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 [ ]
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):
[ ] 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:
------------------------------------------------------------------------
[CIGNA LOGO]
CIGNA Corporation
One Liberty Place
1650 Market Street
Philadelphia, PA
19192-1550
March 22, 2002
NOTICE OF 2002 ANNUAL MEETING OF SHAREHOLDERS
CIGNA Corporation Shareholders:
The annual meeting of shareholders will be held on Wednesday, April 24, 2002 at
3:30 p.m. at The Gregg Conference Center at The American College, at 270 S. Bryn
Mawr Avenue, Bryn Mawr, Pennsylvania. Directions to The Gregg Conference Center
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 2005;
2. Ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for 2002; and
3. Approve the CIGNA Executive 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.
These proposals are described in the proxy statement.
CIGNA shareholders of record at the close of business on February 28, 2002 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 many 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
2001 Annual Report to Shareholders on or about March 22, 2002.
Sincerely,
[/s/ H. EDWARD HANWAY]
H. EDWARD HANWAY
Chairman and Chief Executive Officer
By order of the Directors
[/s/ CAROL J. WARD]
CAROL J. WARD, Corporate Secretary
CIGNA CORPORATION
ONE LIBERTY PLACE
1650 MARKET STREET
PHILADELPHIA, PA 19192-1550
PROXY STATEMENT
TABLE OF CONTENTS
GENERAL INFORMATION ABOUT CIGNA'S ANNUAL MEETING............ 2
PROPOSALS THAT REQUIRE A SHAREHOLDER VOTE................... 2
HOW TO VOTE................................................. 4
INFORMATION ABOUT ITEM 1: ELECTION OF DIRECTORS............. 6
-- Management's nominees............................... 6
-- Directors who will continue in office............... 7
-- Stock held by directors and executive officers...... 8
-- Board of directors and committees................... 10
-- Summary of committee responsibilities............... 10
-- Non-employee director compensation.................. 11
-- Transactions with affiliates........................ 12
INFORMATION ABOUT ITEM 2: RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS................................... 13
-- Additional Information about PricewaterhouseCoopers
LLP.................................................... 13
AUDIT COMMITTEE REPORT...................................... 14
INFORMATION ABOUT ITEM 3: APPROVAL OF THE CIGNA EXECUTIVE
INCENTIVE PLAN............................................ 14
OTHER MATTERS THAT MAY ARISE AT THE MEETING................. 17
VOTING REQUIREMENTS......................................... 17
EXECUTIVE COMPENSATION...................................... 18
-- Summary compensation table.......................... 18
-- Option grants table................................. 19
-- Option exercises and value table.................... 20
-- Long-term incentive plan awards table............... 21
-- Pension plan table.................................. 21
-- Termination of employment........................... 23
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION.............................................. 24
PERFORMANCE GRAPH........................................... 27
COMPLIANCE WITH SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
REQUIREMENTS.............................................. 27
LARGEST SECURITY HOLDERS.................................... 28
SOLICITATION EXPENSES....................................... 28
2003 ANNUAL MEETING......................................... 28
APPENDIX A -- AUDIT COMMITTEE CHARTER....................... A-1
APPENDIX B -- CIGNA EXECUTIVE INCENTIVE PLAN................ B-1
1
GENERAL INFORMATION ABOUT CIGNA'S ANNUAL MEETING
WHEN AND WHERE IS THE ANNUAL MEETING?
The annual meeting will be held on Wednesday, April 24, 2002 at 3:30 p.m. at The
Gregg Conference Center at The American College located at 270 S. Bryn Mawr
Avenue, Bryn Mawr, 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,
2002 is entitled to one vote per share owned. There were 141,516,105 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 24, 2002 meeting and at any adjournment (or continuation) of that meeting.
WHAT IF MY SHARES ARE NOT REGISTERED IN MY NAME?
If you and other residents at your mailing address own shares of CIGNA stock in
street name, your broker or bank may have notified you that your household will
receive only one annual report and proxy statement for each company in which you
hold stock through that broker or bank. This practice is known as
"householding." Unless you responded that you did not want to participate in
householding, you were deemed to have consented to the process. Your broker or
bank will send one copy of our annual report and proxy statement to your
address. Each shareholder will continue to receive a separate proxy card or
voting instruction card.
If you would like to receive your own set of CIGNA's future annual report and
proxy statement or if you share an address with another CIGNA shareholder and
together both of you would like to receive only a single set of CIGNA annual
disclosure documents, please contact Householding Department, 51 Mercedes Way,
Edgewood, NY 11717 or call them at 800-542-1061. Be sure to indicate your name,
the name of your brokerage firm or bank and your account number. The revocation
of your consent to householding will be effective 30 days following its receipt.
If you did not receive an individual copy of this year's proxy statement or our
annual report, we will send a copy to you if you address a written request to
CIGNA Corporation, Shareholder Services, 1601 Chestnut Street, TL37A,
Philadelphia, PA 19192 or call 215-761-3516.
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 PETER N. LARSON, JOSEPH NEUBAUER, CAROL
COX WAIT AND MARILYN WARE TO BE DIRECTORS WITH TERMS EXPIRING APRIL 2005.
You can find information about these nominees, as well as information about
CIGNA's board of directors and its committees, director compensation, and other
related matters, beginning on page 6.
2
ITEM 2. RATIFICATION OF APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
THE BOARD RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL TO RATIFY THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS FOR THE YEAR 2002.
You can find information about CIGNA's relationship with PricewaterhouseCoopers
LLP beginning on page 13.
ITEM 3. APPROVAL OF THE CIGNA EXECUTIVE INCENTIVE PLAN
THE BOARD RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL TO APPROVE THE CIGNA
EXECUTIVE INCENTIVE PLAN.
You can find information about the Amended and Restated CIGNA Executive
Incentive Plan beginning on page 14.
3
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 at the end of the meeting.
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. E.D.T. on April 23, 2002.
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. E.D.T. on April 23,
2002.
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 be revealed to CIGNA only 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 GIVEN FOR
CIGNA CORPORATION IN THE MEETING NOTICE (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 DATE LATER THAN YOUR LAST VOTE. 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. E.D.T. on April 23, 2002.
4. ATTEND THE ANNUAL MEETING AND VOTE IN PERSON (OR BY PERSONAL REPRESENTATIVE
WITH AN APPROPRIATE PROXY).
4
WHAT TO DO IF YOU HAVE MONEY IN THE CIGNA STOCK FUND OF YOUR CIGNA OR INTRACORP
401(K) PLAN
If you have money in the CIGNA Stock Fund of the CIGNA 401(k) Plan or the
Intracorp 401(k) Performance Sharing 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. E.D.T. ON APRIL 19, 2002, 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
4. You may NOT vote in person at the annual meeting.
Your voting instructions will be kept confidential under the terms of the plans.
5
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 2005. 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, the board can either reduce its size or designate a substitute
nominee. If the board designates a substitute, proxies that would have been cast
for the original nominee will be cast for the substitute nominee.
The board has set 70 years as the retirement age for non-employee directors.
Pursuant to this policy, incumbent director Alfred C. DeCrane, Jr. will retire
as of the 2002 Annual Meeting.
MANAGEMENT'S NOMINEES FOR TERMS TO EXPIRE IN APRIL 2005.
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.
NAME, AGE, AND YEAR FIRST
ELECTED TO THE BOARD BUSINESS BACKGROUND
Peter N. Larson, 62 -- Chairman and Chief Executive Officer from 1995
Director since 1997 until June 2000 of Brunswick Corporation (a producer
of recreational consumer products).
-- Executive Officer and director of Johnson &
Johnson (a health care product maker) from 1991
until 1995.
-- Director of the New York Stock Exchange and
Click Commerce, Inc.
Joseph Neubauer, 60 -- Chairman and Chief Executive Officer of ARAMARK
Director since 1998 Corporation (a service management company)
since 1984.
-- Director of Verizon Communications Inc.,
Federated Department Stores, Inc., and Wachovia
Corporation.
Carol Cox Wait, 59 -- Director, President, and Chief Executive
Director since 1995 Officer, Committee for a Responsible Federal Budget
(a bipartisan, educational, non-profit
organization) since 1981.
