, proxy/voting instruction card, and
1999 Annual Report to shareholders on or about March 24, 2000.
Sincerely,
<TABLE>
<S> <C>
[/s/ WILSON H. TAYLOR] [/s/ H. EDWARD HANWAY]
WILSON H. TAYLOR H. EDWARD HANWAY
Chairman of the Board President and Chief Executive Officer
</TABLE>
By order of the Directors
[/s/ CAROL J. WARD]
CAROL J. WARD, Corporate Secretary
<PAGE> 3
CIGNA CORPORATION
ONE LIBERTY PLACE
1650 MARKET STREET
PHILADELPHIA, PA 19192-1550
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
GENERAL INFORMATION ABOUT CIGNA'S ANNUAL MEETING............ 2
PROPOSALS THAT REQUIRE A SHAREHOLDER VOTE................... 2
HOW TO VOTE................................................. 3
INFORMATION ABOUT ITEM 1: ELECTION OF DIRECTORS............. 5
-- Management's nominees............................... 5
-- Directors who will continue in office............... 6
-- Stock held by directors and executive officers...... 7
-- Board of directors and committees................... 9
-- Non-employee director compensation.................. 10
-- Transactions with affiliates........................ 11
INFORMATION ABOUT ITEM 2: RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS................................... 12
INFORMATION ABOUT ITEM 3: APPROVAL OF AMENDMENT AND
RESTATEMENT OF THE CIGNA LONG-TERM INCENTIVE PLAN......... 12
OTHER MATTERS THAT MAY ARISE AT THE MEETING................. 19
VOTING REQUIREMENTS......................................... 19
EXECUTIVE COMPENSATION...................................... 20
-- Summary compensation table.......................... 20
-- Option grants table................................. 21
-- Option exercises and value table.................... 23
-- Long-term incentive plan awards table............... 23
-- Pension plan table.................................. 24
-- Termination of Employment........................... 25
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION.............................................. 27
PERFORMANCE GRAPH........................................... 30
COMPLIANCE WITH SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
REQUIREMENTS.............................................. 31
LARGEST SECURITY HOLDERS.................................... 31
SOLICITATION EXPENSES....................................... 32
2001 ANNUAL MEETING......................................... 32
APPENDIX A: CIGNA LONG-TERM INCENTIVE PLAN.................. A-1
</TABLE>
1
<PAGE> 4
GENERAL INFORMATION ABOUT CIGNA'S ANNUAL MEETING
WHEN AND WHERE IS THE ANNUAL MEETING?
The annual meeting will be held on Wednesday, April 26, 2000 at 1:00 p.m. at The
Conference Center at Eagle Lodge. Eagle Lodge is at the intersection of Ridge
Pike and Manor Road in Lafayette Hill, Pennsylvania. Directions are on the back
of the proxy statement.
WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
Anyone who owns CIGNA common stock as of the close of business on February 28,
2000 is entitled to one vote per share owned. There were 167,044,786 shares of
CIGNA common stock outstanding on that date.
WHO IS SEEKING AUTHORITY TO VOTE MY SHARES AND WHEN?
CIGNA's Board of Directors is soliciting your "proxy," or your authorization for
our representatives to vote your shares. Your proxy will be effective for the
April 26, 2000 meeting and at any adjournment (or continuation) of that meeting.
WHAT IF MY SHARES ARE NOT REGISTERED IN MY NAME?
If you own your shares in "street name," meaning that your broker is actually
the record owner, you should receive proxy materials from your broker.
PROPOSALS THAT REQUIRE A SHAREHOLDER VOTE
Management is presenting three proposals for a shareholder vote.
ITEM 1. ELECTION OF DIRECTORS
THE BOARD RECOMMENDS THAT YOU VOTE FOR ALFRED C. DECRANE, JR., H. EDWARD HANWAY,
WILSON H. TAYLOR, AND HAROLD A. WAGNER TO BE DIRECTORS WITH TERMS EXPIRING APRIL
2003.
You can find information about these nominees, as well as information about
CIGNA's board of directors and its committees, executive compensation, and other
related matters, beginning on page 5.
ITEM 2. RATIFICATION OF APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
THE BOARD RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL TO APPROVE THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS FOR THE YEAR 2000.
You can find information about CIGNA's relationship with PricewaterhouseCoopers
LLP beginning on page 12.
ITEM 3. APPROVAL OF AMENDMENT AND RESTATEMENT OF THE CIGNA LONG-TERM INCENTIVE
PLAN
THE BOARD RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL TO APPROVE THE AMENDMENT
AND RESTATEMENT OF THE CIGNA LONG-TERM INCENTIVE PLAN.
You can find information about the Amendment and Restatement of the CIGNA
Long-Term Incentive Plan beginning on page 12.
2
<PAGE> 5
HOW TO VOTE
THERE ARE FOUR WAYS THAT YOU CAN VOTE YOUR SHARES.
1. BY MAIL. Mark your voting instructions on, and sign and date, the proxy
card and then return it in the postage-paid envelope provided. If you mail your
proxy card, we must receive it before the polls close on April 26, 2000.
If we receive your signed proxy card, but you do not give voting instructions,
our representatives will vote your shares FOR Items 1, 2 and 3. If any other
matters arise during the meeting that require a vote, the representatives will
exercise their discretion.
2. BY TELEPHONE. If you are in the United States or Canada, call
1-877-779-8683, which is a toll-free number. If you are outside of the United
States or Canada, call 1-201-536-8073. The telephone voting system is available
24 hours a day until 5:00 p.m. on April 25, 2000.
In order to vote by telephone, you need the control number on your proxy card.
Each shareholder has a unique control number so that we can ensure that all
voting instructions are genuine and prevent duplicate voting.
Once you are into the telephone voting system, a series of prompts will tell you
how to record and confirm (or change) your voting instructions. If you use the
telephone voting system, you do not need to return your proxy card.
3. OVER THE INTERNET. The Web site for voting is at
http://www.eproxyvote.com/ci.
In order to vote on the Internet, you need the control number on your proxy
card. Each shareholder has a unique control number so that we can ensure that
all voting instructions are genuine and prevent duplicate voting. The Internet
voting system is available 24 hours a day until 5:00 p.m. on April 25, 2000.
Once you are into the Internet voting system, you can record and confirm (or
change) your voting instructions. If you use the Internet voting system, you do
not need to return your proxy card.
4. IN PERSON. Attend the annual meeting, or send a personal representative
with an appropriate proxy, in order to vote.
REQUIREMENTS FOR CONFIDENTIAL VOTING. If you want your vote to be confidential,
you must indicate that when you submit your proxy. If you choose confidential
voting, your votes can only be revealed to CIGNA in limited circumstances, such
as to meet a legal requirement or in contested board elections.
HOW TO REVOKE YOUR PROXY OR CHANGE YOUR VOTING INSTRUCTIONS
There are four ways that you can revoke your proxy or change your voting
instructions.
1. WRITE TO THE CORPORATE SECRETARY, CAROL J. WARD, AT THE ADDRESS ON THE COVER
OF THIS PROXY STATEMENT. Your letter should contain the name in which your
shares are registered, your control number, the date of the proxy you wish to
revoke or change, your new voting instructions, if applicable, and your
signature. She must receive your letter before the annual meeting begins.
2. SUBMIT A NEW PROXY CARD BEARING A LATER DATE THAN THE ONE YOU WISH TO
REVOKE. We must receive your new proxy card before the annual meeting begins.
3. ENTER NEW INSTRUCTIONS ON EITHER THE TELEPHONE OR INTERNET VOTING SYSTEM
BEFORE 5:00 p.m. on April 25, 2000.
4. ATTEND THE ANNUAL MEETING AND VOTE IN PERSON (OR BY PERSONAL
REPRESENTATIVE).
3
<PAGE> 6
WHAT TO DO IF YOU HAVE MONEY IN THE CIGNA STOCK FUND OF YOUR 401(k) PLAN
If you have money in the CIGNA Stock Fund of the CIGNA 401(k) Plan, the
Intracorp 401(k) Profit Sharing Plan or the Trilog Employees Partnership Savings
Plan, you do not actually own shares of CIGNA stock. The plan trustees do. Under
the plans, however, you do have "pass-through voting rights" based on your
interest -- the amount of money you have invested -- in the CIGNA Stock Fund.
You may exercise pass-through voting rights in almost the same way that
shareholders may vote their shares, but you have an earlier deadline. If your
voting instructions are received by 5:00 P.M. EASTERN TIME ON APRIL 21, 2000,
the trustee will submit a proxy that reflects your instructions. If you do not
give voting instructions (or give them late), the trustees will vote your
interest in the CIGNA Stock Fund as instructed by a CIGNA management advisory
committee.
You may send your instructions to your plan trustee by using the mail
(proxy/voting instruction card), telephone or Internet methods described on page
3. You may NOT vote in person at the annual meeting.
Your voting instructions will be kept confidential under the terms of the plans.
4
<PAGE> 7
INFORMATION ABOUT ITEM 1:
ELECTION OF DIRECTORS
The board nominated four of CIGNA's twelve incumbent directors to stand for
reelection at the annual meeting for terms ending April 2003. All nominees have
consented to serve, and the board does not know of any reason why any would be
unable to serve. If a nominee becomes unavailable or unable to serve before the
annual meeting (for example, due to serious illness), the board can either
reduce its size or designate a substitute nominee. If the board designates a
substitute, proxies that would have voted for the original nominee will be cast
for the substitute nominee. Wilson H. Taylor plans to retire by year-end 2000.
Pursuant to the retirement policy adopted by the Board of Directors, Alfred C.
DeCrane, Jr. will retire effective as of the date of CIGNA's 2002 Annual Meeting
of Shareholders.
MANAGEMENT'S NOMINEES FOR TERMS TO EXPIRE IN APRIL 2003.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THESE NOMINEES.
All of the nominees are current members of the board whose terms expire this
year.
<TABLE>
<CAPTION>
NAME, AGE, AND YEAR FIRST
ELECTED TO THE BOARD BUSINESS BACKGROUND
<S> <C>
Alfred C. DeCrane, Jr., 68 -- Chairman of the Board (from 1987 until 1996),
Director since 1980 and Chief Executive Officer (from 1993 until 1996)
of Texaco, Inc. (integrated oil, gas and
chemical manufacturer). Also served as director
(from 1977 until 1996).
-- Director of Bestfoods, Corn Products
International, Inc., Harris Corporation, and U.S.
Global Leaders Growth Fund, Ltd.
H. Edward Hanway, 48 -- Chief Executive Officer of CIGNA Corporation
Director since January 1999 since January 2000.
-- President of CIGNA Corporation since January
1999 and Chief Operating Officer of CIGNA
Corporation from January 1999 until January
2000.
-- President of CIGNA HealthCare from 1996 until
1999.
-- President of CIGNA International from 1989
until 1996.
-- Associated with CIGNA since 1978.
Wilson H. Taylor, 56 -- Chairman of the Board of CIGNA Corporation
Director since 1988 since 1989
-- Chief Executive Officer of CIGNA Corporation
from 1988 until January 2000.
-- President of CIGNA Corporation from 1988 until
1999.
-- Associated with CIGNA since 1964.
Harold A. Wagner, 64 -- Chairman and Chief Executive Officer of Air
Director since 1997 Products and Chemicals, Inc. since 1992 (supplier of
industrial gases and related equipment and
selected chemicals). President of Air Products
and Chemicals, Inc. from 1992 until 1998.
-- Director of Daido-Hoxan, Inc., United
Technologies Corporation and PACCAR, Inc.
</TABLE>
5
<PAGE> 8
DIRECTORS WHO WILL CONTINUE IN OFFICE.
<TABLE>
<CAPTION>
NAME, AGE, AND YEAR CURRENT TERM
FIRST ELECTED TO THE BOARD BUSINESS BACKGROUND EXPIRES IN:
<S> <C> <C>
Robert P. Bauman, 68 -- Chief Executive Officer and Director April 2001
Director since 1990 from 1989 until 1994 of SmithKline
Beecham plc (a manufacturer of
pharmaceuticals and health care
products). Deputy Chairman (from
1997 until 1998) and Non-Executive
Chairman (from 1998 until 1999) of
BTR plc (manufacturer of automotive
power drives, process control,
packaging and materials).
Non-Executive Chairman of British
Aerospace, plc (manufacturer of
aerospace and other defense systems
and commercial aircraft) from 1994
until 1997.
-- Director of Morgan Stanley, Dean
Witter, Discover & Co.; Reuters Holdings,
plc; Union Pacific Corporation; and
Invensys plc (formerly BTR Siebe
plc).
Robert H. Campbell, 62 -- Chairman (since 1992) and Chief April 2001
Director since 1992 Executive Officer (since 1991) of Sunoco,
Inc. (domestic refiner and marketer
of petroleum products). President of
Sunoco, Inc. from 1991 until 1996.
-- Director of Hershey Foods, Inc.
Peter N. Larson, 60 -- Chairman and Chief Executive Officer April 2002
Director since 1997 of Brunswick Corporation (a producer of
recreational consumer products)
since 1995. Executive Officer and
director of Johnson & Johnson (a
health care product maker) from 1991
until 1995.
-- Director of COMPAQ Computer Corpora-
tion and Click Commerce, Inc.
Joseph Neubauer, 58 -- Chairman and Chief Executive Officer April 2002
Director since 1998 of ARAMARK Corporation (a service man-
agement company) since 1984.
-- Director of Bell Atlantic
Corporation, Federated Department Stores,
Inc., and First Union Corporation.
Charles R. Shoemate, 60 -- Chairman, President, and Chief April 2001
Director since 1991 Executive Officer since 1990, and
director since 1988 of Bestfoods
(consumer food company).
-- Director of International Paper
Company and Texaco, Inc.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
NAME, AGE, AND YEAR CURRENT TERM
FIRST ELECTED TO THE BOARD BUSINESS BACKGROUND EXPIRES IN:
<S> <C> <C>
Louis W. Sullivan, M.D., 66 -- President, Morehouse School of April 2001
Director since 1993 Medicine (educational institution) since
1981, except from 1989 until 1993,
when he served as the U.S. Secretary
of Health and Human Services.
-- Director of Bristol-Myers Squibb
Company, Equifax Inc., Endo Vascular
Instruments, Inc., General Motors
Corporation, Georgia Pacific
Corporation, Household Interna-
tional, Inc., Minnesota Mining &
Manufacturing Co. and BioSante
Pharmaceuticals, Inc.
Carol Cox Wait, 57 -- Director, President, and Chief April 2002
Director since 1995 Executive Officer, Committee for a
Responsible Federal Budget (a
non-profit educational or-
ganization) since 1981.
-- President of Carol Cox and
Associates (a consulting firm) since
1984.
Marilyn Ware, 56 -- Director (since 1982) and Chairman April 2002
Director since 1993 (since 1988) of American Water Works Com-
pany, Inc (a water utility holding
company).
-- Chief Executive Officer of The Ware
Family Offices, and Manager of AMWorks,
LLC.
-- Director of PP&L Resources, Inc.
</TABLE>
STOCK HELD BY DIRECTORS AND EXECUTIVE OFFICERS AS OF JANUARY 31, 2000
The following table shows:
-- how much CIGNA common stock each director, nominee, the Chief Executive
Officer, and the four other most highly compensated executive officers
own, either directly or "beneficially";
-- how much CIGNA common stock the directors, nominees, and executive
officers own as a group, either directly or "beneficially"; and
-- the number of "common stock equivalents" that non-employee directors and
executive officers have accumulated under deferred compensation
arrangements.
The "beneficial owner" of a security is the person that
exercises voting or investment power over the security, even if
someone else is the record owner.
"Common stock equivalents" track the economic performance of
common stock but do not carry voting rights.
7
<PAGE> 10
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
SHARES THAT CAN HOLDINGS IN
BE ACQUIRED CIGNA
WITHIN 60 DAYS OF STOCK
WHOLLY-OWNED RESTRICTED JANUARY 31, 2000 FUNDS OF COMMON
COMMON COMMON BY EXERCISING 401(k) STOCK
NAME STOCK STOCK STOCK OPTIONS PLANS EQUIVALENTS TOTAL
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Directors
-------------------------------------------------------------------------------------------------------------------------
Robert P. Bauman 5,052 4,500 -0- -0- 20,401 29,953
-------------------------------------------------------------------------------------------------------------------------
Robert H. Campbell 966 4,500 -0- -0- 6,508 11,974
-------------------------------------------------------------------------------------------------------------------------
Alfred C. DeCrane, Jr. 3,653 4,500 -0- -0- 17,956 26,109
-------------------------------------------------------------------------------------------------------------------------
H. Edward Hanway 89,526 -0- 160,263 29 103,237 353,055
-------------------------------------------------------------------------------------------------------------------------
Peter N. Larson 2,000 4,500 -0- -0- 2,314 8,814
-------------------------------------------------------------------------------------------------------------------------
Joseph Neubauer 3,034 4,500 -0- -0- 1,288 8,822
-------------------------------------------------------------------------------------------------------------------------
Charles R. Shoemate 6,879 4,500 -0- -0- 4,039 15,418
-------------------------------------------------------------------------------------------------------------------------
Louis W. Sullivan, M.D. 2,066 4,500 -0- -0- 4,256 10,822
-------------------------------------------------------------------------------------------------------------------------
Wilson H. Taylor 196,363 -0- 693,849 31 664,723 1,554,966
-------------------------------------------------------------------------------------------------------------------------
Harold A. Wagner 3,503 4,500 -0- -0- 1,502 9,505
-------------------------------------------------------------------------------------------------------------------------
Carol Cox Wait 394 4,500 -0- -0- 3,436 8,330
-------------------------------------------------------------------------------------------------------------------------
Marilyn Ware 2,204 4,500 -0- -0- 2,528 9,232
-------------------------------------------------------------------------------------------------------------------------
Named Executive Officers
-------------------------------------------------------------------------------------------------------------------------
James G. Stewart 83,394 -0- 277,916 28 318,839 680,177
-------------------------------------------------------------------------------------------------------------------------
Donald M. Levinson 45,177 -0- 166,388 26 188,977 400,568
-------------------------------------------------------------------------------------------------------------------------
William M. Pastore 26,776 8,442 123,323 25 9,972 168,538
-------------------------------------------------------------------------------------------------------------------------
All directors, nominees
and executive officers
as a group including
those named above (21
persons) 660,752 53,442 1,836,977 720 1,706,450 4,258,341
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
Additional information about stock held by directors and executive officers.