-- President of Carol Cox and Associates (a
consulting firm) since 1984.
Marilyn Ware, 58 -- Director (since 1982) and Chairman (since 1988)
Director since 1993 of American Water Works Company, Inc. (a water
utility holding company).
-- Chief Executive Officer of The Ware Family
Offices, and Manager of Amworks, LLC.
-- Director of Ikon Office Solutions, Inc.
6
DIRECTORS WHO WILL CONTINUE IN OFFICE.
NAME, AGE AND YEAR CURRENT TERM
FIRST ELECTED TO THE BOARD BUSINESS BACKGROUND EXPIRES IN
Robert H. Campbell, 64 -- Chairman from 1992 and Chief April 2004
Director since 1992 Executive Officer from 1991 until July
2000 of Sunoco, Inc. (domestic
refiner and marketer of petroleum
products). President of Sunoco, Inc.
from 1991 until 1996.
-- Director of Hershey Foods, Inc. and
Hypercar, Inc.
Fred Hassan, 56 -- Chairman of the Board of Pharmacia April 2003
Director since 2001 Corporation (a research based global
pharmaceutical company) since
February 2001 and Chief Executive
Officer since March 2000. President
and Chief Executive Officer of
Pharmacia and Upjohn, Inc.
(predecessor of Pharmacia) from May
1997 until March 2000. Executive
Vice President and Director of
American Home Products Corporation
from 1995 until May 1997.
-- Director of Avon Products, Inc.
H. Edward Hanway, 50 -- Chairman of the Board of CIGNA April 2003
Director since 1999 Corporation since December 2000. Chief
Executive Officer since January
2000. President since January 1999
and Chief Operating Officer 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.
-- Chairman of MedUnite Inc. since
January 2001, Director since June 2000
and Chairman of Coalition for
Affordable Quality Healthcare since
July 2001, Director since June 2000
and Treasurer from June 2000 until
July 2001.
Joseph M. Magliochetti, 60 -- Chairman of Dana Corporation April 2003
Director since 2001 (supplier of components, modules and
complete systems to global vehicle
manufacturers and related
aftermarkets) since April 2000,
Chief Executive Officer since
February 1999, Chief Operating
Officer from 1997 until 1999,
President and Director since 1996.
-- Director of BellSouth Corporation
and member of the New York Stock Exchange
Nominating Committee.
7
NAME, AGE, AND YEAR CURRENT TERM
FIRST ELECTED TO THE BOARD BUSINESS BACKGROUND EXPIRES IN
Charles R. Shoemate, 62 -- Chairman, President, and Chief April 2004
Director since 1991 Executive Officer from 1990 until October
2000 of Bestfoods (consumer food
company).
-- Director of International Paper
Company, Chevron-Texaco Inc. and member
of the Unilever Advisory Board.
Louis W. Sullivan, M.D., 68 -- President, Morehouse School of April 2004
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, EndoVascular Instruments, Inc.,
Equifax Inc., Georgia Pacific
Corporation, Household
International, Inc., Minnesota
Mining & Manufacturing Co. and
BioSante Pharmaceuticals, Inc.
Harold A. Wagner, 66 -- Chairman of Agere Systems, Inc. April 2003
Director since 1997 since December 2001.
-- Chairman and Chief Executive Officer
from 1992 until November 2000 of Air
Products and Chemicals, Inc.
(supplier of industrial gases and
related equipment and selected
chemicals). President of Air Prod-
ucts and Chemicals, Inc. from 1992
until 1998.
-- Director of United Technologies
Corporation, PACCAR, Inc., Agere Systems,
Inc. and Arsenal Digital Solutions
Worldwide, Inc.
STOCK HELD BY DIRECTORS AND EXECUTIVE OFFICERS AS OF JANUARY 31, 2002
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.
Stock is owned "beneficially" by 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.
8
-------------------------------------------------------------------------------------------------------------------------
SHARES THAT CAN HOLDINGS IN
BE ACQUIRED CIGNA
WITHIN 60 DAYS OF STOCK
WHOLLY-OWNED RESTRICTED JANUARY 31, 2002 FUNDS OF COMMON
COMMON COMMON BY EXERCISING 401(K) STOCK
NAME STOCK STOCK STOCK OPTIONS PLANS EQUIVALENTS TOTAL
-------------------------------------------------------------------------------------------------------------------------
Directors
-------------------------------------------------------------------------------------------------------------------------
Robert H. Campbell 1,111 4,500 -0- -0- 9,019 14,630
-------------------------------------------------------------------------------------------------------------------------
Alfred C. DeCrane, Jr. 3,869 4,500 -0- -0- 19,893 28,262
-------------------------------------------------------------------------------------------------------------------------
H. Edward Hanway 96,026 7,500 503,088 146 202,477 809,237
-------------------------------------------------------------------------------------------------------------------------
Fred Hassan 67(1) -0- -0- -0- -0- 67
-------------------------------------------------------------------------------------------------------------------------
Peter N. Larson 1,000 4,500 -0- -0- 4,597 10,097
-------------------------------------------------------------------------------------------------------------------------
Joseph M. Magliochetti -0- -0- -0- -0- 188 188
-------------------------------------------------------------------------------------------------------------------------
Joseph Neubauer 3,154 4,500 -0- -0- 3,525 11,179
-------------------------------------------------------------------------------------------------------------------------
Charles R. Shoemate 6,879(2) 4,500 -0- -0- 5,303 16,682
-------------------------------------------------------------------------------------------------------------------------
Louis W. Sullivan, M.D. 2,240 4,500 -0- -0- 5,647 12,387
-------------------------------------------------------------------------------------------------------------------------
Harold A. Wagner 3,745 4,500 -0- -0- 3,537 11,782
-------------------------------------------------------------------------------------------------------------------------
Carol Cox Wait 523 4,500 -0- -0- 4,700 9,723
-------------------------------------------------------------------------------------------------------------------------
Marilyn Ware 83,651(3) 4,500 -0- -0- 3,349 91,500
-------------------------------------------------------------------------------------------------------------------------
Named Executive Officers
-------------------------------------------------------------------------------------------------------------------------
James G. Stewart 83,394 30,910 436,610 143 416,582 967,639
-------------------------------------------------------------------------------------------------------------------------
William M. Pastore 64,354 -0- 147,828 143 9,972 222,297
-------------------------------------------------------------------------------------------------------------------------
Thomas C. Jones 22,491 22,500 136,184 142 108,658 289,975
-------------------------------------------------------------------------------------------------------------------------
Donald M. Levinson 45,177 26,230 312,747 141 284,801 669,096
-------------------------------------------------------------------------------------------------------------------------
All directors, nominees
and executive officers
as a group including
those named above (21
persons) 451,668 130,810 1,691,542 3,791 1,112,278 3,390,089
-------------------------------------------------------------------------------------------------------------------------
(1) Mr. Hassan acquired 2,750 additional shares in February 2002.
(2) All of these shares of common stock are held by a limited liability company
controlled by Mr. Shoemate and his spouse, as to which Mr. Shoemate shares
voting and dispositive power with his spouse.
(3) 81,000 of these shares are held in a limited partnership; Ms. Ware has sole
voting and dispositive power as to these shares.
Additional information about stock held by directors and executive officers.
-- No director or executive officer beneficially owns more than 1.0% of
CIGNA's outstanding common stock. Directors, nominees, and executive
officers as a group beneficially own 1.61% of the outstanding common
stock. These beneficial ownership percentages have been calculated
exclusive of common stock equivalents and based on 141,477,878 shares of
common stock outstanding on January 31, 2002.
-- On January 31, 2002, the CIGNA Pension Plan held 292,500 shares, or
approximately 0.21% of the outstanding common stock. A CIGNA management
advisory committee determines how these shares will be voted.
-- On January 31, 2002, the CIGNA Stock Funds of CIGNA's two 401(k) plans for
employees held a total of 3,621,232 shares, or approximately 2.56% of the
outstanding common stock. A CIGNA management advisory committee determines
how these shares will be voted only to the extent those plans' individual
participants do not give voting instructions.
-- 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, 2002 and shares of restricted
common stock.
9
-- All except one executive officer participated in the CIGNA Stock Fund of
the CIGNA 401(k) Plan on January 31, 2002.
BOARD OF DIRECTORS AND COMMITTEES
The full board held five meetings during 2001. The board has five committees:
Audit, Corporate Governance, Executive, Finance, and People Resources. The
following table shows the members of each committee and how many meetings were
held during 2001. Each director attended at least 75% of the meetings of the
board and of his or her assigned committees.
CURRENT COMMITTEE MEMBERSHIP AND MEETINGS HELD DURING 2001
--------------------------------------------------------------------------------------
CORPORATE PEOPLE
NAME AUDIT* GOVERNANCE* EXECUTIVE FINANCE* RESOURCES*
--------------------------------------------------------------------------------------
R. H. Campbell C M M
--------------------------------------------------------------------------------------
A. C. DeCrane, Jr. M M M
--------------------------------------------------------------------------------------
H. E. Hanway C
--------------------------------------------------------------------------------------
F. Hassan M M
--------------------------------------------------------------------------------------
P. N. Larson M C
--------------------------------------------------------------------------------------
J. Magliochetti 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 2001 meetings 4 2 0 3 3
C = Chair M = Member * = Chair and Members are non-employee directors
SUMMARY OF COMMITTEE RESPONSIBILITIES
Audit Committee (Complete text of the Audit Committee's charter is provided in
Appendix A.)
-- 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.
-- Recommending the independent accountants for appointment by the board.
-- Reviewing, monitoring, and advising the board about CIGNA's compliance
with laws and regulations, any material regulatory examinations, and any
material illegal acts or contingencies.
10
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 no later than
October 1, 2002 for consideration in 2002.
-- Overseeing CIGNA's positions and policies regarding shareholder relations
and political and charitable contributions.
Executive Committee
The Executive Committee is authorized to exercise the board's authority in
managing CIGNA's business between regular board meetings.
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 $50,000. At least $25,000 of the annual
retainer must be paid in shares of CIGNA common stock or stock equivalents.
Committee member retainer. Each director receives $10,000 annually for each
committee membership. Committee chairs and members of the Executive Committee do
not receive this retainer.
Committee chair retainer. Each committee chair other than the chair of the
Executive Committee receives $15,000.
Directors have several payment options for their compensation. Directors can
elect to receive more (or all) of their remaining cash compensation in:
-- common stock;
-- common stock equivalents; or
11
-- deferred cash compensation credited at the same rates of return earned on
employee participant contributions to certain funds offered by the CIGNA
401(k) Plan.
Annual Credit. Each director is entitled to an annual credit of $46,000 to a
Restricted Deferred Compensation Account under the Deferred Compensation Plan
for Directors of CIGNA Corporation. This amount is credited in restricted common
stock equivalents, and is payable when a director dies or retires from the
board.
When CIGNA instituted the Annual Credit, CIGNA 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, a retiring director, elected to
continue accruing benefits under the frozen plan. In April 2001, Mr. DeCrane
received a credit of $35,000 of deferred restricted equivalents under the
Deferred Compensation Plan so that his compensation would be consistent with
that of other directors.
Hypothetical Dividends. Hypothetical dividends are paid on common stock
equivalents and restricted common stock equivalents and can be reinvested in
equivalents or invested in the hypothetical investments available for deferred
cash compensation.
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 shares
under this plan 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 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 provided $204,000 of coverage.
Financial planning. Each director can use the financial planning services
available to CIGNA executive officers.
Insurance. Each director may purchase or participate in life insurance,
medical/dental care programs, property/casualty personal lines insurance
programs, and matching gift programs 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 entities (or their
subsidiaries) of which CIGNA directors were executive officers or 10%
shareholders during 2001. These transactions included:
-- providing insurance coverages, health care services, pension contracts,
and related products and services to these entities;
12
-- purchasing various products and services from these entities;
-- acquiring, disposing of, or holding debt or equity issued by these
entities; and
-- relying on the credit of these entities.
Various CIGNA directors and executive officers purchased products marketed by
CIGNA companies.
In 2001, CIGNA paid approximately $365,000 in legal fees to the law firm of
Davis & Harman LLP. Richard S. Belas, a member of Davis & Harman LLP, is the
spouse of Judith E. Soltz, Executive Vice President and General Counsel of
CIGNA.
During 2001, various CIGNA companies engaged in transactions with companies that
beneficially own more than 5% of CIGNA's outstanding common stock listed on page
28. These transactions included, for JP Morgan Chase & Company, banking and
investment management services and the purchase of JP Morgan Chase's debt
instruments and, for Wellington Management Co. LLP, investment management
services.
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 2002.
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 2002. The board wants
shareholders to ratify this appointment even though ratification is not legally
required. 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, a predecessor company of CIGNA, 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.
ADDITIONAL INFORMATION ABOUT PRICEWATERHOUSECOOPERS LLP
Audit Fees
Fees for professional services for PricewaterhouseCoopers LLP's audit of 2001
annual financial statements and reviews of quarterly financial statements were
approximately $6.0 million.
Financial Information Systems Design and Implementation Fees
Fees for professional services rendered by PricewaterhouseCoopers LLP during
2001 for information technology services related to financial information system
design and implementation were approximately $0.8 million.
All Other Fees
Other fees for professional services rendered by PricewaterhouseCoopers LLP
during 2001 were approximately $9.3 million for audit-related services including
among other items, financial process advisory services. Fees for non-audit
related services were approximately $5.6 million for, among other items,
business strategy consulting and tax-related services.
13
AUDIT COMMITTEE REPORT
This Audit Committee Report (except for the information in the fourth bullet
point) is provided only for the purpose of this proxy statement. This Report
shall not 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 Board of Directors has adopted a written charter for the Audit Committee. A
summary description of the duties and powers of the Audit Committee is set forth
at page 10 of this proxy statement.
All of the members of the Audit Committee are independent (as defined in the
listing standards of the New York Stock Exchange).
Before CIGNA filed its Annual Report on Form 10-K for the year ended December
31, 2001 with the Securities and Exchange Commission, the Audit Committee:
-- Reviewed and discussed with company management the audited financial
statements included in the Form 10-K.
-- Discussed with PricewaterhouseCoopers LLP, CIGNA's independent
accountants, matters related to the conduct of its audit that are required
to be communicated by auditors to audit committees by Statement on
Auditing Standards No. 61, as amended.
-- Received the communications from PricewaterhouseCoopers LLP required by
Standard No. 1 of the Independence Standards Board to disclose all
relationships that in the auditor's professional judgment may reasonably
be thought to bear on their independence and to confirm their
independence. Based on these communications, the Audit Committee discussed
with PricewaterhouseCoopers LLP its independence from CIGNA.
-- Reviewed and considered the compatibility of non-audit services provided
by PricewaterhouseCoopers LLP with maintaining the auditor's independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that such audited financial statements be
included in CIGNA's Annual Report on Form 10-K for the year ended December 31,
2001 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE:
Robert H. Campbell, Chairman
Alfred C. DeCrane, Jr.
Fred Hassan
Peter N. Larson
Joseph Magliochetti
Joseph Neubauer
INFORMATION ABOUT ITEM 3:
APPROVAL OF THE CIGNA EXECUTIVE INCENTIVE PLAN
CIGNA's shareholders approved the CIGNA Executive Incentive Plan at the 1997
annual meeting. Under federal tax rules, CIGNA's shareholders must approve the
plan every five years to maintain the tax deductibility of annual incentive
bonuses to the named executive officers. Thus, the company is submitting the
amended and restated plan to shareholders for approval.
CIGNA's success depends, in large part, on its ability to recruit and retain
executives with outstanding ability and experience in a way that serves the
company's best interests and those of its shareholders. The Board of Directors
believes that the company can achieve this objective by motivating its officers
with competitive compensation that is both conditioned upon achievement of
CIGNA's financial goals and tax-deductible for the company. The Board believes
that the Executive Incentive Plan helps the company meet this objective.
14
The purpose of the plan is:
- to pay annual incentive bonuses to CIGNA's executive officers if
they and CIGNA meet or exceed annual performance goals, and
- to qualify these bonuses as "performance based compensation" under
Section 162(m) of the Internal Revenue Code.