-- No director or executive officer beneficially owns more than 1% of CIGNA's
outstanding common stock. Directors, nominees, and executive officers as a
group beneficially own 1.51% of the outstanding common stock.
-- On January 31, 2000, the CIGNA Pension Plan held 292,500 shares, or
approximately .17% of the outstanding common stock. A CIGNA management
advisory committee determines how these shares will be voted.
-- On January 31, 2000, the CIGNA Stock Funds of CIGNA's three 401(k) plans
for employees held a total of 3,790,609 shares, or approximately 2.25% of
the outstanding common stock. A CIGNA management advisory committee
determines how these shares will be voted only to the extent that
individual participants do not give voting instructions.
-- All executive officers participate in the CIGNA Stock Funds. Their
combined holdings through the CIGNA Stock Funds are 720 shares of common
stock. The shares held by each executive officer through the CIGNA Stock
Funds of the 401(k) plans are included in the number of shares shown above
as beneficially owned by him or her.
-- The directors and executive officers control the voting and investment of
all shares of common stock they own beneficially, except as described
elsewhere. This number includes shares of common stock that they have the
option to buy within 60 days of January 31, 2000 and shares of restricted
common stock.
8
<PAGE> 11
BOARD OF DIRECTORS AND COMMITTEES
The full board held seven meetings during 1999. The board has five committees:
Audit, Corporate Governance, Executive, Finance, and People Resources. The
following table shows, for each committee, who the members are and how many
meetings were held during 1999. Each director attended at least 75% of the
meetings of the Board and of his or her assigned committees.
<TABLE>
<CAPTION>
COMMITTEE MEMBERSHIP AND MEETINGS HELD
--------------------------------------------------------------------------------------
CORPORATE PEOPLE
NAME AUDIT* GOVERNANCE* EXECUTIVE FINANCE* RESOURCES*
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
W. H. Taylor C
--------------------------------------------------------------------------------------
R. P. Bauman C M
--------------------------------------------------------------------------------------
R. H. Campbell C M M
--------------------------------------------------------------------------------------
A. C. DeCrane, Jr. M M M
--------------------------------------------------------------------------------------
H. E. Hanway M
--------------------------------------------------------------------------------------
P. N. Larson M M
--------------------------------------------------------------------------------------
J. Neubauer M M
--------------------------------------------------------------------------------------
C. R. Shoemate M C M
--------------------------------------------------------------------------------------
L. W. Sullivan, M.D. M C
--------------------------------------------------------------------------------------
H. A. Wagner M M
--------------------------------------------------------------------------------------
C. C. Wait M M
--------------------------------------------------------------------------------------
M. Ware M M
--------------------------------------------------------------------------------------
# of 1999 meetings 5 2 0 4 5
--------------------------------------------------------------------------------------
</TABLE>
C = Chair M = Member * = Chair and Members are non-employee directors
These committees have the following responsibilities:
Executive Committee
The Executive Committee is authorized to exercise the board's authority in
managing CIGNA's business between regular board meetings.
Audit Committee
-- Reviewing and reporting to the board on whether CIGNA's accounting
policies are appropriate, internal controls are adequate, and the
financial information we report to the public is reliable.
-- Reviewing and approving audit plans.
-- Reviewing CIGNA's Annual Report on Form 10-K.
-- Reviewing and advising the board concerning the work of the internal
auditors and independent accountants.
-- Reviewing, monitoring, and advising the board about CIGNA's compliance
with laws and regulations, any material regulatory examinations, and any
illegal acts or contingencies.
-- Recommending the independent accountants for appointment by the board.
9
<PAGE> 12
Corporate Governance Committee
-- Reviewing, advising, and reporting to the board on the structure,
organization, compensation, performance and effectiveness of the board.
-- Advising the board about procedures governing the election of directors.
-- Considering and generating suggestions for board membership. Shareholder
suggestions should be submitted to the Corporate Secretary by November 10,
2000.
-- Overseeing CIGNA's positions and policies regarding shareholder relations
and political and charitable contributions.
Finance Committee
-- Reviewing, advising, and reporting to the board on the management of
CIGNA's financial resources and invested assets, the annual capital plan,
shareholder dividends, and capital position.
-- Implementing proposed capital commitments in amounts established by the
board.
-- Reviewing investment policies, strategies, and guidelines for CIGNA and
its individual subsidiaries and affiliates.
People Resources Committee
-- Reviewing and reporting to the board on the management of CIGNA's human
resources, including personnel policies and policy controls, people
development including diversity programs, and employee compensation and
benefits.
-- Reviewing and approving, subject to board ratification, executive
compensation plans (including targets and payouts), any compensation plan
that involves the issuance of stock, and (if required by law) adoption of
and changes to qualified benefit plans.
-- Setting the Chief Executive Officer's compensation (subject to board
ratification), approving the compensation of other senior executives, and
making stock-related awards.
-- Reviewing succession plans for principal executive officers.
NON-EMPLOYEE DIRECTOR COMPENSATION
The compensation package for non-employee directors has several components.
Annual retainer. Each director receives $40,000.
Committee member retainer. Each director receives $2,500 annually for each
committee membership. We do not pay this retainer to committee chairs or to
members of the Executive Committee.
Committee chair retainer. Each committee chair other than the chair of the
Executive Committee receives $7,500.
Attendance fee. Directors receive $1,750 for each board and committee meeting
attended.
Directors have several payment options for their compensation. At least $20,000
of the annual retainer must be paid in shares of CIGNA common stock or stock
equivalents. Directors can elect to receive more (or all) of their remaining
cash compensation in:
-- common stock;
-- common stock equivalents; or
-- deferred cash compensation credited at the same rates of return earned on
employee participant contributions to certain funds offered by CIGNA's
401(k) plans.
10
<PAGE> 13
Hypothetical dividends paid on stock equivalents can be reinvested in
equivalents or invested in the hypothetical investments available for deferred
cash compensation.
Annual Credit. Each director is entitled to an annual credit of $24,000 to a
Restricted Deferred Compensation Account under the Deferred Compensation Plan
for Directors of CIGNA Corporation. This amount is credited in restricted stock
equivalents, and is payable when a director dies or retires from the board.
When CIGNA instituted the Annual Credit, we froze the existing Retirement and
Consulting Plan for Directors of CIGNA Corporation. That plan offered annual
payments equal to the annual retainer when a director retired so long as the
director did not compete with CIGNA and remained available for consultation. A
director who retired at the mandatory age of 70 would receive payments until
death. A director who retired after age 65 but before the age of 70 would
receive payments for a period equal to the number of months served as a director
or, in some cases, could elect a single discounted lump sum payment.
Directors who had vested rights under the frozen plan as of December 31, 1996
were given the option to continue to accrue benefits under that plan or start
participating in the new Deferred Compensation Plan with a credit equal to the
amount of their accrued benefits. Mr. DeCrane elected to continue accruing
benefits under the frozen plan. In April 1999, Mr. DeCrane received a credit of
$13,000 of deferred restricted equivalents under the Deferred Compensation Plan
so that his compensation would be consistent with that of other directors.
Restricted stock. Any non-employee director who was not an officer or employee
of CIGNA or any of its subsidiaries in the preceding ten years is entitled to a
one-time grant of 4,500 shares of common stock under the Restricted Stock Plan
for Non-Employee Directors of CIGNA Corporation. A director who receives them
can collect dividends and vote the shares, but cannot transfer them until the
later of:
-- six months from the date of grant; or
-- end of service due to death, disability, a change of control, retirement
at or after age 70, or retirement between the ages of 65 and 70 with the
consent of a majority of the other members of the board.
Shares are forfeited if a director's service ends for any other reason.
Travel accident coverage. Each director is entitled to $204,000 of coverage.
Financial planning. Each director can use the financial planning services
available to CIGNA executives.
Insurance. Each director may purchase or participate in life insurance,
medical/dental care programs, property/casualty personal lines insurance
programs, and matching gift programs on the same terms and conditions available
to CIGNA employees. One director who elected to do so participates in a life
insurance program available to employees of Connecticut General Corporation
before CIGNA was formed.
TRANSACTIONS WITH AFFILIATES
CIGNA companies engaged in many transactions with companies (or their
subsidiaries) of which CIGNA directors were executive officers or 10%
shareholders during 1999. These transactions included:
-- providing insurance coverages, health care services, pension contracts,
and related products and services to these entities;
-- purchasing products and services from these entities;
-- acquiring, disposing of, or holding debt issued by these entities; and
-- relying on the credit of these entities.
Various CIGNA directors and executive officers purchased insurance products
marketed by CIGNA companies.
During 1999, various CIGNA companies engaged in transactions with companies that
beneficially own more than 5% of CIGNA's outstanding common stock listed on page
31. These transactions included, for
11
<PAGE> 14
Sanford C. Bernstein & Co., Inc., health services and investment management
services, for FMR Corporation, insurance coverage and investment management
services, for Wellington Management Company, LLP, investment management services
and commercial paper transactions, and for Putnam Investment Inc., the purchase
of CIGNA Corporation debt instruments.
Management believes that these transactions were in the ordinary course of
business and on terms as favorable as CIGNA would have received from
unaffiliated persons or organizations. Transactions, service arrangements, and
relationships similar to those described will likely occur in varying amounts
during 2000.
INFORMATION ABOUT ITEM 2:
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee recommended, and the board approved, the appointment of
PricewaterhouseCoopers LLP as independent accountants for 2000. The board wants
shareholders to ratify this appointment even though ratification is not legally
necessary. If shareholders do not ratify this appointment, the board will
reconsider it.
PricewaterhouseCoopers LLP has served as independent accountants for CIGNA and
its subsidiaries since 1983, and performed the same role for Connecticut General
Corporation and its subsidiaries since 1967. A representative from
PricewaterhouseCoopers LLP will attend the annual meeting, may make a statement,
and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
INFORMATION ABOUT ITEM 3:
APPROVAL OF AMENDMENT AND RESTATEMENT
OF THE CIGNA LONG-TERM INCENTIVE PLAN
The Board of Directors has amended the CIGNA Long-Term Incentive Plan effective
as of January 1, 2000, subject to approval by the shareholders. The amendments
are intended to replenish the supply of CIGNA common stock available to be
issued under the plan and to facilitate the continued use of the plan for the
purposes described below. Item 3 presents the amendments and the Incentive Plan,
as amended and restated, for approval by the shareholders.
We have used the Incentive Plan since 1995 to grant stock-based and/or
performance-based compensation awards to CIGNA officers and employees. Such
awards advance the interests of the company and the shareholders by facilitating
our ability to recruit, reward and retain officers and employees of outstanding
ability and experience, aligning the interests of our officers and employees
with those of the shareholders through promotion of increased employee stock
ownership and motivating officers and employees with compensation conditioned
upon achievement of competitively superior strategic and financial goals.
Brief descriptions of the amendments and of the Incentive Plan are set forth
below. The full text of the Incentive Plan, as amended and restated, is attached
for your information and review as Appendix A at the back of this proxy
statement.
Shareholder approval of the amendments and of the Incentive Plan is required by
Section 162(m) of the Internal Revenue Code in order for CIGNA to maintain the
deductibility for Federal income tax purposes of performance-based compensation
granted under the plan in excess of $1 million per taxable year to our Chief
Executive Officer or any of our next four most highly paid executive officers.
For further information, see the discussion below under the heading "Section
162(m) of Internal Revenue Code."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
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<PAGE> 15
SUMMARY DESCRIPTION OF MATERIAL AMENDMENTS
Increase in Number of Shares Available for Issuance. The Incentive Plan
provides for several kinds of stock-based compensation, which are described in
greater detail below. To enable CIGNA to continue to grant stock-based
compensation awards under the plan, the amendments increase the number of shares
of CIGNA common stock available for issuance by an additional 10,000,000 shares.
The additional shares are needed to facilitate the continued use of the plan
because the original 1995 authorization of 15,000,000 shares is expected to be
largely exhausted in the near term. CIGNA views the current request for a lower
number of additional shares as sufficient to meet the company's needs and as
competitively mainstream.
On February 29, 2000, the closing price for a share of CIGNA common stock, as
reported on the New York Stock Exchange composite tape, was $73.8125.
Plan Maximum for Stock Awards. In order to limit the dilutive effect of awards
of CIGNA common stock under the Incentive Plan, the amendments limit the number
of shares of common stock that may be awarded under the plan
-- in the form of restricted stock grants,
-- in payment for dividend equivalents,
-- in payment for strategic performance units or
-- in payment for certain amounts due under other CIGNA incentive plans
to a maximum of 20% of the total shares of CIGNA common stock available for
issuance under the plan.
Annual Maximum for Awards of Strategic Performance Units. The amendments
increase the number of strategic performance units that may be awarded to any
individual in any one calendar year to a new limit of 100,000 units. The
amendments do not otherwise change the terms of the performance goals for
strategic performance units. For further information, see the discussion below
under the heading "Strategic Performance Units."
Annual Maximum for Shares Subject to Stock Options or Stock Appreciation
Rights. Consistent with the increase in the aggregate number of shares
available for issuance under the Incentive Plan, the amendments also increase
the number of shares of common stock that may be the subject of grants of stock
options or stock appreciation rights to any individual in any one calendar year
to a new aggregate limit of 2,500,000 shares.
Stock Options upon Termination of Employment. The amendments simplify the
Incentive Plan provisions pertaining to vesting, exercise and expiration of
stock options upon termination of employment of an optionholder by reason of
early retirement, regular retirement, disability or death. The amendments
provide for the People Resources Committee to specify, at the time it grants any
stock options, what the terms and conditions will be for vesting, exercise and
expiration of the options upon these special circumstances. The amendments do
not affect or alter the terms and conditions for vesting, exercise and
expiration of any stock options granted prior to 2000. Furthermore, the
amendments do not affect or alter the Incentive Plan provisions pertaining to
the expiration of stock options generally upon termination of employment absent
special circumstances. For further information, see the discussion below under
the heading "Stock Options."
SUMMARY DESCRIPTION OF THE INCENTIVE PLAN
Eligibility. Salaried officers and other key employees of CIGNA Corporation or
any of its consolidated subsidiaries are eligible to participate in the
Incentive Plan. Non-employee directors of CIGNA are not eligible.
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<PAGE> 16
Description of Awards under the Plan. The People Resources Committee has
discretionary authority to select which eligible employees will be granted
awards under the Incentive Plan. The People Resources Committee may award to
eligible employees:
-- Stock options.
-- Stock appreciation rights.
-- Restricted stock.
-- Dividend equivalent rights.
-- Strategic performance units.
In addition, CIGNA common stock (including restricted stock) may be awarded
under the Incentive Plan in place of cash awards that are due and would
otherwise be payable under certain other CIGNA benefit plans. For further
information, see the discussion below under the heading "Common Stock In Place
of Other Awards."
Stock Options. Subject to compliance with the provisions and limitations of the
Incentive Plan, the People Resources Committee may grant options to purchase
CIGNA common stock to eligible employees upon terms and conditions that the
Committee may establish in its discretion.
The People Resources Committee may grant incentive stock options (ISOs), which
are intended to comply with Section 422 of the Internal Revenue Code, or
nonqualified stock options. For further information, see discussion below under
the heading "Federal Income Tax Consequences."
The exercise price of any option granted may not be less than the fair market
value of the underlying shares of common stock on the date of grant. The
exercise period for each option may not be more than ten years from the date of
grant.
An unexercised option will generally expire upon termination of employment of
the optionholder. However, among other things, if termination of employment is
within two years following a change of control of CIGNA, the option (1) will
become exercisable on the date of termination of employment (applicable to
options granted on or after January 1, 2000) and (2) will not expire until the
earlier of three months following termination of employment or the regular
expiration date of the option.
The People Resources Committee may provide that the exercise price of an option
can be paid in common stock as well as cash. The committee may further provide
that, to the extent the exercise price is paid in common stock granted or
purchased at least six months earlier, replacement options covering such shares
will automatically be granted at an exercise price equal to the then-prevailing
fair market value. The exercise period of replacement options may not extend
beyond the expiration date of the options that were exercised.
An outstanding option may not be repriced to lower its exercise price or be
replaced by an option with a lower exercise price without prior shareholder
approval.
Stock Appreciation Rights. The People Resources Committee may grant stock
appreciation rights (SARs) in connection with the issuance of stock options.
Each SAR will relate to a specific option granted under the Incentive Plan and
may be granted at the same time as or after the grant of the option. Each SAR
will relate to the same number of shares of common stock as its corresponding
option. A recipient of a SAR may choose to exercise either the SAR or the
corresponding option, but not both.
Upon exercise, a SAR will entitle the recipient to elect to receive shares of
CIGNA common stock having an aggregate fair market value equal to the "spread"
on the corresponding option. The "spread" is the difference, on the date the SAR
is exercised, between the total fair market value of the shares of common stock
subject to the option and the total exercise price of that option. In lieu of
common stock, the committee has the right to pay the "spread" in cash or partly
in cash and partly in shares of common stock.