CIGNA may deduct for federal income tax purposes compensation over $1 million
paid to its chief executive officer and the four other most highly paid
executive officers that qualifies as "performance based compensation."
Shareholder approval of the plan at the 1997 annual meeting was required to
qualify bonuses paid under the plan as "performance based compensation."
In October 2001, the People Resources Committee recommended to the Board that
CIGNA continue the plan, and the Board approved the plan in the form included in
the proxy statement, subject to its approval by shareholders at the 2002 annual
meeting.
The full text of the amended and restated plan is included in this proxy
statement (Appendix B) for your information and review. Below is a summary of
the plan. The material terms of the plan are the same as those originally
approved by the shareholders in 1997. The Committee has made routine
administrative amendments to the original plan.
To have the plan approved, CIGNA needs the affirmative vote of a majority of the
shares of its common stock present in person or by proxy and entitled to vote at
the 2002 annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
SUMMARY OF THE PLAN
Plan Administration: The People Resources Committee administers the plan.
Eligibility: The Committee designates the executive officers -- historically,
CIGNA's chief executive and the heads of its operating and staff
divisions -- that participate in the plan. Their participation in the plan is
mandatory. These executive officers will participate in the plan for the
performance period, which is a calendar year unless the Committee specifies
another period. Except for some leaves of absence and termination of employment
on account of retirement, death or disability, a participant must be
continuously employed by CIGNA from the beginning of the performance period to
the date of the award to be eligible to receive an award.
Performance Goals: The Committee will establish written, objective performance
goals for a performance period generally within 90 days of the beginning of each
performance period. The Committee must state performance goals as specific
amounts of, or specific changes in, one or more of the following financial
measures:
-- revenues
-- earnings
-- earnings per share
-- shareholders' equity
-- return on equity
-- assets
-- return on assets
-- capital
-- return on capital
-- book value
-- economic value added
-- operating margins
-- cash flow
-- shareholder return
-- expenses
-- expense ratios
-- market share
15
In doing so, the Committee may define, within reason, the financial measures it
uses. These definitions may also be subject to reasonable adjustments and may
include or exclude items. Within a reasonable time after the close of a
performance period, the Committee will determine whether the performance goals
for that performance period have been met.
Limits on Awards: Participants are eligible to receive an award under the plan
only if the Committee has certified in writing that the performance goals have
been met. The maximum award for each participant will consist of:
-- cash in the amount of $3 million; and
-- in lieu of additional cash, 75,000 shares of common stock and/or
restricted common stock to be paid under CIGNA's Long-Term Incentive Plan,
which shareholders approved in 2000.
The Committee has sole and absolute discretion to reduce or eliminate entirely
the award to one or more participants.
Deferrals of Awards: The Committee may determine, in its sole discretion,
whether CIGNA will pay the award immediately or defer it until a later date or
the occurrence of a particular event. A participant may also voluntarily defer
receipt of an award.
Amendments and Adjustments: The Committee or the Board of Directors may amend
the plan at any time. However, an amendment will not be effective without the
prior approval of shareholders if their approval is necessary to continue to
qualify the awards as "performance based compensation" or is otherwise required
by any other applicable law, rule or regulation. The plan provides for
appropriate adjustments in the number of shares awardable under the plan upon a
stock dividend, stock split or other subdivision or combination of CIGNA's
common stock, as well as in the number and/or kind of shares awardable under the
plan following a merger, reorganization or other similar event.
Termination: The Committee or the Board of Directors may terminate the plan at
any time.
Future Payments: CIGNA cannot determine the amounts of any future awards under
the plan. The amount of any future awards will depend upon:
-- the performance goals established from time to time by the Committee,
-- CIGNA's performance and the performance of the participants during the
applicable performance periods, and
-- the Committee's exercise of downward discretion in making awards.
The bonuses that were paid for 2001 to the named executive officers under the
plan are included in the "Bonus" column of the Summary Compensation Table on
page 18 of this proxy statement.
16
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 properly submitting proposals and nominations for this
year's meeting were described in CIGNA's 2001 Proxy Statement and were the same
as those described on page 28 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 CIGNA Executive Incentive Plan.
If you attend the meeting or submit your proxy but abstain from voting, 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
ratification of appointment of independent accountants and the approval of the
CIGNA Executive Incentive Plan.
Many CIGNA shareholders own their shares in "street name," which means that
brokers are actually the record owners entitled to vote the shares. Brokers will
have discretionary authority to vote on Items 1, 2 and 3 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.
17
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 2001. 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 19 and the long-term
incentive plan awards table on page 21, provide more detail about specific types
of compensation.
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)
--------------------------- ---- ------- --------- ------------ ---------- ---------- --------- ---------
H. Edward Hanway............ 2001 986,500 2,625,000 -0- -0- 262,026 -- 204,400
Chairman and 2000 896,200 4,375,000 -0- -0- 284,526 3,800,000 152,500
Chief Executive Officer 1999 711,500 2,500,000 -0- 562,500 228,612 2,400,000 82,800
Thomas C. Jones(4).......... 2001 568,300 935,000 -0- 2,467,600 100,105 -- 67,200
President, CIGNA 2000 536,500 990,000 -0- -0- 103,982 1,367,000 54,700
Retirement 1999 -- -- -- -- -- -- --
and Investment Services
James G. Stewart............ 2001 701,900 600,000 -0- 2,841,500 174,329 -- 64,900
Executive Vice President 2000 671,900 900,000 -0- -0- 187,935 1,867,000 74,900
and Chief Financial
Officer 1999 636,500 975,000 3,500 375,000 230,908 1,867,000 72,500
William M. Pastore.......... 2001 634,600 540,000 -0- -0- 136,345 -- 73,800
President, CIGNA 2000 504,800 975,000 -0- -0- 118,791 1,200,000 58,300
HealthCare 1999 435,300 725,000 5,800 -0- 68,367 933,000 44,300
Donald M. Levinson.......... 2001 551,900 510,000 -0- 2,438,000 109,507 -- 59,300
Executive Vice President 2000 521,900 700,000 -0- -0- 138,354 1,200,000 64,200
Human Resources & Services 1999 493,300 750,000 6,100 300,000 127,235 933,000 62,400
------------------------
(1) The following named executive officers held the following aggregate shares
of restricted stock, with the following values, at December 31, 2001: Mr.
Hanway, 7,500 shares valued at $694,900; Mr. Jones, 22,500 shares at $2,085,000;
Mr. Stewart, 30,910 shares at $2,864,000; and Mr. Levinson, 26,230 shares at
$2,430,000. CIGNA pays dividends on restricted stock.
(2) Long-term compensation for the three-year period ending December 31, 2000
was paid in cash in May, 2001. Long-term compensation for the three-year period
ending December 31, 2001 will be paid in May, 2002. We explain the long-term
incentive plan on page 21.
(3) The amounts shown in column (i) include:
-- CIGNA's contributions under its regular and supplemental 401(k) plans in
the following amounts for 2001: Mr. Hanway, $192,400; Mr. Jones,
$55,800; Mr. Stewart, $57,400; Mr. Pastore, $57,700; and Mr. Levinson,
$44,800.
-- 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 2001, were as follows: Mr.
Hanway, $12,000; Mr. Jones, $11,400; Mr. Stewart, $7,500; Mr. Pastore,
$16,100; and Mr. Levinson, $14,500.
(4) Mr. Jones announced his retirement as President, CIGNA Retirement and
Investment Services, in February, 2002.
18
OPTION GRANTS IN FISCAL YEAR 2001
The following table provides additional information about the stock options
granted in 2001 to the named executive officers. Those stock options are shown
in column (g) of the summary compensation table on page 18. CIGNA did not grant
stock appreciation rights in 2001.
GRANT
INDIVIDUAL GRANTS DATE VALUE
---------------------------------------------------------------------------------------------- ----------
(A) (C) (D) (E) (F)
(B) % OF
NUMBER OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED(#) IN 2001 ($/SH) DATE VALUE($)(1)
---- ---------- ---------- -------- ---------- -----------
H. Edward Hanway
New options(2) 140,000 4.02 110.375 2/28/11 2,894,836
Replacement options(3) 72,026 2.07 111.510 --(4) 1,624,897
Replacement options 25,000 0.72 90.165 --(5) 456,038
Replacement options 25,000 0.72 89.700 2/24/09 453,686
Thomas C. Jones
New options 33,000 0.95 110.375 2/28/11 682,354
Replacement options 24,491 0.70 92.930 --(6) 460,453
Replacement options 22,500 0.65 91.715 --(7) 417,490
Replacement options 20,114 0.58 87.250 --(8) 355,048
James G. Stewart
New options 38,000 1.09 110.375 2/28/11 785,741
Replacement options 43,853 1.26 107.375 --(9) 952,632
Replacement options 5,000 0.14 109.050 2/25/08 110,311
Replacement options 39,541 1.14 109.945 --(10) 879,520
Replacement options 47,935 1.38 91.715 --(11) 889,438
William M. Pastore
New options 74,000 2.13 110.375 2/28/11 1,530,128
Replacement options 56,390 1.62 94.025 --(12) 1,072,675
Replacement options 5,955 0.17 89.355 2/25/08 107,652
Donald M. Levinson
New options 32,600 0.94 110.375 2/28/11 674,083
Replacement options 49,177 1.41 93.000 --(13) 925,268
Replacement options 22,230 0.64 90.930 --(14) 408,949
Replacement options 5,500 0.16 91.300 2/24/09 101,591
---------------
(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 expected option life of three years, a dividend yield of
1.24%, a price volatility of CIGNA common stock of 24.21%, and an annualized
risk-free interest rate of 4.95%. The calculation also reflects a 5.0% 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.
(3) In order to encourage executives to increase their share ownership, CIGNA
grants one "replacement option" for each share of CIGNA stock that an executive
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
19
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 2001 have a replacement feature. Because replacement options replace shares
that are used to buy new shares, replacement options maintain, but do not
increase, the executive's total ownership of CIGNA shares and options.
(4) This replacement option grant includes 39,641 options expiring December 8,
2007; 11,203 options expiring February 25, 2008; and 21,182 options expiring
February 23, 2010.
(5) This replacement option grant includes 19,124 options expiring February 23,
2010; and 5,876 options expiring February 24, 2009.
(6) This replacement option grant includes 8,853 options expiring February 25,
2008; 14,883 options expiring February 23, 2010; and 755 options expiring July
27, 2004.
(7) This replacement option grant includes 622 options expiring July 27, 2004;
3,604 options expiring February 22, 2005; and 18,274 options expiring February
24, 2009.
(8) This replacement option grant includes 5,916 options expiring February 24,
2009; 9,425 options expiring July 27, 2004 and 4,773 options expiring February
26, 2007.
(9) This replacement option grant includes 41,168 options expiring December 8,
2007; and 2,685 options expiring February 28, 2006.
(10) This replacement option grant includes 6,404 options expiring February 25,
2008; 13,723 options expiring February 23, 2010; 428 options expiring February
28, 2006; 4,500 options expiring February 26, 2007; and 14,486 options expiring
February 24, 2009.
(11) This replacement option grant includes 19,519 options expiring February
24, 2009; 3,060 options expiring July 27, 2004; 8,381 options expiring February
28, 2006; and 16,975 options expiring February 26, 2007.
(12) This replacement option grant includes 7,794 options expiring February 25,
2008; 12,270 options expiring February 26, 2007; 12,570 options expiring
February 23, 2010; 442 options expiring February 28, 2006; and 23,314 options
expiring February 24, 2009.
(13) This replacement option grant includes 47,531 options expiring December 8,
2007; and 1,646 options expiring February 25, 2008.
(14) This replacement option grant includes 7,364 options expiring February 25,
2008; 12,169 options expiring February 23, 2010; and 2,697 options expiring
February 24, 2009.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 2001 AND
2001 FISCAL YEAR-END OPTION VALUES
This table provides information about options exercised by the named executive
officers during 2001, and about the unexercised stock options they held at the
end of 2001. The named executive officers did not exercise or hold any stock
appreciation rights during 2001.
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES
NUMBER OF UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SECURITIES OPTIONS AT 2001 IN-THE-MONEY OPTIONS AT
UNDERLYING YEAR-END(#) 2001 YEAR-END($)
EXERCISED VALUE --------------------------- ---------------------------
NAME OPTIONS(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------- ----------- ----------- ------------- ----------- -------------
H. Edward Hanway............ 183,813 6,739,432 341,922 408,666 3,264,204 4,994,449
Thomas C. Jones............. 79,794 1,167,599 70,851 125,780 137,666 778,605
James G. Stewart............ 236,409 9,424,051 335,175 221,768 2,760,434 3,541,883
William M. Pastore.......... 74,477 1,139,235 93,995 124,788 0 451,919
Donald M. Levinson.......... 134,932 4,939,041 249,818 179,829 2,862,934 3,285,959
20
LONG-TERM INCENTIVE PLAN AWARDS IN FISCAL YEAR 2001
This table provides information about long-term incentive awards granted in 2001
to the named executive officers.
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE BASED PLANS
-----------------------------------
(A) (B) (C) (D) (E) (F)
NUMBER PERIOD
OF UNTIL THRESHOLD MAXIMUM
NAME UNITS MATURATION ($) TARGET($) ($)
---- ------ ---------- --------- --------- -------
H. Edward Hanway..................... 46,670 3 years * 3,500,250 9,334,000
Thomas C. Jones...................... 11,000 3 years * 825,000 2,200,000
James G. Stewart..................... 12,670 3 years * 950,250 2,534,000
William M. Pastore................... 12,335 3 years * 925,125 2,467,000
Donald M. Levinson................... 10,870 3 years * 815,250 2,174,000
------------------------
* 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 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.
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, 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%
21
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.
YEARS OF SERVICE
------------------------------------------------------------------
REMUNERATION 15 20 25 30 35
------------ ---------- ---------- ---------- ---------- ----------
$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
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. Jones, Mr. Pastore and other employees hired on or after January 1, 1989
participate in Part B of the Pension Plan.
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.
The estimated annual benefit under Part B for Mr. Jones upon his retirement from
CIGNA in 2002 would be $57,000, and for Mr. Pastore at age 65 is $242,000. Mr.
Pastore's 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. Part B benefits may be paid at or after
separation from service in cash in a lump sum or in an annuity form.
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 18.
As of January 1, 2002, the named executive officers had the following years of
credited service: Mr. Hanway, 24 years; Mr. Stewart, 35 years; Mr. Jones, 8
years; Mr. Pastore, 6 years; and Mr. Levinson, 31 years. (Mr. Levinson earned
additional years of credited service pursuant to a retention agreement that
vested in 2001.)
If Mr. Pastore and Mr. Jones comply with contractual obligations to CIGNA, which
include obligations not to compete and to maintain confidentiality of business
information and, in Mr. Pastore's case, if he continues employment with CIGNA
until age 55, they will receive supplemental pension benefits from CIGNA. Mr.
Jones will receive additional annual benefit credits under Part B of the Pension
Plan. The estimated annual benefit under this supplemental arrangement upon his
retirement from CIGNA would be $32,000. Mr. Pastore's supplemental pension
benefit is based on the pension accrual formula of his former employer and
covered earnings under the CIGNA plan. The estimated annual benefit under this
supplemental arrangement upon his retirement from CIGNA at age 65 is $422,000.
These estimates are based on the same assumptions as those described above to
calculate their annual benefits under Part B.
22
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
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.
23
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The functions performed by the People Resources Committee are described on page
11. All members of the Committee are outside directors.
SUMMARY
The main objective of CIGNA's executive compensation program is to pay for
performance that increases shareholder value. CIGNA pays executives through:
-- base salary
-- annual bonus
-- long-term incentives
Each is described below under "Elements of the Executive Compensation Program."
Annual bonus and long-term incentives vary based on competitive and absolute
performance versus plan goals. These amounts are not guaranteed to any named
executive because they are tied to CIGNA's business results. The annual bonus
recognizes short-term business results and individual performance. Long-term
incentives for executive officers are based upon sustained corporate-wide
results, linked directly to shareholder value creation.