14
<PAGE> 17
A SAR may be exercised only during the period in which the corresponding option
may be exercised. An unexercised SAR will expire if the corresponding option
expires or is cancelled. The exercise of a SAR will result in cancellation of
the corresponding option.
Restricted Stock. The People Resources Committee may award shares of restricted
CIGNA common stock upon terms and conditions that it considers appropriate in
its discretion, provided that these terms and conditions may not be contrary to
the provisions and limitations contained in the Incentive Plan.
Among other things, the People Resources Committee specifies the restricted
period applicable to shares of restricted stock at the time of the award. The
recipient of the shares may not sell or otherwise transfer the shares for the
duration of the restricted period applicable to the shares. However, the
recipient has the right to vote the shares from the date of grant and, at the
discretion of the committee, may be entitled to receive payment of dividends on
the shares from the date of grant.
Shares of restricted stock must generally be forfeited if the recipient's
employment is terminated prior to the end of the applicable restricted period.
However, if employment is terminated due to death or disability (or within two
years following a change in control) prior to the end of the restricted period,
the restrictions will lapse and the shares will vest immediately. In addition,
if employment is terminated by reason of retirement prior to the end of the
restricted period, the People Resources Committee may provide (before the
retirement occurs) for the restrictions to lapse and the shares of restricted
stock to vest upon retirement.
Dividend Equivalent Rights. The People Resources Committee may grant dividend
equivalent rights to eligible employees. Dividend equivalent rights may relate
to a specific option granted under the plan or may be granted independent of any
option. Dividend equivalent rights that relate to a specific option may be
granted at the same time as or after the grant of the option.
Each dividend equivalent right will entitle the recipient to receive a cash
payment equal to the dividend declared and paid on one share of CIGNA common
stock. At the time of grant, the People Resources Committee will specify the
period over which the right will be paid. However, if the right relates to an
option, the payment period may not extend beyond the date that the related
option is exercised (or beyond the date that any SAR related to the option is
exercised).
At the time of grant, the People Resources Committee will specify whether the
dividend equivalent payments will be made contemporaneously with actual dividend
payments or collectively deferred and delayed until the occurrence of a date or
event specified by the committee. The committee will also specify whether the
dividend equivalent payments will be made in cash or common stock or a
combination of both.
Dividend equivalent rights must generally be forfeited upon termination of
employment, unless the People Resources Committee determines otherwise.
Strategic Performance Units. The People Resources Committee may grant long-term
performance awards to eligible employees in the form of strategic performance
units (SPUs). The value of each SPU is dependent upon the company's achievement
of specified objective performance goals over the course of a performance period
(typically three years).
At the time of grant, the committee specifies in writing the duration of the
performance period as well as:
-- the objective performance goals applicable to the SPUs,
-- the financial measures and corresponding formulas that will be used to
determine the degree to which CIGNA attains those goals, and
-- the valuation formulas that will be used to determine the ultimate dollar
value of the SPUs.
The financial measures selected by the committee must be one or more of the
following: return on equity; adjusted return on equity; earnings; revenue
growth; expense ratios or other expense management measures; and total
shareholder return. The selected financial measures may be evaluated by
reference to a
15
<PAGE> 18
specific standard or by reference to the comparative financial performance of a
peer group of competitors designated by the committee. See pages 23 to 24 of
this proxy statement for discussion of the specific financial measures that
pertain to SPUs granted during 1999.
Performance points are assigned to an SPU for each year of a performance period
based on the applicable financial measures, performance results and the
corresponding formulas. In its discretion (based on its assessment of CIGNA's
financial performance), the committee can adjust the performance points downward
by up to 10% of the maximum points that could have been assigned. Performance
points are accumulated for each year of the performance period.
The aggregate number of points accumulated during the performance period will be
converted into a preliminary dollar value per unit using the applicable
valuation formulas specified by the committee. The committee has discretion to
reduce the dollar value of each unit by up to $25, based on its judgment
regarding strategic and financial performance during the period. The final
dollar value of each unit may be from zero to $200.
Prior to payment, the People Resources Committee must certify in writing as to
the attainment of the pre-established objective performance goals and must
determine the final unit value of the SPUs. Typically, the amount payable to a
participant for the SPUs will be determined by multiplying the number of SPUs
times the final unit value as determined at the end of the applicable
performance period. However, the People Resources Committee may in its
discretion reduce the payment or totally eliminate the payment. Payment for the
SPUs, if any, may be made in the form of cash, shares of CIGNA common stock
(including restricted stock), options or any combination of the three.
Outstanding SPUs are generally cancelled upon termination of employment.
However, if employment of the plan participant is terminated due to retirement,
death, or disability, the disposition of any outstanding SPUs will be at the
discretion of the committee or its designee. If, within two years after a change
of control of CIGNA the plan participant is terminated, or resigns because of
certain adverse changes in employment conditions, that plan participant must be
paid within 30 days for all SPUs not yet valued and paid. The dollar value of
each SPU would be the greatest of:
-- the target value;
-- the highest value paid for a unit in the preceding twelve month period; or
-- the average of the unit values for the last two unit payments.
No payment will be made to a plan participant terminated after conviction of a
felony involving fraud or dishonesty directed against CIGNA.
Common Stock in Place of Other Awards. The People Resources Committee is
authorized under the Incentive Plan to pay shares of CIGNA common stock
(including restricted stock) to satisfy all or a portion of any award under:
-- other CIGNA incentive plans, including any bonus plan, short-term or
long-term incentive compensation plan or any other incentive compensation
arrangement, and
-- supplemental CIGNA benefit plans, including any plan that pays benefits
otherwise payable under a tax qualified retirement plan but for legal
limitations.
The fair market value of shares so issued will equal the amount of the award
that would otherwise have been made.
Limited Authority of Chief Executive Officer to Make Awards. Under the
Incentive Plan CIGNA's Chief Executive Officer has authority similar to the
People Resources Committee to select and make awards to eligible employees,
provided that the CEO must be a director of the company at the time of making an
award. No more than 10% of the shares of common stock available for issuance
under the Incentive Plan may be the subject of awards granted by the CEO. The
CEO may not grant any awards under the Incentive Plan for the benefit of any
director or for the benefit of any executive officer of the
16
<PAGE> 19
company. The CEO may grant strategic performance units only in limited
circumstances and in accordance with guidelines approved by the committee or
subject to ratification by the committee.
Reuse of Shares for Further Awards. The Incentive Plan provides that the
following shares may be reused for further awards under the plan: (1) shares of
common stock underlying stock options that expire or are canceled or
surrendered; (2) shares of restricted stock that are forfeited; (3) shares of
common stock that are tendered in payment of a stock option exercise price; and
(4) shares of common stock that are withheld or tendered to cover payment of
taxes on an award.
Adjustments and Amendments. The Incentive Plan provides for appropriate
adjustments in the number of shares of common stock subject to awards and
available for future awards in the event of changes in outstanding common stock
by reason of a merger, stock split or certain other events. In case of a pending
change of control of CIGNA, the People Resources Committee (subject to approval
by a majority of board members not participating in the Incentive Plan) may
modify outstanding options, stock appreciation rights, restricted stock and
certain other rights under the plan so as to accelerate vesting, the lapse of
restrictions or payment.
The Incentive Plan may be modified or amended by the Board of Directors at any
time and for any purpose that the Board of Directors deems appropriate. However,
no amendment may adversely affect any outstanding stock-based awards or
outstanding SPUs without the affected holder's consent. Shareholder approval of
an amendment will be sought if necessary under Internal Revenue Code or any
other applicable law or applicable regulation or under the rules of the New York
Stock Exchange.
Nontransferability. As a general matter, no derivative security (including,
without limitation, options and stock appreciation rights) granted pursuant to,
and no right to payment under, the Incentive Plan shall be assignable or
transferable by a plan participant except by will or by the laws of descent and
distribution. As a general matter, options or other rights shall be exercisable
during a participant's lifetime only by the participant or by the participant's
guardian or legal representative.
However, the People Resources Committee may in its discretion allow (at the time
of grant or afterwards) any options (other than incentive stock options) and
other rights granted to an eligible employee to be transferred, during the
employee's lifetime and without consideration, to an immediate family member, a
family trust or a family partnership or to any other person the committee shall
allow. The transferee may not subsequently transfer the option or other right
except by will or by the laws of descent and distribution.
Duration of the Plan. The Incentive Plan will remain in effect until all
options and rights granted under the plan have been exercised, satisfied or
terminated pursuant to the terms of the plan, and all performance periods for
strategic performance units have been completed.
SECTION 162(m) OF THE INTERNAL REVENUE CODE
The Board of Directors believes that there is a need to motivate officers of the
company with competitive compensation conditioned upon achievement of CIGNA's
financial goals, including stock price growth, and believes that the
compensation should be paid in a manner that allows it to be a deductible
expense for the company. This plan and all other competitive compensation
elements are intended to achieve these objectives.
Under Section 162(m) of the Internal Revenue Code, compensation paid to the CEO
or any of the next four most highly paid executive officers of the company in
excess of $1 million per taxable year generally will be deductible for Federal
income tax purposes if it qualifies as performance-based compensation. Options,
stock appreciation rights and SPUs awarded under the Incentive Plan are intended
to qualify as performance-based compensation for purposes of Section 162(m).
In order to qualify compensation as performance-based Section 162(m) requires,
among other things,
-- that it be paid upon the attainment of one or more performance goals
established by a committee of "outside directors" as defined in Section
162(m), which for CIGNA is the People Resources Committee,
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<PAGE> 20
-- that the material terms of the performance goals (including the financial
measures on which the goals are based and the maximum amount payable to an
individual, or the formula for determining that amount), or any material
amendments of those terms, be approved by shareholders and
-- that the material terms of the performance goals be reapproved by
shareholders every five years if the committee of "outside directors" has
discretion to set the targets in establishing the performance goals, which
is the case for SPUs under the Incentive Plan.
Shareholder approval of the Incentive Plan in 1995 enabled CIGNA to qualify
options, stock appreciation rights and SPUs for federal income tax deductibility
under Section 162(m). Shareholder approval of this proposal will permit CIGNA to
satisfy the requirements described above and continue to claim Federal income
tax deductions for qualifying awards under the plan.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The anticipated Federal income tax consequences of options granted under the
Incentive Plan, based on current Federal income tax law, are briefly summarized
below. This summary is not intended to be exhaustive or to describe tax
consequences based on particular circumstances. Among other things, it does not
address possible state, local or foreign tax consequences or awards other than
options.
Options. With respect to options which qualify as incentive stock options
(ISOs), an Incentive Plan participant will not recognize income for Federal
income tax purposes at the time options are granted or exercised, although the
exercise may give rise to alternative minimum tax liability for the participant.
If the participant disposes of shares acquired by exercise of an ISO either
before the expiration of two years from the date the options are granted or
within one year after the issuance of shares upon exercise of the ISO (the
"holding periods"), the participant will recognize in the year of disposition:
(a) ordinary income, to the extent that the lesser of either (1) the fair market
value of the shares on the date of option exercise or (2) the amount realized on
disposition, exceeds the option price; and (b) capital gain, to the extent that
the amount realized on disposition exceeds the fair market value of the shares
on the date of option exercise. If the shares are sold after expiration of the
holding periods, the participant generally will recognize capital gain or loss
equal to the difference between the amount realized on disposition and the
option price.
With respect to options which do not qualify as ISOs, the participant will
recognize no income upon grant of the option and, upon exercise, will recognize
ordinary income to the extent of the excess of the fair market value of the
shares on the date of option exercise over the amount paid by the participant
for the shares. Upon a subsequent disposition of the shares received under the
option, the participant generally will recognize capital gain or loss to the
extent of the difference between the fair market value of the shares at the time
of exercise and the amount realized on the disposition.
In general, for the option awards described above, CIGNA will receive an income
tax deduction at the same time and in the same amount as the amount that is
taxable to the employee as compensation. Options under the Incentive Plan are
intended to be qualified performance-based compensation for purposes of Section
162(m). To the extent a participant realizes capital gains, as described above,
CIGNA will not be entitled to any deduction for Federal income tax purposes.
PLAN BENEFITS
The benefits that will be received in the future under the Incentive Plan, as
amended, by particular individuals or groups are not determinable at this time.
The options and SPUs that were awarded under the Incentive Plan during 1999 to
the five named executive officers are summarized in the executive compensation
tables on pages 21 to 23. See "Summary Compensation Table" on page 20 for
information about grants of restricted stock to certain named executive officers
in February 2000. No stock appreciation rights or dividend equivalent rights
were awarded to any of the five named executive officers during 1999.
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<PAGE> 21
During 1999, the current executive officers of the company as a group (11) and
the current employees of the company, including all current officers who are not
executive officers of the company, as a group received the following awards
under the Incentive Plan:
<TABLE>
<CAPTION>
NUMBER OF SHARES GRANT DATE
UNDERLYING EXERCISE EXPIRATION PRESENT
NEW OPTION GRANTS OPTIONS GRANTED PRICE($) DATE VALUE(1)($)
- ----------------- ---------------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Executive Officer Group.................. 599,500 81.1875 2/24/2009 9,594,195
Non-Executive Officer & Employee Group... 1,950,090 81.1875 2/24/2009 30,272,135
</TABLE>
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERIOD UNTIL ------------------------
STRATEGIC PERFORMANCE UNITS: NUMBER OF UNITS MATURATION TARGET($) MAXIMUM($)
- ---------------------------- --------------- ------------ --------- ----------
<S> <C> <C> <C> <C>
Executive Officer Group................... 99,855 3 years 7,489,125 19,971,000
Non-Executive Officer & Employee Group.... 92,210 3 years 6,915,750 18,442,000
</TABLE>
<TABLE>
<CAPTION>
RESTRICTED STOCK: NUMBER OF SHARES VALUE ($)(2)
- ----------------- ---------------- ------------
<S> <C> <C> <C> <C>
Executive Officer Group................... -0- -0-
Non-Executive Officer & Employee Group.... 258,165 19,055,804
</TABLE>
- ------------------------
(1) Based on the Black-Scholes option pricing model adapted for use in valuing
employee stock options. See footnote 1 of the Option Grants Table at page 21 of
this Proxy Statement for details.
(2) Based on $73.8125 per share of CIGNA common stock at the close of regular
trading on February 29, 2000.
OTHER MATTERS THAT MAY ARISE AT THE MEETING
We do not know of any other matters that will come before the shareholders
during the annual meeting. If any other matters are properly presented for a
vote, the people named as proxies will have discretionary authority, to the
extent permitted by law, to vote on such matters according to their best
judgment.
The Chairman of the meeting may refuse to allow presentation of a proposal or a
nominee for the board if the proposal or nomination was not properly submitted.
The requirements for submitting proposals and nominations for this year's
meeting were the same as those described on page 32 for next year's meeting.
VOTING REQUIREMENTS
In order to transact business at an annual meeting, we must have a "quorum," or
the presence of a prescribed number of voting shares. For this meeting, we need
the holders of two-fifths of the issued and outstanding shares entitled to vote
to either be represented by proxy or attend.
Assuming we attain a quorum, the four nominees who receive a plurality (the
greatest number) of votes cast on Item 1 will be elected as directors. We need
the affirmative vote of a majority of the shareholders present in person at the
meeting or represented by proxy to ratify the appointment of independent
accountants and to approve the amendment and restatement of the CIGNA Long-Term
Incentive Plan.
If you abstain, your shares will count towards a quorum. Abstentions will not
affect the outcome of the election of directors, but they will be treated as
negative votes on the other items.
Many CIGNA shareholders own their shares in "street name," which means that
brokers are actually the record owners entitled to vote the shares. There are
certain instances in which the New York Stock Exchange prohibits brokers from
voting shares held for customers without specific voting instructions. When a
broker does not have voting instructions and withholds its vote on one of these
matters, it is called a "broker non-vote." Broker non-votes count toward a
quorum, but otherwise do not affect the outcome of any proposal. Brokers will
have discretionary authority to vote on Items 1 and 2 described in this proxy
statement, which means that your broker can vote your street name shares even if
you do not give specific voting instructions. The New York Stock Exchange has
advised CIGNA that brokers may not vote on Item 3 without your instructions.
19
<PAGE> 22
EXECUTIVE COMPENSATION
What follows is information about how CIGNA compensates its Chief Executive
Officer and each of the four most highly compensated executive officers other
than the CEO at the end of 1999. Together these five individuals are called the
"named executive officers."
SUMMARY COMPENSATION TABLE
This table shows the various forms of compensation awarded to each of the named
executive officers in the past three years. Other tables in this proxy
statement, such as the options grants table on page 21 and the long-term
incentive plan awards table on page 23, provide more detail about specific types
of compensation.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ ----------------------- -------
(a) (b) (c) (d) (e) (f) (g) (i)
OTHER RESTRICTED SECURITIES (h) ALL OTHER
ANNUAL STOCK UNDERLYING LTIP COMPEN-
SALARY BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($) ($)(2) (#) ($)(3) ($)(4)
- --------------------------- ---- ------ ------ ------------ ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. Edward Hanway............ 1999 711,500 2,500,000 -0- 565,780 228,612 -- 82,815
President and 1998 536,500 900,000 -0- -0- 125,591 1,400,000 58,600
Chief Executive Officer* 1997 486,500 525,000 -0- -0- 377,112 1,122,660 41,526
Wilson H. Taylor............ 1999 1,173,100 4,000,000 26,500 2,074,530 600,539 -- 260,487
Chairman* 1998 1,069,000 3,800,000 -0- -0- 440,310 2,800,000 118,909
1997 970,200 2,300,000 -0- -0- 999,951 1,913,670 118,391
James G. Stewart............ 1999 636,500 975,000 3,500 377,190 230,908 -- 72,496
Executive Vice President 1998 590,600 875,000 -0- -0- 204,123 1,400,000 60,898
and Chief Financial
Officer 1997 558,300 725,000 -0- -0- 498,642 1,122,660 44,921
William M. Pastore.......... 1999 435,300 725,000 5,800 -0- 68,367 -- 44,284
President, CIGNA 1998 -- -- -- -- -- -- --
HealthCare 1997 -- -- -- -- -- -- --
Donald M. Levinson.......... 1999 493,300 750,000 6,100 301,750 127,235 -- 62,371
Executive Vice President 1998 468,300 687,500 -0- -0- 136,923 800,000 48,002
Human Resources and 1997 440,600 550,000 -0- -0- 370,281 660,330 37,774
Services
</TABLE>
- ------------------------
* Mr. Hanway was elected Chief Executive Officer on January 26, 2000,
succeeding Mr. Taylor who remains as Chairman of the Board.
(1) The amounts shown in this column for 1999 are bonus awards made under the
CIGNA Executive Incentive Plan. Mr. Taylor's bonus award consisted of cash and
shares of CIGNA common stock. The fair market value of those shares on the date
of grant was approximately $1,000,000. The other named executive officers
received their bonuses in cash.
(2) Shares of restricted stock, the value of which is shown in column (f), were
granted in February 2000 under the CIGNA Executive Incentive Plan and the CIGNA
Long-Term Incentive Plan. On December 31, 1999, Mr. Pastore held 8,442 shares of
restricted stock valued at $676,679. CIGNA pays dividends on restricted stock.
(3) Long-term compensation for the three-year period ending December 31, 1998
was paid in cash in May, 1999. Long-term compensation for the three-year period
ending December 31, 1999 will be paid in May, 2000. We explain the long-term
incentive plan on page .
(4) The amounts shown in column (i) include:
-- CIGNA's contributions under its regular and supplemental 401(k) plans in
the following amounts for 1999: Mr. Hanway, $65,435; Mr. Taylor,
$202,151; Mr. Stewart, $61,368; Mr. Pastore, $38,952; and Mr. Levinson,
$47,915.
-- the value of benefits under CIGNA's Financial Services Program (covering
financial planning, tax preparation, and legal services related to
financial and estate planning), which, for 1999, were as follows: Mr.
Hanway, $17,354; Mr. Taylor, $27,436; Mr. Stewart, $8,089; Mr. Pastore,
$5,332; and Mr. Levinson, $14,456.
-- above-market interest (as defined under SEC rules) on mandatorily
deferred compensation in the following amounts: Mr. Taylor, $30,900, and
Mr. Stewart, $3,039.
20
<PAGE> 23
OPTION GRANTS IN FISCAL YEAR 1999
The following table provides additional information about the stock options
granted in 1999 to the named executive officers. Those stock options are shown
in column (g) of the summary compensation table on page 20. CIGNA did not grant
stock appreciation rights in 1999.
<TABLE>
<CAPTION>
GRANT
INDIVIDUAL GRANTS DATE VALUE
- ---------------------------------------------------------------------------------------------- ----------
(a) (c) (d) (e) (f)
(b) % OF
NUMBER OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED(#) IN 1999 ($/SH) DATE VALUE($)(1)
---- ---------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
H. Edward Hanway
New options(2) 106,000 2.07 81.1875 02/24/09 1,696,388
Replacement options(3) 3,872 0.08 78.6875 02/28/06 62,873
Replacement options 45,669 0.89 95.8750 --(4) 903,539
Replacement options 73,071 1.43 84.5938 --(5) 1,275,569
Wilson H. Taylor
New options 202,800 3.97 81.1875 02/24/09 3,245,543
Replacement options 88,078 1.72 78.6875 --(6) 1,430,189
Replacement options 113,305 2.22 90.4688 --(7) 2,115,281
Replacement options 83,051 1.62 90.6563 --(8) 1,553,686
Replacement options 113,305 2.22 83.2188 --(9) 1,945,767
James G. Stewart
New options 62,500 1.22 81.1875 02/24/09 1,000,229
Replacement options 33,894 0.66 78.6875 --(10) 550,362
Replacement options 19,811 0.39 80.0625 --(11) 327,307
Replacement options 31,927 0.62 90.4688 --(12) 596,042
Replacement options 51,460 1.01 90.1875 --(13) 957,715
Replacement options 31,316 0.61 83.2188 --(14) 537,784
William M. Pastore
New options 40,500 0.79 81.1875 02/24/09 648,148
Replacement options 27,867 0.54 80.0313 --(15) 460,225
Donald M. Levinson
New options 45,500 0.89 81.1875 02/24/09 728,167
Replacement options 16,401 0.32 80.0625 --(16) 270,969
Replacement options 20,161 0.39 92.5625 --(17) 385,095
Replacement options 25,013 0.49 90.1875 --(18) 465,514
Replacement options 20,160 0.39 79.1250 --(19) 329,173
</TABLE>
- ------------------------
(1) We used the Black-Scholes option pricing model, adapted for use in valuing
employee stock options, to calculate these amounts. Our calculation required
several assumptions: an option life of three years, a dividend yield of 1.63%, a
price volatility of CIGNA common stock of 25.97%, and an annualized risk-free
interest rate of 4.88%. The calculation also reflects a 3.0% discount per year
for risk of forfeiture over the option vesting schedules. The actual value, if
any, an executive may realize on options will depend on the excess of the stock
price on the date the option is exercised over the exercise price. Executives
will not necessarily realize the estimated value that the Black-Scholes model
generates. CIGNA believes that no model can accurately predict the future price
of CIGNA common stock or assign an accurate present value to stock options.
(2) New options become exercisable over a three-year period, with one-third
becoming exercisable no earlier than the first anniversary of their grant date.
New options have a replacement feature, which is described below in Note 3.
Options granted in 1995 or later, and gains realized upon exercise of those
options for certain periods, may be forfeited by the named executive officers
if, following termination of employment with CIGNA, they engage in activities
harmful to or in competition with CIGNA.
21
<PAGE> 24
(3) In order to encourage employees to increase their share ownership, CIGNA
grants one "replacement option" for each share of CIGNA stock that an employee
uses to pay the exercise price of stock options. Replacement options become
exercisable six months after their grant date, and terminate on the expiration
date of the option that they replace. The exercise price of a replacement option
is equal to the fair market value of CIGNA common stock on the grant date. All
replacement options granted in 1999 have a replacement feature. Because
replacement options replace shares that are used to buy new shares, replacement
options maintain, but do not increase, the employee's total ownership of CIGNA
shares and options.
(4) This replacement option grant includes 6,936 options expiring July 27,
2004; 9,376 options expiring February 28, 2006; and 29,357 options expiring
February 26, 2007.
(5) This replacement option grant includes 1,954 options expiring February 24,
2003; 3,977 options expiring February 23, 2004; 23,542 options expiring July 27,
2004; 15,971 options expiring February 22, 2005; 9,324 options expiring February
28, 2006; 3,536 options expiring February 26, 2007; and 14,767 options expiring
February 25, 2008.
(6) This replacement option grant includes 58,400 options expiring February 28,
2006; and 29,678 options expiring February 26, 2007.
(7) This replacement option grant includes 858 options expiring February 24,
2003; 58,932 options expiring July 27, 2004; 5,058 options expiring February 22,
2005; 20,167 options expiring February 28, 2006; and 28,290 options expiring
February 25, 2008.
(8) This replacement option grant includes 10,977 options expiring February 24,
2003; 14,856 options expiring February 23, 2004; 20,940 options expiring July
27, 2004; and 36,278 options expiring February 22, 2005.
(9) This replacement option grant includes 1,876 options expiring February 22,
2005; 11,054 options expiring February 28, 2006; and 100,375 options expiring
October 20, 2007.
(10) This replacement option grant includes 20,396 options expiring February
28, 2006; and 13,498 options expiring February 26, 2007.
(11) This replacement option grant includes 13,632 options expiring February
28, 2006; and 6,179 options expiring February 26, 2007.
(12) This replacement option grant includes 4,579 options expiring February 24,
2003; 7,444 options expiring February 23, 2004; 2,261 options expiring July 27,
2004; 5,676 options expiring February 28, 2006; and 11,967 options expiring
February 25, 2008.
(13) This replacement option grant includes 15,376 options expiring July 27,
2004; 24,967 options expiring February 22, 2005; 9,271 options expiring February
28, 2006; and 1,846 options expiring February 25, 2008.
(14) This replacement option grant includes 3,372 options expiring July 27,
2004; 9,236 options expiring February 28, 2006; and 18,708 options expiring
February 26, 2007.
(15) This replacement option grant includes 15,403 options expiring December
22, 2005; 3,124 options expiring February 28, 2006; 7,207 options expiring
February 26, 2007; and 2,133 options expiring February 25, 2008.
(16) This replacement option grant includes 11,276 options expiring February
28, 2006; and 5,125 options expiring February 26, 2007.
(17) This replacement option grant includes 7,298 options expiring February 22,
2005; 3,976 options expiring February 26, 2007; and 8,887 options expiring
February 25, 2008.
(18) This replacement option grant includes 14,168 options expiring July 27,
2004; 1,453 options expiring February 22, 2005; and 9,392 options expiring
February 28, 2006.
(19) This replacement option grant includes 5,665 options expiring February 22,
2005; 11,409 options expiring February 28, 2006; and 3,086 options expiring
February 26, 2007.
22
<PAGE> 25
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 1999 AND
1999 FISCAL YEAR-END OPTION VALUES
This table provides information about options exercised by the named executive
officers during 1999, and about the unexercised stock options they held at the
end of 1999. The named executive officers did not exercise or hold any stock
appreciation rights during 1999.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
NUMBER OF SECURITIES
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SECURITIES OPTIONS AT 1999 IN-THE-MONEY OPTIONS AT
UNDERLYING YEAR-END(#) 1999 YEAR-END($)
EXERCISED VALUE --------------------------- ---------------------------
NAME OPTIONS(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ---------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
H. Edward Hanway............ 196,050 6,684,957 74,429 475,071 147,237 6,410,015
Wilson H. Taylor............ 599,399 17,159,294 456,198 678,156 6,230,695 6,556,421
James G. Stewart............ 248,814 6,808,893 155,122 441,276 2,482,374 6,410,015
William M. Pastore.......... 41,359 1,079,605 91,208 66,615 1,533,118 602,397
Donald M. Levinson.......... 122,499 3,511,031 97,708 357,673 1,654,519 5,737,836
</TABLE>
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL YEAR 1999
This table provides information about long-term incentive awards granted in 1999
to the named executive officers.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE BASED PLANS
-----------------------------------
(a) (b) (c) (d) (e) (f)
NUMBER PERIOD
OF UNTIL THRESHOLD MAXIMUM
NAME UNITS MATURATION ($) TARGET($) ($)
- ---- ------ ---------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
H. Edward Hanway..................... 33,335 3 years * 2,500,125 6,667,000
Wilson H. Taylor..................... 43,335 3 years * 3,250,125 8,667,000
James G. Stewart..................... 12,000 3 years * 900,000 2,400,000
William M. Pastore................... 8,670 3 years * 650,250 1,734,000
Donald M. Levinson................... 8,670 3 years * 650,250 1,734,000
</TABLE>
- ------------------------
* The discussion below explains the minimum amount payable under the CIGNA
Long-Term Incentive Plan.
CIGNA provides long-term incentives to executive officers and other key
employees by awarding them strategic performance units, called "SPUs", under the
Long-Term Incentive Plan. The value of SPUs is based on CIGNA's achievement over
a three-year period of financial and strategic performance objectives in
comparison to a group of competitors that overall have business lines similar to
CIGNA's. The table includes equivalent units which were awarded to ensure
competitive pay opportunity: 13,335 to Mr. Hanway and 23,335 to Mr. Taylor.
The People Resources Committee assigns a value to SPUs by:
-- Comparing CIGNA's return on equity for each year in the three-year
performance period to the average return on equity of the group of
competitors;
-- Assigning points from zero, if CIGNA's return on equity is five or more
percentage points below the competitors, to 100, if five or more
percentage points above the competitors (the Committee may reduce any
year's point total by up to 10 points); and
-- Translating the combined three-year point score into dollars using a
conversion formula established by the Committee when the SPUs are awarded.
23
<PAGE> 26
The Committee has discretion to reduce the dollar value of each unit by up to
$25, based on its judgment regarding strategic and financial performance during
the period. The final dollar value of each unit may be from zero to $200. The
Committee sets a target value for units when they are awarded, which is the
target to be paid when CIGNA's three-year return on equity equals the
competitors. The target is currently $75 per unit.
If within two years after a change of control of CIGNA an employee is
terminated, or resigns because of certain adverse changes in employment
conditions, that employee must be paid within 30 days for all SPU awards not yet
valued and paid. The dollar value of each SPU would be the greatest of:
-- the target value;
-- the value for a unit paid in the preceding twelve-month period; or
-- the average of the unit values for the last two unit payments.
No payment is made to an employee terminated after conviction of a felony
involving fraud or dishonesty directed against CIGNA.
PENSION PLAN TABLE
The CIGNA Pension Plan provides two methods of determining retirement benefits.
Messrs. Hanway, Taylor, Stewart and Levinson, and most other employees hired
before January 1, 1989 participate in Part A of the Plan. This table shows
annual retirement benefits under Part A (before the Social Security offset of
50% of an individual's annual primary Social Security benefit) under a straight
life annuity, computed assuming the recipient retires at age 65 after specified
years of service and earnings.
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------
REMUNERATION 15 20 25 30 35
- ------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$ 200,000...................... $ 60,000 $ 80,000 $ 100,000 $ 120,000 $ 140,000
600,000...................... 180,000 240,000 300,000 360,000 420,000
1,000,000..................... 300,000 400,000 500,000 600,000 700,000
1,400,000..................... 420,000 560,000 700,000 840,000 980,000
1,800,000..................... 540,000 720,000 900,000 1,080,000 1,260,000
2,200,000..................... 660,000 880,000 1,100,000 1,320,000 1,540,000
2,600,000..................... 780,000 1,040,000 1,300,000 1,560,000 1,820,000
3,000,000..................... 900,000 1,200,000 1,500,000 1,800,000 2,100,000
3,400,000..................... 1,020,000 1,360,000 1,700,000 2,040,000 2,380,000
3,800,000..................... 1,140,000 1,520,000 1,900,000 2,280,000 2,660,000
4,200,000..................... 1,260,000 1,680,000 2,100,000 2,520,000 2,940,000
4,600,000..................... 1,380,000 1,840,000 2,300,000 2,760,000 3,220,000
5,000,000..................... 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000
5,400,000..................... 1,620,000 2,160,000 2,700,000 3,240,000 3,780,000
5,800,000..................... 1,740,000 2,320,000 2,900,000 3,480,000 4,060,000
6,200,000..................... 1,860,000 2,480,000 3,100,000 3,720,000 4,340,000
</TABLE>
Under Part A, annual retirement benefits are based upon:
-- the employee'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.
Mr. Pastore and employees hired on or after January 1, 1989 participate in Part
B of the Pension Plan.
24
<PAGE> 27
Pension benefits under Part B equal the sum of an employee's accumulated annual
benefit and quarterly interest credits. Annual benefit credits are based on age,
years of credited service and earnings. Quarterly interest credits are based on
U.S. Treasury bond rates.
These Part B benefits may be paid at or after separation from service in cash in
a lump sum or in an annuity form. The estimated annual benefit under Part B for
Mr. Pastore upon his retirement from CIGNA at age 65 is $35,000. This estimate
assumes level compensation until retirement, U.S. Treasury bond rate of 6.5%,
current plan formulas and regulatory environment, and payout under a straight
life annuity.
Covered earnings under both Part A and Part B include salary and bonuses, but
not long-term incentive plan payouts or any other incentive awards. Salary and
bonus information for the named executive officers is in columns (c) and (d) of
the summary compensation table on page 20.
As of January 1, 2000, the named executive officers had the following credited
years of service: Mr. Taylor, 30 years; Mr. Hanway, 22 years; Mr. Stewart, 30
years; Mr. Pastore, 4 years; and Mr. Levinson, 22 years.
If Messrs. Taylor, Stewart, and Levinson remain employed by CIGNA and comply
with their contractual obligations to CIGNA, which include obligations not to
compete and to maintain confidentiality of business information, they will be
credited with up to five additional years of service under Part A. This
additional credited service (which cannot increase total years of service to
more than 35) will vest in the event of death, disability, certain resignations
within two years after CIGNA experiences a change of control, or otherwise upon
termination if CIGNA approves such vesting. If CIGNA terminates any of these
executive officers, the officer will be credited with the years of additional
service credit, unless the officer was terminated because of a conviction of a
felony involving fraud or dishonesty directed against CIGNA. If any of these
executive officers dies after the age of 55 while he is still in CIGNA's employ,
his surviving spouse's benefit will be the same as the benefit she would have
received had the executive first retired and then died immediately.
If Mr. Pastore remains employed by CIGNA, he will be credited with additional
years of service under Part B. The estimated annual benefit under this
supplemental plan upon his retirement from CIGNA at age 65 is $163,000. In
addition, if Mr. Pastore continues his employment with CIGNA until age 55 and
complies with his contractual obligations to CIGNA, which include obligations
not to compete and to maintain confidentiality of business information, he will
receive a supplemental pension benefit to bring his total pension to the level
that he would have attained if he had stayed with his former employer. The
estimated annual benefit under this supplemental arrangement upon his retirement
from CIGNA at age 65 is $144,000. These estimates are based on the same
assumptions as those used above to calculate his annual benefit under Part B.