PROGRAM DESCRIPTION
For each senior executive, CIGNA establishes total pay targets based on median
compensation levels for executives in comparable positions in similarly sized
companies. In making comparisons, we consider a significant number of companies,
including most of the companies in the S&P Insurance/Managed Care Indexes shown
in the performance graph on page 27. Using these total pay targets, the
Committee determines the appropriate competitive mix of compensation that will
motivate the executives to achieve CIGNA's performance and strategic objectives
and to remain with the company.
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 changed 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 forfeit certain gains realized
from exercising options.
We expect CIGNA executives to demonstrate confidence in the company's future by
owning a substantial amount of CIGNA stock. In particular, we expect the named
executive officers to own stock valued at between five and seven times their
salaries. The Committee reviews ownership levels annually.
We intend compensation paid to the named executive officers to be fully
tax-deductible to the company.
ELEMENTS OF THE EXECUTIVE COMPENSATION PROGRAM
Base Salary
Base salary provides competitive annual compensation that reflects 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.
Annual Bonus
Named executive officers who are covered under Section 162(m) of the Internal
Revenue Code earn awards under the shareholder-approved CIGNA Executive
Incentive Plan. The Plan was designed to motivate these officers with
competitive awards based upon achievement of competitive financial and
24
operational goals. The Plan limits award amounts and complies with Section
162(m) of the Internal Revenue Code. The Plan does not pay awards unless CIGNA
attains certain objective performance goals.
Annual bonus awards 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. These incentives may include Strategic Performance Units,
restricted stock and stock options. In making long-term incentive awards in
2001, we 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. Hanway's overall compensation package acknowledges:
-- achievement of continued operating improvements in our key health care
businesses; progress in implementing a new retirement and investment
strategy;
-- people strengthening; and
-- investments in customer service, technology and e-commerce that are
expected to have a positive impact on future earnings.
Approximately 90% of Mr. Hanway's total pay opportunity is variable compensation
(such as bonuses and stock options). It 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
dependent upon long-term, sustained competitively superior corporate-wide
results. Mr. Hanway's total compensation opportunity (as well as the individual
base salary and variable compensation components) is consistent with the total
compensation opportunity for CEOs of comparable sized companies.
The Committee considers several factors to assess the performance of CIGNA and
Mr. Hanway:
-- profitability of each business unit;
-- profit improvement;
-- growth in revenue from profitable products/services;
-- expense management;
-- customer service; and
-- specific measures that vary by business activity, such as profit margin
and membership growth in the health care business and profitable asset
growth in the pension business.
Mr. Hanway's compensation package for 2001 is itemized in the summary
compensation table on page 18. (His payment in 2001 under the Long-Term
Incentive Plan for the three-year period ending December 31,
25
2000 is included in the 2000 column of the table.) What follows is an
explanation of how the Committee arrived at the amounts of the various
components.
2001 Bonus. Mr. Hanway 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 earnings
growth and earnings per share performance.
Payment under Long-Term Incentive Plan. The Committee approved a
formula-generated value of $200 for each Strategic Performance Unit awarded in
1998. This amount, which reflects CIGNA's superior performance over the period
from 1998 to 2000 compared to the peer group, was distributed in cash to Mr.
Hanway and the other named executives officers because they met CIGNA's stock
ownership guidelines (five to seven times salary).
Stock options. Mr. Hanway received options to recognize the financial results
achieved in 2000 and to link his future compensation opportunity to the creation
of additional shareholder value.
PEOPLE RESOURCES COMMITTEE:
Louis W. Sullivan, M.D., Chairman
Charles R. Shoemate
Harold A. Wagner
Carol Cox Wait
Marilyn Ware
26
PERFORMANCE GRAPH
The following graph, which covers the five-year period ending December 31, 2001,
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 and (ii) a weighted average of
the S&P Managed Care and Life/Health Insurance Indexes.
FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN*
[FIVE-YEAR TOTAL SHAREHOLDER RETURN* GRAPH]
S&P MANAGED CARE,
CIGNA S&P 500 INDEX LIFE/HEALTH INS. INDEXES**
----- ------------- --------------------------
12/31/96 100 100 100
12/31/97 129 133 114
12/31/98 176 171 106
12/31/99 186 208 93
12/29/00 309 189 150
12/31/01 220 166 138
----------------------------------------------------------------------------------------------------------------
12/31/96 12/31/97 12/31/98 12/31/99 12/29/00 12/31/01
----------------------------------------------------------------------------------------------------------------
CIGNA $100 $129 $176 $186 $309 $220
S&P 500 Index $100 $133 $171 $208 $189 $166
S&P Managed Care, Life/Health
Ins. Indexes** $100 $114 $106 $ 93 $150 $138
* Assumes that the value of the investment in CIGNA common stock and each index
was $100 on December 31, 1996 and that all dividends were reinvested.
** Weighted average of S&P Managed Care (75%) and Life/Health Insurance (25%)
Indexes.
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
reports due in 2001 were filed as required.
27
LARGEST SECURITY HOLDERS
This table lists shareholders that filed Schedules 13G indicating that they
beneficially owned more than five percent of CIGNA's common stock as of December
31, 2001. We prepared the table using information from Schedules 13G filed by
the beneficial owners listed and other sources.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP PERCENT OF CLASS
NAME AND ADDRESS OF BENEFICIAL OWNER AS OF 12/31/2001 AS OF 12/31/01
-------------------------------------------------------------------------------------------------------
JP Morgan Chase & Company 11,600,816 8.20%
270 Park Avenue
New York, NY 10017
Wellington Management Company, LLP 8,455,430 5.97%
75 State Street
Boston, MA 02109
-- JP Morgan Chase & 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.
JP Morgan Chase reported sole voting power as to 8,006,144 shares, shared
voting power as to 1,653,358 shares, sole dispositive power as to
9,725,006 shares and shared dispositive power as to 1,871,210 shares. JP
Morgan Chase 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, LLP 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 or dispositive
power for any of these shares, but has shared voting power as to 1,310,230
of these shares, and shared dispositive power as to all of these shares.
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.
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 $15,000 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.
2003 ANNUAL MEETING
The 2003 Annual Meeting will be Wednesday, April 23, 2003 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 22,
2002 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 23, 2003. 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 23, 2003. 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
28
APPENDIX A
AUDIT COMMITTEE CHARTER
Purpose
RESOLVED, That the Audit Committee shall review and report to the Board
regarding:
-- The appropriateness of the Corporation's accounting policies.
-- The adequacy of the Corporation's internal controls and reliability of the
Corporation's financial information reported to the public.
-- The Corporation's compliance with legal and regulatory requirements.
-- The independence and performance of the Corporation's internal auditors
and Independent Accountants.
Composition
RESOLVED, That the Audit Committee shall be appointed by the Board and shall
have at least three members. All members of the Audit Committee shall meet the
independence and experience requirements of the New York Stock Exchange.
Matters Pertaining to Independent Accountants
RESOLVED, That the Independent Accountants shall have ultimate accountability to
the Audit Committee and the Board of Directors.
RESOLVED, That the Audit Committee and the Board of Directors shall have the
ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the Independent Accountants.
RESOLVED, That the Audit Committee shall:
-- Review the terms of the engagement of the Independent Accountants,
including the scope of their audit, proposed fees and personnel
qualifications. Periodically review information from the Independent
Accountants pertaining to the Independent Accountants' independence,
discuss such information with the Independent Accountants and, if so
determined by the Audit Committee, recommend that the Board take
appropriate action to satisfy itself of such independence. Review
quarterly the results with the Independent Accountants before filing with
the Securities and Exchange Commission or authorize the Audit Committee
Chairman to conduct such a review.
-- Review with the Independent Accountants and management the results of the
Independent Accountant's year-end audit. Review the Independent
Accountant's Annual Report on Internal Controls with the Independent
Accountants and management. Receive and review required communications
from the Independent Accountants.
Matters Pertaining to the General Auditor
RESOLVED, That the Audit Committee shall:
-- Review with the General Auditor the Corporation's major financial and
business risk exposures and steps taken to monitor and control such
exposures.
-- Review with the General Auditor planned Internal Audit activities and the
results of Internal Audit activities.