The CIGNA Pension Plan (Part A and Part B) cannot be terminated, or benefit
accruals reduced, for a three-year period following a change of control of
CIGNA. If Part A 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, participants in Part A and Part B
who are terminated, other than for cause, within three years following a change
of control will receive certain benefits. Participants in Part A 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.
Participants in Part B will receive a special benefit credit for the year of
termination equal to a percentage of adjusted eligible earnings.
TERMINATION OF EMPLOYMENT
CIGNA employees are entitled to severance benefits under certain circumstances,
but not if they are terminated for cause or resign. Severance benefits include
payments equal to the employee's salary rate at termination for a specified
period based on the employee's years of service. The period is generally two to
25
<PAGE> 28
52 weeks, but it is 13 to 104 weeks if the employee is terminated within two
years after a change of control of CIGNA.
An employee terminated because of job elimination or within two years after a
change of control of CIGNA also receives a supplemental payment equal to:
-- For a termination from January 1 to March 31 -- the average of the bonuses
paid during the two years before the year of termination, offset by any
bonus paid in the year of termination;
-- For a termination from April 1 to December 31 -- the average of the
bonuses paid for the two years before the year of termination, prorated to
reflect actual months worked in the year of termination; and
-- The value of restricted CIGNA stock forfeited upon termination.
Executive level employees (including the named executive officers) who are
terminated within two years after a change of control will receive:
-- Payments, at the salary rate in effect at termination (regardless of years
of service), for 156 weeks for senior executives (including the named
executive officers) and 104 weeks for other executives;
-- The higher of the bonus actually received for the preceding calendar year
or the amount of the annual incentive bonus guideline applicable to the
employee under the Corporation's incentive bonus plan immediately before
the change of control multiplied by three for senior executives (including
the named executive officers) and by two for other executives; and
-- The value of restricted CIGNA stock forfeited upon termination.
If within two years after a change of control certain changes affect an
executive level employee, and he or she then resigns following written
notification to CIGNA, the resignation will be treated as a termination after a
change of control. The covered changes are any reduction in compensation; any
material reduction in authority, duties or responsibilities; or a relocation of
the executive's office more than 35 miles from its location on the date of the
change of control.
Executive level employees who are terminated as a result of conviction of a
felony involving fraud or dishonesty directed against CIGNA will not receive the
payments described above.
26
<PAGE> 29
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report of the People Resources Committee and the performance graph on page
30 have been prepared only for the purpose of this proxy statement. Neither
shall be incorporated, in whole or in part, in any other CIGNA filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
The functions performed by the People Resources Committee are described on page
10. All members of the Committee are outside directors.
SUMMARY
The primary objective of CIGNA's executive compensation program is to pay for
performance that increases shareholder value. The program compensates executives
through:
-- base salary
-- annual bonus
-- long-term incentives
Each of these items is described in detail below under the heading "Elements of
the Compensation Package."
Annual bonus and long-term incentives vary based on competitive performance
because they are tied to CIGNA's business results, and are not guaranteed to any
named executive. The annual bonus recognizes short-term business results and
individual performance. Long-term incentives for the named executive officers
are based upon sustained corporate-wide results.
PROGRAM DESCRIPTION
For each senior executive, CIGNA's compensation program provides targets for
total pay based on median compensation levels for executives in comparable
positions in similarly sized companies. We consider a significant number of
companies to make this comparison, including most of the companies in the S&P
Insurance/Managed Care Indexes shown in the performance graph on page 30. Once
total pay targets are set, the Committee determines the appropriate competitive
mix of compensation that will motivate the executives to achieve CIGNA's
performance and strategic objectives.
The Committee regularly monitors CIGNA's compensation program, keeping in mind
the company's strategic goals as well as industry practices and trends. We
modify the program when we believe a change will promote shareholder interests.
For example, the stock option program was amended several years ago to provide
that an executive who becomes employed by a competitor or engages in other
activities deemed to be detrimental to CIGNA may be required to forfeit certain
gains realized from exercising options.
CIGNA executives are expected to demonstrate their confidence in the company's
future by owning a substantial amount of CIGNA stock. In particular, the named
executive officers are expected to own stock valued at between five and seven
times their salaries. The Committee reviews ownership levels annually.
Compensation paid to the named executive officers is expected to be fully
tax-deductible.
ELEMENTS OF THE COMPENSATION PACKAGE
Base Salary
Base salary is intended to provide a fixed level of competitive compensation
reflecting the scope and nature of basic job responsibilities. The Committee
will grant a salary increase, if appropriate, based on an individual's
performance and an assessment of whether the current salary is competitive
relative to executives in comparable positions at similarly sized companies.
27
<PAGE> 30
Annual Bonus
Named executive officers earn awards under the shareholder-approved CIGNA
Executive Incentive Plan, which was designed to motivate these officers with
competitive awards based upon achievement of competitive financial and
operational goals. This plan, which prescribes limits for award amounts,
complies with Section 162(m) of the Internal Revenue Code. The Plan does not
permit the named executive officers to receive awards unless CIGNA attains
certain objective performance goals.
Annual bonus awards for all employees recognize contributions to annual business
results as measured against competitors and against CIGNA's operational plans.
In particular, we assess corporate-wide, business unit, and individual
performance in relation to the following major factors, listed in order of
importance: earnings, revenue growth and cost management. Financial results must
be achieved within the context of customer service quality and financial
integrity standards. We generally reward performance that meets CIGNA's
operational plans and equals the results of the competition with a bonus that is
equal to median bonus levels at other large companies. Better or worse
performance can result in a bonus that is higher or lower than the median. An
individual's bonus, reflecting personal contribution to business results, can
range from 0 to 200% of the competitive median.
Long-Term Incentives
CIGNA offers long-term incentives to its executives under the CIGNA Long-Term
Incentive Plan, which is described beginning on page 12. These awards may
include Strategic Performance Units, restricted stock and stock options. The
1999 long-term incentives awards were intended to focus management on
competitively superior long-term results, to align executives' interests with
shareholder interests, to ensure that CIGNA executives have incentive
opportunities comparable to their counterparts at CIGNA's competitors, and to
motivate key executives to remain with the company. CIGNA's stock options
typically have terms of ten years and vesting periods of up to three years.
CEO COMPENSATION
Mr. Taylor's overall compensation package acknowledges a record of significant
increases in CIGNA's share value (as shown on the performance graph on page 30),
as well as:
-- achievement of continued operating performance improvements in healthcare
and in other employee benefits businesses
-- sale of the property and casualty business
-- people strengthening, including CEO transition
-- cost reductions that are expected to have a positive impact on future
earnings.
Most of Mr. Taylor's total pay opportunity (approximately 90%) is variable
compensation (such as bonuses and stock options) that is at risk and tied to
competitive corporate business results. Approximately one-third of his total
compensation opportunity is based on annual competitive business performance;
over half is tied to long-term, sustained competitively superior corporate-wide
results. Mr. Taylor's total compensation opportunity (as well as the individual
base salary and variable compensation components) is consistent with the median
total compensation for CEOs of comparable sized companies.
The Committee considers several factors to assess the performance of CIGNA and
Mr. Taylor:
-- profitability of each business unit
-- profit improvement
-- growth in revenue from profitable products/services
-- expense management
28
<PAGE> 31
-- specific measures that vary by business activity, such as profit margin
and membership growth in the healthcare business and profitable asset
growth in the pension business.
Mr. Taylor's compensation package for 1999 is itemized in the summary
compensation table on page 20. (His payment in 1999 under the Long-Term
Incentive Plan for the three-year period ending December 31, 1998 is included in
the 1998 column of the table.) What follows is an explanation of how the
Committee arrived at the amounts of the various components.
1999 Bonus and Restricted Stock Grant. Mr. Taylor was awarded a bonus because
CIGNA exceeded the objective financial performance goals established under the
CIGNA Executive Incentive Plan. Specific issues that the Committee considered
included CIGNA's competitively superior earnings growth and earnings per share
performance. A grant of restricted stock was awarded to specifically recognize
the successful sale of the property and casualty business and well managed CEO
transition.
Payment under Long-Term Incentive Plan. The Committee approved a
formula-generated value of $200 for each Strategic Performance Unit awarded in
1996. This amount, which reflects CIGNA's superior performance over the period
from 1996 to 1998 compared to the peer group, was distributed in cash to Mr.
Taylor and other named executives who met CIGNA's stock ownership guidelines
(five to seven times salary).
Stock options. Mr. Taylor received options to recognize the total shareholder
return achieved in 1998 and to link his future compensation opportunity to the
creation of additional shareholder value.
PEOPLE RESOURCES COMMITTEE:
Louis W. Sullivan, M.D., Chairman
Robert P. Bauman
Charles R. Shoemate
Harold A. Wagner
Marilyn Ware
29
<PAGE> 32
PERFORMANCE GRAPH
The following graph, which covers the five-year period ending December 31, 1999,
compares the cumulative total shareholder return (assuming reinvestment of
dividends) on CIGNA's common stock with the cumulative total shareholder return
on (i) the Standard and Poor's (S&P) 500 Index, (ii) a weighted average of the
S&P Managed Care and Life/Health Insurance Indexes, and (iii) an equally
weighted average of the S&P Multi-line, Property & Casualty, Life/Health
Insurance and Managed Care Indexes. To better reflect CIGNA's businesses after
the sale of its property & casualty business in 1999, CIGNA has begun comparing
its performance to a weighted average of the S&P Managed Care and Life/ Health
Insurance Indexes and intends to stop using the average of the S&P Multi-line,
Property & Casualty, Life/Health Insurance and Managed Care Indexes after this
proxy statement.
FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN*
[FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN CHART]
<TABLE>
<CAPTION>
CIGNA S&P 500 INDEX S&P MANAGED CARE, S&P INSURANCE,
----- ------------- LIFE/HEALTH INSURANCE MANAGED CARE
INDEXES** INDEXES***
--------------------- --------------
<S> <C> <C> <C> <C>
12/30/94 100.0 100.0 100.0 100.0
12/29/95 168.0 138.0 133.0 139.0
12/31/96 228.0 169.0 134.0 162.0
12/31/97 294.0 226.0 154.0 219.0
12/31/98 402.0 290.0 146.0 221.0
12/31/99 425.0 351.0 127.0 217.0
</TABLE>
* Assumes that the value of the investment in CIGNA common stock and each
index was $100 on December 30, 1994 and that all dividends were reinvested.
** Weighted average of S&P Managed Care (75%) and Life/Health Insurance (25%)
Indexes.
*** Equally weighted average of S&P Multi-line, P&C, Life/Health Insurance and
Managed Care Indexes.
30
<PAGE> 33
COMPLIANCE WITH SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
CIGNA's directors and executive officers are required to file reports of their
holdings and transactions in CIGNA securities with the Securities and Exchange
Commission and the New York Stock Exchange. Based on our records and
representations from our executive officers and directors, we believe that all
such reports due in 1999 were filed as required.
LARGEST SECURITY HOLDERS
This table lists the only shareholders that we know beneficially owned more than
five percent of CIGNA's common stock as of December 31, 1999. We prepared the
table using information from Schedule 13G filed by the beneficial owners listed
and other sources.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER AS OF 12/31/1999 AS OF 12/31/99
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
FMR Corporation 15,849,564 9.34%
82 Devonshire Street
Boston, MA 02109-3605
-------------------------------------------------------------------------------------------------------
Sanford C. Bernstein & Co. 14,483,049 8.53%
767 Fifth Avenue
New York, NY 10153
-------------------------------------------------------------------------------------------------------
Wellington Management Company, LLP 9,603,380 5.66%
75 State Street
Boston, MA 02109-1807
-------------------------------------------------------------------------------------------------------
Putnam Investment Inc. 8,736,051 5.15%
One Post Office Square
Boston, MA 02109
</TABLE>
-- FMR Corporation reported on Schedule 13G that it held these shares for the
accounts of discretionary clients. These clients have the right to receive
dividends and any proceeds from the sale of these shares. FMR reported
sole voting power as to 2,168,854 shares, shared voting power as to none
of these shares, and sole dispositive power as to all of these shares. FMR
reported to the Securities and Exchange Commission that it acquired its
shares in the ordinary course of business with no intention of influencing
control of CIGNA.
-- Sanford Bernstein reported on Schedule 13G that it held these shares for
the accounts of discretionary clients. These clients have the right to
receive dividends and any proceeds from the sale of these shares.
Bernstein reported sole voting power as to 6,817,757 shares, shared voting
power as to 1,941,439 shares, and sole dispositive power as to all of
these shares. Bernstein reported to the Securities and Exchange Commission
that it acquired its shares in the ordinary course of business with no
intention of influencing control of CIGNA.
-- Wellington Management Company reported on Schedule 13G that it held these
shares for the accounts of discretionary clients. These clients have the
right to receive dividends and any proceeds from the sale of these shares.
Wellington reported it does not have sole voting power for any of these
shares, but has shared voting power for 1,236,080 and shared dispositive
power as to all of them. Wellington reported to the Securities and
Exchange Commission that it acquired its shares in the ordinary course of
business with no intention of influencing control of CIGNA.
-- Putnam advised management that it acquired its shares in the ordinary
course of business with no intention of influencing control of CIGNA.
31
<PAGE> 34
SOLICITATION EXPENSES
CIGNA will bear the cost of soliciting your proxy. We will enlist the help of
banks and brokerage houses in soliciting proxies from their customers, and
reimburse them for their out-of-pocket expenses. In addition, we have engaged
Georgeson Shareholder Communications, Inc. to assist in soliciting proxies.
Georgeson will receive a fee of approximately $20,000 plus reasonable
out-of-pocket expenses for this work.
Proxies will be solicited personally, through the mail, by telephone, or via the
Internet. Directors, officers, employees, and agents of CIGNA or its
subsidiaries may assist in solicitation efforts.
2001 ANNUAL MEETING
The 2001 Annual Meeting will be Wednesday, April 25, 2001 at a time and location
to be announced later. The board may change this date if necessary.
CIGNA's Corporate Secretary must receive a shareholder proposal by November 24,
2000 for the proposal to be eligible for inclusion in our proxy materials for
the next annual meeting. Shareholders can present other proposals from the floor
of the annual meeting only if the Corporate Secretary receives notice and
certain information before January 25, 2001. Any shareholder who wishes to
introduce a proposal should consult CIGNA's by-laws and applicable proxy rules
of the Securities and Exchange Commission.
If you wish to nominate someone for the board of directors, you must notify the
Corporate Secretary before January 25, 2001. The notice must include certain
information, specified in the by-laws, about yourself and your nominee(s). Each
nominee must also provide the Corporate Secretary with written consent to serve
if elected.
CAROL J. WARD, Corporate Secretary
32
<PAGE> 35
APPENDIX A
CIGNA LONG-TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 2000)
ARTICLE 1
STATEMENT OF PURPOSE
The CIGNA Long-Term Incentive Plan (the "Plan") is intended to:
(a) Provide incentives for and reward key employees of the Company by providing
them with an opportunity to acquire an equity interest in CIGNA
Corporation, thereby increasing their personal interest in its continued
success and progress;
(b) Aid the Company in attracting and retaining key personnel of exceptional
ability;
(c) Supplement and balance the Company's salary and incentive bonus programs in
support of CIGNA Corporation's long-term strategic plans;
(d) Motivate and reward the maximization of CIGNA Corporation's long-term
financial results; and
(e) Encourage decisions and actions by senior level Company executives that are
consistent with the long-range interests of CIGNA Corporation's
shareholders.
The Plan is an amendment and restatement as of the Effective Date of the CIGNA
Long-Term Incentive Plan.
ARTICLE 2
DEFINITIONS
Except as otherwise provided in the Plan or unless the context otherwise
requires, the terms defined below shall have the following meanings under the
Plan:
2.1 "BOARD" -- the board of directors of CIGNA Corporation or any duly
authorized committee of that board.
2.2 "CEO" -- the Chief Executive Officer of CIGNA Corporation.
2.3 "CHANGE OF CONTROL" --
(a) A corporation, person or group acting in concert, as described in Exchange
Act Section 14(d)(2), holds or acquires beneficial ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act of a number of
preferred or common shares of CIGNA Corporation having voting power which
is either (1) more than 50% of the voting power of the shares which voted
in the election of directors of CIGNA Corporation at the shareholders'
meeting immediately preceding such determination, or (2) more than 25% of
the voting power of CIGNA Corporation's outstanding common shares; or
(b) As a result of a merger or consolidation to which CIGNA Corporation is a
party, either (1) CIGNA Corporation is not the surviving corporation or (2)
Directors of CIGNA Corporation immediately prior to the merger or
consolidation constitute less than a majority of the board of directors of
the surviving corporation; or
(c) A change occurs in the composition of the Board at any time during any
consecutive 24-month period such that the "Continuity Directors" cease for
any reason to constitute a majority of the Board. For purposes of the
preceding sentence "Continuity Directors" shall mean those members of the
Board who either: (1) were directors at the beginning of such consecutive
24-month period; or (2) were elected by, or on nomination or recommendation
of, at least a majority (consisting of at least nine directors) of the
Board.
2.4 "CODE" -- the Internal Revenue Code of 1986, as amended.
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<PAGE> 36
2.5 "COMMITTEE" -- the Board's People Resources Committee or any successor
committee with responsibility for compensation. The number of Committee members
and their qualifications shall at all times be sufficient to meet the
requirements of SEC Rule 16b-3 and Code Section 162(m).
2.6 "COMMON STOCK" -- the common stock, par value $0.25 per share, of CIGNA
Corporation.