A-1
Matters Pertaining to Filings with Government Agencies
RESOLVED, That the Audit Committee shall:
-- Review with the Independent Accountants and management the Corporation's
Form 10-K, and, if satisfied, recommend its approval to the Board for
filing with the Securities and Exchange Commission.
-- Review with management the Corporation's proxy statement and related
materials, and, if satisfied, recommend their approval to the Board for
filing with the Securities and Exchange Commission.
Controls
RESOLVED, That the Audit Committee shall:
-- Review with management and the General Auditor the adequacy and
effectiveness of the Corporation's internal controls.
-- Review the Corporation's procedures with respect to appropriateness of
significant accounting policies and adequacy of financial controls.
Compliance and Legal Matters
RESOLVED, That the Audit Committee shall:
-- Review and monitor the Corporation's Compliance Program.
-- Review with the Corporation's General Counsel material litigation and
other legal matters as appropriate.
Other Matters
RESOLVED, That in order to carry out and effectuate the purposes of the
foregoing resolutions, the Audit Committee shall have authority as it deems
necessary to confer with the Corporation's Independent Accountants, Internal
Auditors and Officers and to conduct or authorize investigations into any
matters within the scope of the Committee's responsibilities.
Charter Review
RESOLVED, That the Audit Committee shall reassess the adequacy of its charter
annually and recommend any proposed changes to the Board for approval.
A-2
APPENDIX B
CIGNA EXECUTIVE INCENTIVE PLAN
(AMENDED AND RESTATED AS OF JANUARY 1, 2002)
ARTICLE 1
STATEMENT OF PURPOSE
The CIGNA Executive Incentive Plan is intended to provide annual incentive
bonuses to executive officers of the Company if annual performance goals are
achieved. The Plan is also intended to qualify as a performance based
compensation plan under Section 162(m) of the Internal Revenue Code.
ARTICLE 2
DEFINITIONS
The terms used in this Plan 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. The following terms, unless the context requires otherwise, are
defined as follows:
2.1 "AWARD" means the incentive compensation determined by the Committee under
Section 4.4 of the Plan.
2.2 "BOARD" means the CIGNA board of directors.
2.3 "CIGNA" means CIGNA Corporation, a Delaware corporation, or any successor.
2.4 "CIGNA LTIP" means the CIGNA Long-Term Incentive Plan, or any successor
plan under which grants of Common Stock or Restricted Stock are authorized.
2.5 "CODE" means the Internal Revenue Code of 1986, as amended.
2.6 "COMMITTEE" means the People Resources Committee of the Board or any
successor committee with responsibility for compensation, or any subcommittee,
as long as the number of Committee members and their qualifications shall at all
times be sufficient to meet the requirements for "outside directors" under
Section 162(m), as in effect from time to time.
2.7 "COMMON STOCK" means CIGNA common stock other than Restricted Stock.
2.8 "COMPANY" means CIGNA and/or its Subsidiaries.
2.9 "DEFERRED COMPENSATION PLAN" means the CIGNA Deferred Compensation Plan, a
similar or successor plan, or other arrangement for the deferral of compensation
specified by the Committee.
2.10 "DISABILITY" means permanent and total disability as defined in Code
Section 22(e)(3).
2.11 "EMPLOYER" means the Company that employs a Participant during a
Performance Period.
2.12 "EXECUTIVE OFFICER" means any Company employee who is an "executive
officer" as defined in Rule 3b-7 promulgated under the Exchange Act.
2.13 "EXCHANGE ACT" means the Securities Exchange Act of 1934.
2.14 "PARTICIPANT" means an employee described in Article 3 of the Plan.
2.15 "PERFORMANCE PERIOD" means the period for which an Award may be made.
Unless otherwise specified by the Committee, the Performance Period shall be a
calendar year.
2.16 "PLAN" means the CIGNA Executive Incentive Plan, as it may be amended from
time to time. This Plan is deemed to be a Qualifying Incentive Plan under
Section 9.1 of the CIGNA LTIP.
B-1
2.17 "RESTRICTED STOCK" means CIGNA common stock that is subject to
restrictions on sale, transfer, or other alienation for a period specified by
the Committee.
2.18 "RETIREMENT" means 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.
2.19 "SEC" means the Securities and Exchange Commission.
2.20 "SECTION 162(m)" means Code Section 162(m) and regulations promulgated
thereunder by the Secretary of the Treasury.
2.21 "SUBSIDIARY" means 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; 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; 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.
2.22 "TERMINATION OF EMPLOYMENT" means (a) the termination of the Participant's
active employment relationship with the Company, unless otherwise expressly
provided by the Committee, or (b) the occurrence of a transaction by which the
Participant's employing Company ceases to be a Subsidiary.
ARTICLE 3
PARTICIPATION
Any Executive Officer designated by the Committee shall be a Participant in the
Plan and shall continue to be a Participant until any Award he may receive has
been paid or forfeited under the terms of the Plan.
ARTICLE 4
INCENTIVE AWARDS
4.1 OBJECTIVE PERFORMANCE GOALS. The Committee shall establish written,
objective performance goals for a Performance Period not later than 90 days
after the beginning of the Performance Period (but not after more than 25% of
the Performance Period has elapsed), or by some other date required or permitted
under Section 162(m). The objective performance goals shall be stated as
specific amounts of, or specific changes in, one or more of the financial
measures described in Section 4.2 of the Plan. The objective performance goals
need not be the same for different Performance Periods and for any Performance
Period may be stated: (a) as goals for CIGNA, for one or more of its
subsidiaries, divisions, business units, lines of business, or for any
combination of the foregoing; (b) on an absolute basis or relative to the
performance of other companies or of a specified index or indices, or be based
on any combination of the foregoing; and (c) separately for one or more of the
Participants, collectively for the entire group of Participants, or in any
combination of the two.
4.2 FINANCIAL MEASURES. The Committee shall use any one or more of the
following financial measures to establish objective performance goals under
Section 4.1 of the Plan: revenues, earnings, earnings per share, shareholders'
equity, return on equity, assets, return on assets, capital, return on capital,
book value, economic value added, operating margins, cash flow, shareholder
return, expenses, expense ratios, or market share. The Committee may specify any
reasonable definition of the financial measures it uses. Such definitions may
provide for reasonable adjustments and may include or exclude items, including
but not limited to: realized investment gains and losses; extraordinary, unusual
or non-recurring items; effects of accounting changes, currency fluctuations,
acquisitions, divestitures, reserve strengthening, or financing activities;
expenses for restructuring or productivity initiatives; and other non-operating
items.
B-2
4.3 PERFORMANCE EVALUATION. Within a reasonable time after the close of a
Performance Period, the Committee shall determine whether the objective
performance goals established for that Performance Period have been met. If the
objective performance goals and any other material terms established by the
Committee have been met, the Committee shall so certify in writing.
4.4 AWARD. If the Committee has made the written certification under Section
4.3 for a Performance Period, each Participant to whom the certification applies
shall be eligible for an Award for that Performance Period. The Award for each
such Participant shall consist of (a) cash in the amount of $3 million and (b)
in lieu of additional cash, 75,000 shares of Common Stock and/or Restricted
Stock to be paid under Article 9 of the CIGNA LTIP. For any Performance Period,
however, the Committee shall have the sole and absolute discretion to reduce the
amount of, or eliminate entirely, the Award to one or more of the Participants.
Payment of all or part of an Award in Common Stock or Restricted Stock shall be
made under and subject to the terms and conditions of the CIGNA LTIP and the
applicable grant. In the event of a stock dividend, stock split, or other
subdivision or combination of the Common Stock, the number of shares of Common
Stock and/or Restricted Stock that a Participant may receive as an Award under
the Plan will be adjusted accordingly. If the outstanding shares of Common Stock
and/or Restricted Stock are changed or converted into, exchanged or exchangeable
for, a different number or kind of shares or other securities of CIGNA or of
another corporation, by reason of a reorganization, merger, consolidation,
reclassification or combination, the Committee shall make an appropriate
adjustment in the number and/or kind of shares that may be awarded under this
Plan.