2.7 "COMPANY" -- CIGNA Corporation, a Delaware corporation, and/or its
Subsidiaries.
2.8 "DEFERRED COMPENSATION PLAN" -- a Company deferred compensation plan or
another arrangement of the Company which has been designated by the Committee as
a "Deferred Compensation Plan" for purposes of this Plan.
2.9 "DISABILITY" -- permanent and total disability as defined in Code Section
22(e)(3).
2.10 "EARLY RETIREMENT" -- a Termination of Employment, after appropriate
notice to the Company, (a) on or after age 55 and before age 65 with eligibility
for immediate annuity benefits under a qualified pension or retirement plan of
the Company, or (b) upon such terms and conditions approved by the Committee or
officers of the Company designated by the Board or the Committee.
2.11 "EFFECTIVE DATE" -- January 1, 2000, subject to approval by the
shareholders of CIGNA Corporation.
2.12 "ELIGIBLE EMPLOYEE" -- a salaried officer or other key employee of the
Company.
2.13 "EXCHANGE ACT" -- the Securities Exchange Act of 1934, as amended.
2.14 "FAIR MARKET VALUE" -- the average of the highest and lowest quoted
selling prices as reported on the Composite Tape (or any successor method of
publishing stock prices) as of 4:00 p.m. Eastern time on the date as of which
any determination of stock value is made. If the Composite Tape (or any
successor publication) is not published on that date, the determination will be
made on the next preceding date of publication. In the absence of reported
Common Stock sales, the Committee will determine Fair Market Value by taking
into account all facts and circumstances the Committee deems relevant.
2.15 "INCENTIVE STOCK OPTION" -- an Option described by Code Section 422(b).
2.16 "NONQUALIFIED OPTION" -- an Option that is not an Incentive Stock Option.
2.17 "OPTION" -- a right granted under Article 5 to purchase one or more shares
of Common Stock.
2.18 "OPTION EXPIRATION DATE" -- the last date, specified in the Option grant,
on which an Option may be exercised.
2.19 "PARTICIPANT" -- an Eligible Employee who has received an award under the
Plan.
2.20 "PAYMENT" -- the compensation due a Participant, or Participant's estate,
under the Plan on account of a Unit Award.
2.21 "PAYMENT DATE" -- the date that a Qualifying Incentive Plan or a
Qualifying Supplemental Benefit Plan payment is made (or would have been made if
not deferred under Section 9.3).
2.22 "PEER GROUP" -- a group of companies, selected by the Committee, whose
financial performance is compared to CIGNA Corporation's under performance goals
established for Strategic Performance Units.
2.23 "PERFORMANCE PERIOD" -- the period specified by the Committee for which
Unit Awards may be made.
2.24 "PERFORMANCE POINTS" -- the number of points assigned to a particular year
of a Performance Period under Section 10.3.
2.25 "PLAN" -- the CIGNA Long-Term Incentive Plan.
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<PAGE> 37
2.26 "QUALIFYING INCENTIVE PLAN" -- any Company bonus plan, short-term or
long-term incentive compensation plan or any other incentive compensation
arrangement, including the Company's Performance Recognition Award Program.
2.27 "QUALIFYING SUPPLEMENTAL BENEFIT PLAN" -- any plan of the Company that
pays benefits otherwise payable under a tax qualified retirement plan but for
legal limitations.
2.28 "RESTRICTED PERIOD" -- the period during which Common Stock is subject to
restrictions under Section 7.2.
2.29 "RESTRICTED STOCK" -- Common Stock granted under Article 7 that remains
subject to a Restricted Period.
2.30 "RETIREMENT" -- a Termination of Employment, after appropriate notice to
the Company, (a) on or after age 65 with eligibility for immediate annuity
benefits under a qualified pension or retirement plan of the Company, or (b)
upon such terms and conditions approved by the Committee, or officers of the
Company designated by the Board or the Committee.
2.31 "SAR" -- a stock appreciation right granted under Article 6.
2.32 "SEC" -- the Securities and Exchange Commission.
2.33 "STRATEGIC PERFORMANCE UNIT" or "UNIT" -- the smallest amount of incentive
opportunity available for award to a Participant for a specified Performance
Period, with a target value of $75.00 per Unit unless a different target value
is established by the Committee at the time a Unit Award is made.
2.34 "SUBSIDIARY" -- any corporation of which more than 50% of the total
combined voting power of all classes of stock entitled to vote, or other equity
interest, is directly or indirectly owned by CIGNA Corporation; or a
partnership, joint venture or other unincorporated entity of which more than a
50% interest in the capital, equity or profits is directly or indirectly owned
by CIGNA Corporation; provided that such corporation, partnership, joint venture
or other unincorporated entity is included in the Company's consolidated
financial statements under generally accepted accounting principles.
2.35 "TERMINATION FOR CAUSE" -- a Termination of Employment initiated by the
Company on account of the conviction of an employee of a felony involving fraud
or dishonesty directed against the Company.
2.36 "TERMINATION OF EMPLOYMENT" -- the termination of the Participant's active
employment relationship with the Company (unless otherwise expressly provided by
the Committee) or a transaction by which the Participant's employing Company
ceases to be a Subsidiary.
2.37 "TERMINATION UPON A CHANGE OF CONTROL" -- a Termination of Employment upon
or within two years after a Change of Control (a) initiated by the Company or a
successor other than a Termination for Cause or (b) initiated by a Participant
after determining in his reasonable judgment that there has been a material
reduction in his authority, duties or responsibilities, any reduction in his
compensation, or any change caused by the Company in his office location of more
than 35 miles from its location on the date of the Change of Control.
2.38 "UNIT AWARD" -- the assignment of a specific number of Strategic
Performance Units to an Eligible Employee for a Performance Period.
ARTICLE 3
PARTICIPATION
3.1 PARTICIPATION. An Eligible Employee who receives an authorized award under
the Plan shall become a Participant upon receipt of the award.
3.2 DIRECTORS. Members of the Board who are not employed by the Company are
not eligible to participate in the Plan.
A-3
<PAGE> 38
ARTICLE 4
AUTHORIZED INCENTIVE AWARDS
4.1 AUTHORIZED AWARDS. The Plan's authorized awards are: (a) Options
(including Incentive Stock Options); (b) SARs; (c) Restricted Stock; (d)
dividend equivalent rights; (e) Common Stock in lieu of cash or other awards
payable under a Qualifying Incentive Plan or Qualifying Supplemental Benefit
Plan, and (f) Strategic Performance Units.
4.2 GENERAL POWERS OF THE COMMITTEE. Subject to the requirements of Delaware
law, the Committee may in its sole discretion select Participants and grant them
any authorized awards in amounts and combinations, and upon terms and
conditions, as it shall determine. No power or authority delegated by the
Committee to a designee under the Plan may be exercised (a) to affect the terms
and conditions of an award made to anyone subject to the requirements of Section
16(a) of the Exchange Act or (b) as to matters reserved to the Board under the
Delaware General Corporation Law.
4.3 GENERAL POWERS OF THE CEO. Subject to the requirements of Delaware law,
the CEO may in his sole discretion select Participants and grant them any
authorized awards in amounts and combinations and upon terms and conditions as
he shall determine, subject to the same limitations and provisions that apply
under the Plan to the Committee, and also subject to the following:
(a) The CEO may not grant any awards to or for the benefit of (1) members of
the Board or (2) anyone subject to the requirements of Exchange Act Section
16(a);
(b) The CEO must be a member of the Board when he grants any award under the
Plan and must be properly empowered by the Board to grant such award; and
(c) The total number of shares of Common Stock which may be issued pursuant to
awards granted under this Section 4.3 is limited to a maximum of 10% of the
number of shares of Common Stock authorized to be issued under the Plan.
ARTICLE 5
STOCK OPTIONS
5.1 GENERAL. Subject to any Plan limitations and provisions, the Committee may
grant Options to Eligible Employees upon terms and conditions that it may
establish, including restrictions on the right to exercise Options.
5.2 OPTION PRICE. The exercise price per share of any Option shall not be less
than the Fair Market Value on the grant date. The Option price may be paid in
cash or, if the Committee so provides, in Common Stock (including Restricted
Stock). Common Stock used to pay the Option price shall be valued using the Fair
Market Value on the Option exercise date. If the Option price is paid in any
number of shares of Restricted Stock:
(a) An equal number of the shares purchased upon the Option exercise shall be
Restricted Stock;
(b) The new Restricted Stock shall be subject to restrictions identical to
those applicable to the Restricted Stock used to pay the Option price; and
(c) The restrictions shall continue in effect for the remaining part of the
Restricted Period applicable to that Restricted Stock.
5.3 MAXIMUM TERM. No Option Expiration Date shall be more than 10 years after
the Option grant date. Under Section 5.5, an Option may expire earlier than the
Option Expiration Date specified in the Option grant.
5.4 LEAVE OF ABSENCE. Unless otherwise expressly provided by the Committee, no
Option may be exercised during a leave of absence except to the extent
exercisable immediately before the start of the leave. Termination of Employment
during a leave of absence shall be treated under Section 5.5 the same as
Termination of Employment during a period of active employment.
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<PAGE> 39
5.5 EXPIRATION OF OPTIONS.
(a) Except as provided elsewhere in Section 5.5, any outstanding Option held by
a Participant at Termination of Employment shall expire on the date of
Termination of Employment.
(b) Any outstanding Option held by a Participant at Termination Upon a Change
of Control shall:
(1) If granted on or after the Effective Date, become exercisable no later
than the date of his Termination of Employment; and
(2) Expire on the earlier of 3 months from the date of Termination of
Employment or the Option Expiration Date.
(c) Any outstanding Option granted on or after February 24, 1999 and held by a
Participant at Termination of Employment due to death, Disability, Early
Retirement or Retirement shall become or remain exercisable in accordance
with the terms and conditions established by the Committee at the time of
grant.
(d) Any outstanding Nonqualified Option granted before February 24, 1999 and
held by a Participant at Termination of Employment due to death, Disability
or Retirement shall become exercisable in accordance with conditions
imposed by the Committee, at time of grant or thereafter, and remain fully
exercisable until the Option Expiration Date.
(e) The exercise period of any outstanding Nonqualified Option granted before
February 24, 1999 and held by a Participant at Termination of Employment
due to Early Retirement may, at the sole discretion of the Committee or its
designee be extended until a date determined by the Committee or its
designee, but not later than the Option Expiration Date.
5.6 OPTION REPLACEMENTS; REPRICING. Without prior approval of CIGNA
Corporation shareholders, the Committee may not cancel a previously granted
Option and grant a replacement Option if the new Option exercise price is lower
than that of the canceled Option.
5.7 AUTOMATIC OPTION GRANTS. The Committee may provide that, to the extent a
Participant pays the Option price of an Option granted under the Plan in Common
Stock, a new Option will automatically be granted to the Participant, subject to
the following terms and conditions (and any other terms and conditions the
Committee may deem appropriate):
(a) The Option price per share of any new Option shall not be less than the
Fair Market Value on the date of the automatic grant;
(b) The date of the automatic grant of the new Option shall be the date the
former Option is exercised; and
(c) The term of the new Option shall not extend beyond the Option Expiration
Date of the former Option.
5.8 INCENTIVE STOCK OPTIONS. The following terms and conditions shall apply to
any Options granted under the Plan that are identified as Incentive Stock
Options.
(a) Incentive Stock Options may be granted only to Eligible Employees who are
employed by CIGNA Corporation or a corporation that is either a direct
Subsidiary or an indirect Subsidiary through an unbroken chain of
corporations.
(b) No Incentive Stock Option may be granted after December 13, 2009.
(c) No Incentive Stock Option may be granted to any person who, at the time of
grant, owns (or is deemed to own under Code Section 424(d)) shares of
outstanding Common Stock possessing more than 10% of the total combined
voting power of all classes of stock of CIGNA Corporation or a Subsidiary,
unless the Option exercise price is at least 110% of the Fair Market Value
of the stock subject to the Option and the Option by its terms is not
exercisable after the expiration of five years after the Option grant
date.
A-5
<PAGE> 40
(d) To the extent that the aggregate Fair Market Value of stock with respect to
which the Incentive Stock Options first become exercisable by a Participant
in any calendar year exceeds $100,000 (taking into account both Common
Stock subject to the Incentive Stock Options under this Plan and stock
subject to Incentive Stock Options under all other Company plans, if any),
such Options shall be treated as Nonqualified Options. For this purpose the
Fair Market Value of the stock subject to Options shall be determined as of
the date the Options were awarded. In reducing the number of options
treated as Incentive Stock Options to meet the $100,000 limit, the most
recently granted Options shall be reduced first. To the extent a reduction
of simultaneously granted Options is necessary to meet the $100,000 limit,
the Committee may, in the manner and to the extent permitted by law,
designate which shares of Common Stock are to be treated as shares acquired
pursuant to the exercise of an Incentive Stock Option.
(e) Any grant of Incentive Stock Options shall include whatever terms and
conditions are required to meet the requirements of Code Section 422.
ARTICLE 6
STOCK APPRECIATION RIGHTS
6.1 GENERAL. Subject to Article 6, and upon terms and conditions it may
establish, the Committee may grant SARs to Eligible Employees who are granted
Options under the Plan.
6.2 RIGHTS AND OPTIONS. Each SAR shall relate to a specific Option granted
under the Plan and may be granted at the same time as the related Option or
later.
6.3 NATURE OF RIGHTS. The SAR shall entitle an Option holder to receive upon
exercise of the SAR, without payment to the Company, a number of shares of
Common Stock determined by multiplying (a) and (b) and dividing the result by
(c):
(a) Total number of shares subject to the related Option that the Option
holder designates for SAR exercise, up to the maximum number he may
purchase under the related Option as of the SAR exercise date;
(b) Excess of (1) the Fair Market Value of a share of Common Stock on the SAR
exercise date over (2) the Fair Market Value of a share of Common Stock on
the grant date of the SAR or the related Option (as specified by the
Committee upon grant of the SAR); and
(c) Fair Market Value of a share of Common Stock on the SAR exercise date.
6.4 CASH PAYMENTS. The Committee may provide that, instead of issuing shares
upon the SAR exercise, the Company shall pay cash equal to the Fair Market
Value, on the SAR exercise date, of some or all the shares that would otherwise
be issued upon the SAR exercise.
6.5 RELATED OPTIONS. Shares under an Option shall be used not more than once
to calculate a number of shares or cash to be received upon exercise of a
related SAR. Upon exercise of an SAR the related Option shall be canceled to the
extent of the number of shares used in the calculation under Section 6.3(a).
That number of shares will be subtracted from the number of shares available
under the Option immediately before the SAR exercise to determine the remaining
number of shares, if any, which may be issued upon any future exercise of the
related Option or SAR.
6.6 TERMINATION OF EMPLOYMENT. A Participant may exercise an SAR after
Termination of Employment only to the extent and upon the conditions that
related Option may be exercised after Termination of Employment.
A-6
<PAGE> 41
ARTICLE 7
RESTRICTED STOCK GRANTS
7.1 GENERAL. Subject to any limitations and provisions in the Plan, the
Committee may grant Restricted Stock to Eligible Employees upon terms and
conditions it may establish. The consideration for a Restricted Stock grant may
be solely in the form of the recipient's services rendered to the Company, or it
may be any other lawful form of consideration the Committee may determine.
7.2 RESTRICTED PERIOD. Except as provided below, Restricted Stock shall not be
sold, transferred, assigned, pledged or otherwise disposed of by the Participant
during the Restricted Period established by the Committee. Restricted Stock may
be used to pay the exercise price of Options under Section 5.2. The Committee
may establish different Restricted Periods and different restriction terms for
shares contained in a single Restricted Stock grant.
7.3 ISSUANCE; VOTING RIGHTS; DIVIDENDS. Restricted Stock granted to a
Participant shall be issued by the Company as of the date of the grant. During
the Restricted Period, the Participant shall be entitled to vote the shares. The
Committee may provide for the current payment of dividends on shares of
Restricted Stock to the holders of such shares. Shares issued as a result of
stock dividends, splits or reclassifications, to the extent the issued shares
relate to Restricted Stock, shall be subject to the same limitations,
restrictions and provisions that are applicable to the related Restricted Stock.
7.4 TERMINATION OF EMPLOYMENT.
(a) Except as provided below, Restricted Stock (and all related rights) owned
by a Participant at Termination of Employment during a Restricted Period
shall be forfeited to the Company immediately upon Termination of
Employment (unless otherwise expressly provided by the Committee).
(b) If a Participant's Termination of Employment during a Restricted Period is
due to Retirement, the Committee or its designee (in the sole discretion
of either) may provide before the Participant's Retirement that the
Restricted Period applicable to any Restricted Stock owned by the
Participant shall lapse immediately upon the Participant's Retirement.
(c) If a Participant's Termination of Employment during a Restricted Period is
a Termination Upon a Change of Control or is due to death or Disability,
the Restricted Period applicable to any Restricted Stock owned by the
Participant shall lapse immediately on date of Termination of Employment.
7.5 LEAVE OF ABSENCE. The Committee shall determine the effect of approved
leaves of absence on applicable Restricted Periods. No Restricted Period,
however, may lapse during an approved leave of absence unless expressly provided
by the Committee.
ARTICLE 8
DIVIDEND EQUIVALENT RIGHTS
8.1 GENERAL. Subject to the limitations and provisions of the Plan, the
Committee may grant dividend equivalent rights to Eligible Employees upon terms
and conditions it may establish. The consideration for stock issued pursuant to
dividend equivalent rights may be solely in the form of the recipient's services
rendered to the Company, or it may be any other lawful form of consideration as
the Committee may determine.
8.2 RIGHTS AND OPTIONS. Each right may relate to a specific Option granted
under the Plan and may be granted to the Option holder at the same time as the
Option grant or later, or each right may be independent of any Option.
8.3 NATURE OF RIGHTS. The right shall entitle a holder to receive, for a
period of time to be determined by the Committee, a payment equal to the
quarterly dividend declared and paid by the Company on one share of Common
Stock. If the right relates to a specific Option, the period shall not extend
beyond the
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earliest of the date the Option is exercised, the date any related SAR is
exercised, or the Option Expiration Date.
8.4 PAYMENTS. The Committee shall determine at time of grant whether payment
pursuant to a right shall be immediate or deferred and whether made in cash or
Common Stock, or a combination of both. If immediate, the Company shall make
payments pursuant to each right within 90 days after the Company has paid the
quarterly dividend to holders of Common Stock. If deferred, the payments shall
accumulate (with interest computed in a manner to be determined by the
Committee) until a date or event specified by the Committee and then shall be
made within 90 days after the occurrence of the specified date or event, unless
the right is forfeited under the terms of the Plan.
8.5 TERMINATION OF EMPLOYMENT. Any dividend equivalent right held by a
Participant at Termination of Employment for any reason shall be forfeited to
the Company immediately upon Termination of Employment, unless otherwise
expressly provided by the Committee.
ARTICLE 9
COMMON STOCK IN PLACE OF OTHER AWARDS
9.1 GENERAL. The Committee may grant an Eligible Employee Common Stock
(including Restricted Stock) instead of all or a portion (determined by the
Committee) of an award otherwise payable under a Qualifying Incentive Plan or
Qualifying Supplemental Benefit Plan. The grant shall be for a number of shares
of Common Stock that have an aggregate Fair Market Value, determined as of the
Payment Date, equal to the amount of the award being replaced by the Common
Stock.
9.2 DEATH; TERMINATION OF EMPLOYMENT. Unless the Committee, in its sole
discretion, provides otherwise, a Common Stock grant approved under Section 9.1
for a Participant whose Termination of Employment occurs before the Payment Date
shall still be granted. If the reason for Termination of Employment is the
Participant's death, the grant shall be made to the Participant's spouse (or
Participant's estate if there is no surviving spouse).
9.3 DEFERRAL OF PAYMENTS. A Common Stock grant approved under Section 9.1
shall be deferred if the Participant had elected to defer the underlying award
under a Deferred Compensation Plan, subject to the provisions of the Deferred
Compensation Plan and Section 10.7(d) of this Plan. Common Stock that would have
been issued but for deferral under this provision shall be issued under this
Plan at the end of the deferral period.
ARTICLE 10
STRATEGIC PERFORMANCE UNITS
10.1 AWARD OF UNITS.
(a) The Committee may in its sole discretion grant Unit Awards to Eligible
Employees selected for participation for a Performance Period.
(b) The CEO or his designee may grant a Unit Award to a person who becomes an
Eligible Employee during a Performance Period as long as that Unit Award
is (1) in accordance with guidelines approved by the Committee or (2)
subject to ratification by the Committee before any resulting Unit Award
Payment is made.
(c) No Eligible Employee may receive more than 100,000 Units during any
calendar year.
10.2 PERFORMANCE GOALS; FINANCIAL MEASURES. When the Committee grants Unit
Awards for a particular Performance Period, it shall:
(a) Establish in writing the objective performance goals and the financial
measurements to be used to measure the Company's performance;
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(b) Determine the length of the Performance Period and, if the performance
goals and financial measurements require comparing the Company's financial
results to those of a Peer Group, the composition of the Peer Group;
(c) Determine the annual scoring formula or method for assigning Performance
Points to each year of the Performance Period; and
(d) Determine the payout formula for converting Performance Points for the
Performance Period into the preliminary Unit dollar value.
The financial measurements shall be one or more of the following: return on
equity, adjusted return on equity, earnings, revenue growth, expense ratios or
other expense management measures and total shareholder return.
10.3 PERFORMANCE POINTS. A number of Performance Points will be assigned to
each year of a Performance Period under the annual scoring formula or method
under Section 10.2(c). Based upon the Committee's assessment of factors which
affected financial results, the Committee may adjust downward the number of
Performance Points for each or any year in the Performance Period, but the
adjustment shall not exceed 10% of the maximum number of available annual
points. The Performance Points for each year of a Performance Period will be
added to compute the total number of Performance Points to be used in valuing
Units for the entire Performance Period.
10.4 VALUE OF UNITS. The number of Performance Points computed for the
Performance Period and the Performance Period payout formula under Section
10.2(d) will determine the preliminary dollar value of a Strategic Performance
Unit for the Performance Period. The preliminary value may be adjusted downward
by the Committee based upon the Committee's evaluation of CIGNA Corporation's
strategic accomplishments over the Performance Period. The maximum amount of the
downward adjustment per Unit shall not exceed $25.00. The final value of each
Strategic Performance Unit shall not exceed $200.00. To the extent required by
Code Section 162(m), before Payment of any Unit Award the Committee shall
certify in writing that the Unit value for a Performance Period is based on the
attainment of the pre-established, objective performance goals for the
Performance Period.
10.5 UNIT AWARD PAYMENT.
(a) As soon as practicable after the close of a Performance Period, the Units
shall be valued and the Company shall make Payments to Participants with
Unit Awards.
(b) A Participant's Unit Award Payment for a Performance Period shall equal
the value of one Strategic Performance Unit, determined under Section
10.4, multiplied by the number of Units in the Participant's Unit Award.
(d) Notwithstanding the above, the Committee in its sole discretion may reduce
the amount of any Payment to any Participant, eliminate entirely the
Payment to any Participant, or defer the Payment until a later date or
occurrence of a particular event. The Committee's authority under this
Section 10.5(c) shall expire immediately upon a Change of Control.
10.6 ELIGIBILITY FOR PAYMENTS.
(a) Except for Payments described in Section 10.6(b) and (c), and except in
the event of a Termination Upon a Change of Control, a Participant shall
be eligible to receive a Unit Award Payment for a Performance Period only
if the Participant has been employed by the Company continuously from the
date of Participant's Unit Award through the date of Payment.
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(b) For the purposes of this Section 10.6, a leave of absence of less than
three months' duration with the approval of the Company is not considered
to be a break in continuous employment. In the case of a leave of absence
of three months or longer:
(1) The Committee, based on the recommendation of the CEO, shall determine
whether or not the leave of absence constitutes a break in continuous
employment for purposes of a Unit Award Payment; and
(2) If a Participant is on a leave of absence on the date that the Unit
Award Payment is to be made, the Committee may require that the
Participant return to active employment with the Company at the end of
the leave of absence as a condition of receiving the Payment, and any
determination as to eligibility for a Payment may be deferred for a
reasonable period after such return.
(c) If the employment of a Participant is terminated by reason of Retirement,
death or Disability after receipt of a Unit Award but before the related
Payment is made, the Committee or its designee shall determine whether a
Payment shall be made to or on behalf of such Participant, and whether the
Payment, if made, shall be in full or prorated based on factors determined
in the sole discretion of the Committee, or its designee. Any such Payment
shall be made to the Participant or the Participant's estate.
(d) In the event of a Termination Upon a Change of Control of a Participant
after the Participant receives a Unit Award but before the related Payment
is made, a Payment in cash shall be made to the Participant within 30 days
following the Termination Upon a Change of Control. The amount of the
Payment shall equal the total number of Units contained in all Unit Awards
held by the Participant as of the date of his Termination Upon a Change of
Control multiplied by the greatest of:
(1) The Unit target value;
(2) The highest value established by the Committee for Unit Awards for
which any Payments were made to any Participants during the
twelve-month period immediately preceding the date of Participant's
Termination Upon a Change of Control; or
(3) The average of the highest values established by the Committee for the
last two Unit Awards paid to any Participants before the Participant's
Termination Upon a Change of Control.
10.7 FORM OF PAYMENT.
(a) Except as otherwise provided in Section 10.6(d), Unit Award Payments shall
be made in cash, shares of Common Stock (including Restricted Stock),
Options or a combination of any of these forms of Payment, as determined
by the Committee in its sole discretion.
(b) If a Payment is made wholly or partially in shares of Common Stock, the
Payment shall be made in a number of whole shares. That number of shares
shall have an aggregate Fair Market Value that most closely approximates,
but does not exceed, the dollar amount of the Payment if made in cash.
(c) A Participant's Payment may be deferred under the Deferred Compensation
Plan. Common Stock that would have been issued but for deferral under this
provision shall be issued under this Plan at the end of the deferral
period.
(d) In case of any deferral under Section 9.3 or 10.7(c), the rate of return
that may be credited upon the deferred compensation shall comply with
requirements under Code Section 162(m), if applicable, so as not to be
considered an impermissible increase in compensation.
10.8 FUTURE UNIT AWARD NOT GUARANTEED. A Unit Award for a Performance Period
is not intended to be, or to be construed as, a right to receive another Unit
Award in any later Performance Period. A Unit Award for any Performance Period
shall be evidenced only by the grant to the Eligible Employee by the Committee
(or CEO) of a Unit Award.
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ARTICLE 11
SHARES AUTHORIZED UNDER THE PLAN
11.1 MAXIMUM NUMBER AUTHORIZED. The number of shares of Common Stock
authorized to be issued pursuant to Options, SARs, rights, grants or other
awards under this Plan shall be 25 million. Of that number 15 million shares
(after adjustment for a 3-for-1 stock split in May 1998) were authorized by
CIGNA Corporation shareholders at the annual shareholders meeting on April 26,
1995, and 10 million shares were authorized by CIGNA Corporation shareholders at
the annual shareholders meeting on April 26, 2000. No more than 20% of the
number of shares authorized for issuance under the Plan may be awarded or
granted under Articles 7, 8, 9 and 10 in the form of Common Stock (including
Restricted Stock).
11.2 MAXIMUM NUMBER PER PARTICIPANT. The aggregate number of shares of Common
Stock subject to Options and SARs that may be granted during any calendar year
to any individual shall be limited to 2,500,000.
11.3 UNEXERCISED OPTIONS, GRANT FORFEITURES AND OPTIONS EXERCISED WITH COMMON
STOCK. There shall be available for further awards under this Plan:
(a) Common Stock under Options granted under the Plan if the Options expire or
are canceled or surrendered;
(b) Restricted Stock granted under the Plan if the Restricted Stock is
forfeited under Section 7.4 or is otherwise surrendered to the Company
before the Restricted Period expires;
(c) Common Stock used by a Participant as full or partial payment to the
Company upon exercise of an Option granted under this Plan;
(d) Common Stock withheld by, or otherwise remitted to, the Company to satisfy
a Participant's tax withholding obligations upon the lapse of restrictions
on Restricted Stock or the exercise of Options or SARs granted under the
Plan or upon any other payment or issuance of shares under the Plan.
11.4 NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued, accepted as payment of an Option exercise price or remitted to meet
tax-withholding obligations under the Plan.
11.5 SOURCE OF SHARES. Common Stock may be issued from authorized but unissued
shares or out of shares held in CIGNA Corporation's treasury, or both.
ARTICLE 12
ANTIDILUTION PROVISIONS
Except as expressly provided under the Plan, the following provisions shall
apply to all shares of Common Stock (including Restricted Stock) authorized for
issuance and all Options granted under the Plan:
12.1 STOCK DIVIDENDS, SPLITS, ETC. In the event of a stock dividend, stock
split, or other subdivision or combination of the Common Stock:
(a) The number of authorized shares of Common Stock, and any numerical share
limits, under the Plan will be adjusted proportionately; and
(b) There will be a proportionate adjustment in the number of shares of Common
Stock subject to unexercised stock Options and related SARs, and in the per
share Option exercise price (but without adjustment to the aggregate Option
exercise price) and in the number of shares of Restricted Stock
outstanding.
12.2 MERGER, EXCHANGE OR REORGANIZATION. If the outstanding shares of Common
Stock are changed or converted into, exchanged or exchangeable for, a different
number or kind of shares or other securities of CIGNA Corporation or of another
corporation, by reason of a reorganization, merger, consolidation,
reclassification or combination (an "Event"), appropriate adjustment shall be
made by the Committee in
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the number of shares and kind of Restricted Stock and Common Stock for which
Options, SARs and other rights may be or may have been awarded under this Plan,
so that the proportionate interests of Participants shall be maintained as
before the Event. However, in case of any contemplated Event which may
constitute a Change of Control, the Committee, with the approval of a majority
of the members of the Board who are not then Participants, may modify any and
all outstanding Restricted Stock, Options, SARs and other rights (except those
deferred under Section 9.3), so as to accelerate, as a consequence of or in
connection with the Event, the vesting of a Participant's right to exercise any
such Options or SARs or the lapsing of the Restricted Periods for shares of
Restricted Stock or the accelerated payment of any deferred dividend equivalent
rights.
ARTICLE 13
ADMINISTRATION OF PLAN
13.1 GENERAL ADMINISTRATION. The Plan shall be administered by the Committee,
subject to any requirements for review and approval by the Board that the Board
may establish.
13.2 ADMINISTRATIVE RULES. The Committee shall have full power and authority
to adopt, amend and rescind administrative guidelines, rules and regulations
relating to this Plan, to interpret the Plan and to rule on any questions
relating to any of its provisions, terms and conditions.
13.3 COMMITTEE MEMBERS NOT ELIGIBLE. No member of the Committee shall be
eligible to participate in this Plan.
13.4 DECISIONS BINDING. All decisions of the Committee concerning this Plan
shall be binding on CIGNA Corporation and its Subsidiaries and their respective
boards of directors, and on all Eligible Employees, Participants and other
persons claiming rights under the Plan.
ARTICLE 14
AMENDMENTS
All amendments to this Plan shall be in writing and shall be effective when
approved by the Board. A Plan amendment shall not be effective without the prior
approval of CIGNA Corporation shareholders if necessary under Internal Revenue
Service or SEC regulations, or the rules of the New York Stock Exchange or any
applicable law. The Board may make any changes required to conform the Plan and
Option agreements or grants with applicable Code provisions and regulations
relating to Incentive Stock Options. Unless otherwise expressly provided by an
amendment or the Board, no amendment to this Plan shall apply to grants of
Options, SARs, other rights or Restricted Stock made before the effective date
of the amendment. To the extent any provision of this Plan (as amended and
restated as of January 1, 2000) amends any provision of the Plan as in effect
before the Effective Date, however, unless otherwise expressly provided the
amendments shall apply to grants made before the Effective Date. Otherwise, a
Participant's rights under any Plan grants or awards, including any rights under
paragraph 10.6(d), and a transferee's rights relating to any transferred
derivative securities, may not be abridged by any amendment, modification or
termination of the Plan without his individual consent.
ARTICLE 15
OTHER PROVISIONS
15.1 EFFECTIVE DATE. The Plan as amended and restated is effective as of
January 1, 2000, subject to approval by the shareholders of CIGNA Corporation.
15.2 DURATION OF THE PLAN. The Plan shall remain in effect until all Options
and rights granted under the Plan have been satisfied by the issuance of Common
Stock or terminated under the terms of this Plan, all Restricted Periods
applicable to Restricted Stock granted under the Plan have lapsed, and all
Performance Periods related to Unit Awards granted under the Plan have expired,
and all related Unit Award Payments have been made.
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15.3 EARLY TERMINATION. Notwithstanding Section 15.2, the Board may terminate
this Plan at any time; but no such action by the Board shall adversely affect
the rights of Participants which exist under this Plan immediately before its
termination.
15.4 GENERAL RESTRICTION. No Common Stock issued pursuant to this Plan shall
be sold or distributed by a Participant until all appropriate listing,
registration and qualification requirements and consents and approvals have been
obtained, free of any condition unacceptable to the Board. In no event shall the
value, amount or form of consideration for any award under the Plan be less than
the value or amount, or in other than the form, required by applicable Delaware
law.
15.5 AWARDS NOT ASSIGNABLE.
(a) No derivative security (as defined in rules promulgated under Exchange Act
Section 16), including any right to receive Common Stock (such as Options,
SARs or similar rights) or any right to payment under the Plan, shall be
assignable or transferable by a Participant except by will or by the laws
of descent and distribution. Any other attempted assignment or alienation
shall be void and of no force or effect. Any right to receive Common Stock
or any other derivative security (including Options, SARs or similar
rights) shall be exercisable during a Participant's lifetime only by the
Participant or by the Participant's guardian or legal representative.
(b) Notwithstanding Section 15.5(a), the Committee shall have the authority, in
its discretion, to grant (or to sanction by way of amendment of an existing
grant) derivative securities (other than Incentive Stock Options) which may
be transferred without consideration by the Participant during his lifetime
to any member of his immediate family, to a trust established for the
exclusive benefit of one or more members of his immediate family, to a
partnership of which the only partners are members of his immediate family,
or to such other person as the Committee shall permit. In the case of a
grant, the written documentation containing the terms and conditions of
such derivative security shall state that it is transferable, and in the
case of an amendment to an existing grant, such amendment shall be in
writing. A derivative security transferred as contemplated in this Section
15.5(b) may not be subsequently transferred by the transferee except by
will or the laws of descent and distribution and shall continue to be
governed by and subject to the terms and limitations of the Plan and the
relevant grant. The Committee, in its sole discretion at the time the
transfer is approved, may alter the terms and limitations of the relevant
grant and establish such additional terms and conditions as it shall deem
appropriate. As used in this subparagraph, "immediate family" shall mean,
as to any person, a spouse, any child, stepchild or grandchild, and shall
include relationships arising from legal adoption.
15.6 WITHHOLDING TAXES. Upon the exercise of any Option or SAR, the vesting of
any Restricted Stock, or payment of any award described in Section 4.1(d), (e)
or (f), or upon the exercise of an Incentive Stock Option prior to the
satisfaction of the holding period requirements of Code Section 422, the Company
shall have the right at its option to:
(a) require the Participant (or personal representative or beneficiary) to
remit an amount sufficient to satisfy applicable federal, state and local
withholding taxes; or
(b) deduct from any amount payable the amount of any taxes the Company may be
required to withhold because of the transaction.
The Committee may require or permit the Participant to remit all or part of the
required withholding amount in Common Stock (other than Restricted Stock). The
remitted Common Stock may be shares deliverable to the Participant because of
the transaction giving rise to the withholding obligation (in which case the
number of shares of Common Stock delivered to a Participant shall be reduced by
the number of shares so remitted) or shares the Participant has owned without
restriction for at least six months as of the date the withholding obligation
arises. If the Committee permits a Participant to elect to remit Common Stock,
the election shall be made on or before the date the withholding obligation
arises and be subject to the disapproval of the Committee. The Committee may
establish any additional conditions it deems
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appropriate. The value of any remitted Common Stock shall be its Fair Market
Value as of the date the withholding obligation arises.
15.7 BOOK ENTRY; CERTIFICATES. A book entry shall be made in the electronic
share ownership records maintained by the Company or the Company's transfer
agent as evidence of the issuance of Common Stock to a Participant (or
beneficiary) upon a Restricted Stock grant, the exercise of an Option or any
other grant or payment of Common Stock under the Plan. The Company or its
transfer agent shall deliver to any Participant (or beneficiary), upon his
request and subject to his compliance with applicable administrative procedures
the Company or its transfer agent may establish, a certificate for any of the
shares evidenced by book entry. A certificate for Restricted Stock, however,
will not be delivered until the applicable Restricted Period has expired.
15.8 PARTICIPANT'S RIGHTS UNSECURED. The right of any Participant to receive
future payments under the provisions of the Plan shall be an unsecured claim
against the general assets of the Company.
15.10 TERMINATION OF EMPLOYMENT. The Company retains the right to terminate
the employment of any employee at any time for any reason or no reason, and an
award or grant under the Plan to an Eligible Employee is not, and shall not be
construed in any manner to be, a waiver of that right.
15.11 SUCCESSORS. Any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of CIGNA Corporation, shall assume the liabilities of CIGNA
Corporation under this Plan and perform any duties and responsibilities in the
same manner and to the same extent that CIGNA Corporation would be required to
perform if no such succession had taken place.
15.12 CONSTRUCTION. The terms used in this Plan shall include the feminine as
well as the masculine gender and the plural as well as the singular, as the
context in which they are used requires.
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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 the end of ramp turn right onto Ridge Pike and proceed
for 3.2 miles through six traffic lights to the seventh traffic light
at 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 exiting 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 the end of ramp turn
right onto Ridge Pike and proceed for 3.2 miles through six traffic
lights to the seventh traffic light at 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
the seventh traffic light at 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 the seventh traffic light at
Manor Road. Turn right onto Manor Road. Proceed 200 yards and turn
right into Eagle Lodge.
<PAGE> 50
/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 and in the discretion of the proxies upon such other matters
as may come before the meeting. If no direction is made, this proxy will be
voted for proposals 1, 2, and 3.
The Board of Directors recommends a vote FOR proposals 1, 2, and 3.
1. Election of Directors. (see reverse) FOR WITHHELD
For, except vote withheld from the following nominee(s):
2. Ratify the Appointment of
PricewaterhouseCoopers
LLP as Independent Accountants. FOR AGAINST ABSTAIN
3. Approval of the Amendment
and Restatement of CIGNA
Long-Term Incentive Plan. 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 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.
Voting instructions for positions held in the CIGNA 401(k) Plan, the Intracorp
401(k) Profit Sharing Plan and the Trilog Inc. Employees Partnership Savings
Plan will be held confidential.
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.
SIGNATURE(S) DATE
FOLD AND DETACH HERE IF YOU ARE NOT VOTING BY INTERNET OR TELEPHONE
Dear Shareholder:
We encourage you to take advantage of new and convenient ways to submit your
proxy or voting instructions. You can do so through the internet or by
telephone. This would eliminate the need to return the attached proxy/Voting
Instruction card. To submit your proxy or voting instructions electronically you
must use the control number printed in the box above, just below the
perforation. The control number that appears in the box above must be used to
access the system.
1. To use the telephone:
- On a touch-tone telephone call 1-877-779-8683 24 hours a day, 7
days a week.
- If you are outside of the United States or Canada, call
1-201-536-8073.
<PAGE> 51
2. To use the Internet:
- Log on to the internet and go to the web site
http://www.eproxyvote.com/ci
Your electronic submission authorizes the named proxies in the same manner as if
you marked, signed, dated and returned the Proxy/Voting Instruction Card. Please
refer to "How to Vote" in the proxy statement for additional information on
submitting an electronic proxy or voting instructions.
If you choose to submit your proxy or voting instructions electronically, you
need not mail back the Proxy/Voting Instruction Card. Your vote is important.
Thank you for voting.
P
R
O
X
Y
Proxy/Voting Instruction Card
CIGNA CORPORATION
This Proxy/VOTING INSTRUCTION CARD is Solicited on Behalf of the Board of
Directors
The undersigned hereby constitutes and appoints Robert A. Lukens, the
Corporation's Assistant Corporate Secretary, and Carol J. Ward, the
Corporation's Corporate Secretary, or either of them, proxies with full power of
substitution and each of them is hereby authorized to represent the undersigned
and vote all shares of the Corporation held of record by the undersigned on
February 28, 2000 and all of the shares as to which the undersigned then had the
right to give voting instructions to the record holder (trustees) under the
CIGNA 401(k) Plan, the Intracorp 401(k) Profit Sharing Plan and the Trilog Inc.
Employee Partnership Savings Plan at the Annual Meeting of Shareholders, to be
held at The Conference Center at Eagle Lodge, Ridge Pike & Manor Road, Lafayette
Hill, Pennsylvania on April 26, 2000, at 1:00 p.m. or at any adjournment
thereof, on the matters set forth below:
1. ELECTION OF DIRECTORS, Nominees for terms expiring April 2003
01. Alfred C. DeCrane, Jr., 02. H. Edward Hanway, 03. Wilson H. Taylor and 04.
Harold A. Wagner
2. RATIFY the Appointment of PricewaterhouseCoopers LLP as Independent
Accountants.
3. Approval of the Amendment and Restatement of the CIGNA Long-Term Incentive
Plan.
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 selections
(either on this card or electronically), but you need not make any selections if
you wish to vote in accordance with the Board of Directors' recommendations.
If you use this card to vote, you must sign it on the reverse side in order for
your vote to be counted.
SEE REVERSE
SIDE
FOLD AND DETACH HERE
CIGNA Corporation
<PAGE> 52
Annual Meeting of Shareholders
April 26, 2000
1:00 p.m.
The Conference Center at Eagle Lodge
Ridge Pike & Manor Road
Lafayette Hill, Pennsylvania
April 26, 2000
1:00 p.m.
The Conference Center at Eagle Lodge
Ridge Pike & Manor Road
Lafayette Hill, Pennsylvania
<PAGE> 53
[A GRAPHIC]
CIGNA Corporation
One Liberty Place
1650 Market Street
Philadelphia, PA
19192-1550
March 22, 2000
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
CIGNA, Intracorp, and Trilog 401(k) Participants:
The annual meeting of CIGNA shareholders will be held on Wednesday, April 26,
2000 at 1:00 p.m. at The Conference Center at Eagle Lodge, in Lafayette Hill,
Pennsylvania.
At the meeting, we will ask all shareholders to:
1. Elect four directors for terms expiring in April 2003;
2. Ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for 2000; and
3. Approve the amendment and restatement of the CIGNA Long-Term Incentive
Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF ITEMS 1, 2 AND 3.
All proposals are described in the 2000 Proxy Statement. CIGNA's 1999 Annual
Report and 2000 Proxy Statement are available on CIGNA Central by clicking on
the CIGNA Financial button. If you do not have access to CIGNA Central, please
contact CIGNA's Shareholder Services Department at 215-761-3516 for a copy of
the Annual Report and Proxy Statement.
CIGNA shareholders of record at the close of business on February 28, 2000 are
entitled to notice of and to vote at the meeting and any adjournment thereof. As
investors in the CIGNA Stock Fund of your 401(k) plan, you are entitled to
pass-through voting rights at the 2000 Annual Meeting based on the amount of
money you had invested in the CIGNA Stock Fund on February 28, 2000. CIGNA
encourages you to exercise your right to vote by any of the following means:
1. By returning the completed, signed and dated voting instructions card in the
enclosed envelope;
2. By telephone at 1-877-779-8683 (or 1-201-536-8073 if outside the US and
Canada) or;
3. Over the Internet at http://www.eproxyvote.com/ci.
Your vote is important, even if you only have a small investment in the CIGNA
Stock Fund. Your vote must be received by 5:00PM Eastern time on Friday April
21, 2000.
Sincerely,
/s/ Wilson H. Taylor /s/ H. Edward Hanway
- ------------------------------ -------------------------------------
WILSON H. TAYLOR H. EDWARD HANWAY
Chairman of the Board President and Chief Executive Officer
By order of the Directors
/s/ Carol J. Ward
- ----------------------------------
CAROL J. WARD, Corporate Secretary
<PAGE> 54
First Chicago Trust Company
2000 Vote-By-Phone Script
(1.1) Welcome to the electronic voting system.
(1.2) Please have your proxy card or voting instruction sheet or ballot
available before voting. Enter the voter control number as it appears
on the card followed by the pound sign.
> xxx#xxxx#xxxxxx#
One moment please while we verify your information.
(If the first part of the control number that identifies the
company you are voting is entered wrong, viz.,
xxx#xxxx#xxxxxx#)
Is not a valid number. (Go to (1.2))
(If good control number is entered)
Enter the last four digits of the US social security number or the US
taxpayer identification number for this account followed by the pound
sign.
>xxxx
The company you are voting is CIGNA CORPORATION.
Your vote is subject to the same terms and authorizations as
indicated on the proxy card. It also authorizes the named
proxies to vote according to the instructions at the meeting
of stockholders. (Go to (1.3))
(If the second and/or third part of the control number is
entered wrong, viz., xxx#xxxx#xxxxxx#)
I am unable to process this request at this time. (Go to
(1.2))
(If incorrect social security number is entered)
Our records show that you have a social security number. (Go to (1.1))
> 9 (Go to (1.2))
1
<PAGE> 55
(1.3) To vote all proposals in accordance with the recommendations of
the Board of Directors, press 1. If you wish to vote on one proposal at
a time, press 2.
>1
You have voted with the recommendations of the board of
directors on all of the proposals. (Go to 1.6)
>2
Item 1
To vote for all nominees, press 1. To withhold from all
nominees, press 2. To withhold from individual nominees, press
3.
1> (Go to next the proposal)
2> (Go to next the proposal)
3> (Go to (1.4))
(1.4) Enter the two digit number next to the nominee
for whom you wish to withhold your vote followed by
the pound key, or if you have completed voting on
directors press the pound key again,
>Invalid number entered.
"xx is not a valid number for any of the
directors listed on your proxy card." (Go to
(1.4))
> 1# 3# 5## (Go to next the proposal)
Item 2
To vote For, press 1. Against, press 2. To Abstain,
press 3.
>1 (Go to 1.5)
2
<PAGE> 56
>2 (Go to 1.5)
>3 (Go to 1.5)
Item 3
To vote For, press 1. Against, press 2. To Abstain, press 3.
>1 (Go to 1.5)
>2 (Go to 1.5)
>3 (Go to 1.5)
(1.4a) If you would like your voting instructions to be
confidential press 1, if not press 2
(1.5) You have cast your vote as follows.
Item 1, you .........
Item 2, you .........
Item 3, you .........
(1.6) To confirm your vote, press 1. To cancel your vote,
press 2.
> 1
One moment please.
Your vote has been successfully recorded. It is not
necessary for you to mail your card. If you wish to
vote another card or change your vote, press 1.
Otherwise, please hang up. Thank you for voting.
>1 (Go to (1.2))
>9 (Go to (1.3))
3
<PAGE> 57
Note: If no action is taken the following script applies.
> Nothing entered
I am unable to process your request at this time. Thank you for
calling. (Hang up) (End of call)
4
<PAGE> 58
Vote By Net
[GRAPHIC] IF YOU HAVE MORE THAN ONE PROXY CARD, PLEASE VOTE ONLY ONE
CARD AT A TIME.
[GRAPHIC] Enter the Voter Control Number that appears in the
box on your proxy card.
[GRAPHIC] Enter the last 4 digits of your U.S. Taxpayer
Identification (Social Security) Number for this
account.
If you do not have a U.S. Taxpayer Identification
Number for this account, please leave this box blank.
Important: FOR YOUR VOTE TO BE CAST, THE VOTER
CONTROL NUMBER AND THE LAST FOUR DIGITS OF THE U.S.
TAXPAYER IDENTIFICATION (SOCIAL SECURITY) NUMBER FOR
THIS ACCOUNT MUST MATCH THE NUMBERS ON OUR RECORDS.
[GRAPHIC] Enter your e-mail address to receive an e-mail
confirmation of your vote.
Enter your e-mail address again for validation.
[GRAPHIC]
<PAGE> 59
[Test Vote - Results will not be recorded]
PROXY/VOTING INSTRUCTION CARD
CIGNA CORPORATION
THIS PROXY/VOTING INSTRUCTION CARD IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The undersigned hereby constitutes and appoints Robert A. Lukens, the
Corporation's Assistant Corporate Secretary, and Carol J. Ward, the
Corporation's Corporate Secretary, or either of them, proxies with full power of
substitution and each of them is hereby authorized to represent the undersigned
and vote all shares of the Corporation held of record by the undersigned on
February 28, 2000 and all of the shares as to which the undersigned then had the
right to give voting instructions to the record holder (trustees) under the
CIGNA 401(k) Plan, the Intracorp 401(k) Profit Sharing Plan and the Trilog Inc.
Employee Partnership Savings Plan at the Annual Meeting of Shareholders, to be
held at The Conference Center at Eagle Lodge, Ridge Pike & Manor Road, Lafayette
Hill, Pennsylvania on April 26, 2000, at 1:00 p.m. or at any adjournment
thereof, on the matters set forth below:
1. ELECTION OF DIRECTORS, Nominees for terms expiring April 2003
01. Alfred C. DeCrane, Jr., 02. H. Edward Hanway, 03. Wilson H. Taylor and 04.
Harold A. Wagner
2. RATIFY the Appointment of PricewaterhouseCoopers LLP as Independent
Accountants.
3. APPROVAL of the Amendment and Restatement of the CIGNA Long-Term Incentive
Plan. In their discretion, upon such other matters as may properly come before
the meeting.
VOTING INSTRUCTIONS FOR POSITIONS HELD IN THE CIGNA 401(k) PLAN, THE INTRACORP
401(k) PROFIT SHARING PLAN AND THE TRILOG INC. EMPLOYEES PARTNERSHIP SAVINGS
PLAN WILL BE HELD CONFIDENTIAL.
THE BOARD RECOMMENDS A VOTE
"FOR" ALL NOMINEES FOR DIRECTOR.
"FOR" PROPOSALS 2 AND 3.
Check this box to cast your vote in accordance with the recommendations of the
Board of Directors. / /
THE BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES FOR DIRECTOR.
<TABLE>
For All Nominees Withhold
Except As Noted As To All
Below Nominees
<S> <C> <C>
1. Election of Directors / / / /
</TABLE>
Or, check the box for the Director(s) from whom you wish to withhold your vote:
<TABLE>
<S> <C> <C>
/ / Alfred C. DeCrane, Jr. / / H. Edward Hanway / / Wilson H. Taylor
/ / Harold A. Wagner
</TABLE>
<PAGE> 60
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 2 AND 3.
<TABLE>
For Against Abstain
<S> <C> <C> <C>
2. Ratify the Appointment of PricewaterhouseCoopers LLP as
Independent Accountants. / / / / / /
For Against Abstain
3. Approval of the Amendment and Restatement of CIGNA
Long-Term Incentive Plan. / / / / / /
</TABLE>
Check the box below, if the option applies to you.
/ / I would like my voting instructions to be confidential pursuant to the
procedures on confidential voting described in the 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.
To submit your vote please click the button below.
(Your vote will not be counted until the Submit Your Vote button is clicked.)
[GRAPHIC]
[Test Vote - Results will not be recorded]
<PAGE> 61
[GRAPHIC]
Vote By Net
[GRAPHIC] YOUR PROXY VOTE HAS BEEN RECORDED AS FOLLOWS:
1. Election of Directors
FOR ALL NOMINEES
2. Ratify the Appointment of PricewaterhouseCoopers LLP as
Independent Accountants.
FOR
3. Approval of the Amendment and Restatement of CIGNA
Long-Term Incentive Plan.
FOR
Please review your vote. If this is incorrect, please use the
Back button on our browser, change your vote and resubmit. If
this is correct, please click the button below.
[GRAPHIC]
[Test Vote - Results will not be recorded]
<PAGE> 62
[GRAPHIC]
Vote By Net
[GRAPHIC] [Test Vote - Results will not be recorded]
SUCCESS! YOUR VOTE HAS BEEN CAST AND WILL BE TABULATED BY EQUISERVE
WITHIN 24 HOURS. PLEASE TAKE A MOMENT TO REVIEW THE OPTIONS BELOW.
You can now vote another proxy card or exit to the Cigna
Corporation's homepage or EquiServe's homepage.
[GRAPHIC]
[Test Vote - Results will not be recorded]