4.5 PAYMENT OF THE AWARD.
(a) When the Committee makes its determination under Section 4.4, it shall also
determine in its sole discretion whether a payment of an Award in the form
of cash or Common Stock shall be made immediately or deferred until a later
date or the occurrence of a particular event. An Award in the form of
Restricted Stock shall be deemed granted by the Committee on the date of the
Award.
(b) If the Committee determines that payment of an Award is to be made
immediately, then as soon as practicable after the Committee's determination
under Section 4.4, but subject to Section 4.6(a), the Employer shall pay the
cash Award to the Participant and/or CIGNA Corporation shall issue and
deposit the Common Stock and/or Restricted Stock into the stock account
maintained for the Participant under the CIGNA LTIP.
(c) If the Committee defers payment of a cash Award, then, on the date or after
the event specified by the Committee, the Employer shall make the cash
Payment, together with any interest or hypothetical investment return as may
be specified by the Committee in its deferral determination. If the
Committee defers payment of a Common Stock Award, the deferral shall be
treated as a deferral of Common Stock under the terms of the Deferred
Compensation Plan.
(d) The Participant may voluntarily defer receipt of an Award in the form of
cash or Common Stock under the terms of the Deferred Compensation Plan. Any
interest rate or hypothetical investment return credited on a voluntarily
deferred Award shall be one that will produce a rate of return not
considered to be an impermissible increase in compensation under Section
162(m).
(e) Deferred Awards will not be funded but will be a general obligation of the
Employer and will be payable out of that Employer's general assets.
(f) The Employer shall have the right to deduct from any cash Award any
applicable Federal, state and local income and employment taxes and any
other amounts that the Company is required to deduct. Deductions from an
Award in the form of Common Stock and/or Restricted Stock shall be governed
by Section 15.6 of the CIGNA LTIP and the terms of the Award.
B-3
4.6 ELIGIBILITY FOR PAYMENTS.
(a) Except as otherwise provided in this Section 4.6:
(1) A Participant shall be eligible to receive an Award for a Performance
Period only if the Participant is employed by the Company continuously
from the beginning of the Performance Period to the date of the
Committee's determination under Section 4.4; and
(2) A Participant shall be eligible to receive payment of an Award deferred
by the Committee only if the Participant is also employed by the
Company continuously from the date of the Committee's determination
under Section 4.4 to the date or event specified by the Committee.
(b) Under paragraph 4.6(a), a leave of absence that lasts less than three months
and that is approved in accordance with applicable Company policies is not a
break in continuous employment. In the case of a leave of absence of three
months or longer, (1) the Committee shall determine whether the leave of
absence constitutes a break in continuous employment and (2) if a
Participant is on a leave of absence on the date that an Award or payment of
the Award 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 Award or payment. Any determination
as to a Participant's eligibility for an Award or payment under this Section
4.6(b) may be deferred for a reasonable period after such return.
(c) If a Participant's Termination of Employment occurs after the end of a
Performance Period but before the Committee makes an Award, and the
Termination of Employment is on account of Retirement, death or Disability,
the Committee shall determine whether to make an Award to or on behalf of
the Participant.
(d) If a Participant's Termination of Employment occurs after the Committee
makes a deferred Award under paragraph 4.5(a) but before the Award payment
is made:
(1) The Award payment shall be made as if the Participant had remained
continuously employed until the date of payment if the Termination of
Employment is on account of Disability;
(2) The Award payment shall be made as soon as practicable (and the payee
shall be determined under the provisions of the Deferred Compensation
Plan applicable to distributions upon the death of a participant), if
the Termination of Employment is on account of death; and
(3) The Committee shall determine whether an Award payment shall be made to
the Participant or forfeited if the Termination of Employment is on
account of Retirement.
(e) Notwithstanding any other provision of the Plan, if a Participant's
Termination of Employment occurs after he receives an Award in the form of
Restricted Stock, the terms of the stock grant and the CIGNA LTIP shall be
applicable.
ARTICLE 5
ADMINISTRATION
5.1 GENERAL ADMINISTRATION. The Plan is to be administered by the Committee,
subject to such requirements for review and approval by the Board as the Board
may establish. Subject to the terms and conditions of the Plan, the Committee is
authorized and empowered in its sole discretion to select Participants and to
make Awards in such amounts and upon such terms and conditions as it shall
determine.
5.2 ADMINISTRATIVE RULES. The Committee shall have full power and authority to
adopt, amend and rescind administrative guidelines, rules and regulations
pertaining to this Plan and to interpret the Plan and rule on any questions
respecting any of its provisions, terms and conditions.
5.3 COMMITTEE MEMBERS NOT ELIGIBLE. No member of the Committee shall be
eligible to participate in this Plan.
B-4
5.4 DECISIONS BINDING. All decisions of the Committee concerning this Plan
shall be binding on CIGNA and its Subsidiaries and their respective boards of
directors, and on all Participants and other persons claiming rights under the
Plan.
5.5 SECTION 162(m); SHAREHOLDER APPROVAL. Awards under this Plan are intended
to satisfy the applicable requirements for the performance-based compensation
exception under Section 162(m). It is intended that the Plan be administered,
interpreted and construed so that Award payments remain tax deductible to the
Company. Any Awards under this Plan shall be contingent upon shareholder
approval of the Plan in accordance with Section 162(m) and applicable Treasury
regulations. Unless and until such shareholder approval is obtained, no Award
shall be made under this Plan.
ARTICLE 6
AMENDMENTS; TERMINATION
The Plan may be amended or terminated by the Board or Committee. All amendments
to this Plan, including an amendment to terminate the Plan, shall be in writing.
An amendment shall not be effective without the prior approval of the
shareholders of CIGNA Corporation if such approval is necessary to continue to
qualify Awards as performance based compensation under Section 162(m), or
otherwise under Internal Revenue Service or SEC regulations, the rules of the
New York Stock Exchange or any other applicable law or regulations. Unless
otherwise expressly provided by the Board or Committee, no amendment to this
Plan shall apply to Awards made before the effective date of the amendment. A
Participant's rights with respect to any Awards made to him may not be abridged
by any amendment, modification or termination of the Plan without his individual
consent.
ARTICLE 7
OTHER PROVISIONS
7.1 DURATION OF THE PLAN. The Plan shall remain in effect until all Awards
made under this Plan have been paid or forfeited under the terms of this Plan,
and all Performance Periods related to Awards made under the Plan have expired.
7.2 AWARDS NOT ASSIGNABLE. No Award, or any right thereto, 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.
7.3 PARTICIPANT'S RIGHTS. The right of any Participant to receive any Award
payments under the provisions of the Plan shall be an unsecured claim against
the general assets of the Employer. The Plan shall not create, nor be construed
in any manner as having created, any right by a Participant to any Award for a
Performance Period because of a Participant's Participation in the Plan for any
prior Performance Period, or because the Committee has made a written
certification under Section 4.3 of the Plan for the Performance Period.
7.4 TERMINATION OF EMPLOYMENT. CIGNA and each Subsidiary retain the right to
terminate the employment of any employee at any time for any reason or no
reason, and an Award is not, and shall not be construed in any manner to be, a
waiver of such right.
7.5 SUCCESSORS. Any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of CIGNA's
business or assets, shall assume CIGNA's liabilities under this Plan and perform
any duties and responsibilities in the same manner and to the same extent that
CIGNA would be required to perform if no such succession had taken place.
B-5
[GREGG CONFERENCE CENTER MAP AND TRAVEL DIRECTIONS]
[COMMAND FINANCIAL
PRESS CORPORATION LOGO]
PDF DISCLAIMER
Please be advised that Command Financial Press can only certify the accuracy and
correctness of the Document as presented in hard copy format. Due to
imperfections in PDF technology, and the potential for issues that may arise due
to differences in computer technology, Command Financial shall not be held
responsible for any issues that arise due to problems with PDF files or other
electronic formats. It is your responsibility if using PDF files or other
electronic formats to verify their accuracy, as produced by your system by
comparing it with the hard copy provided.
This PDF has been created using the Adobe(R) approved method for generating
Print Optimized Output. To assure proper results, proofs must be printed, not
viewed on the screen. The "Fit to Page" option must be unchecked prior to
printing.
This PDF is compatible with Adobe(R) Acrobat Reader Version 3.0, but we
recommend using Adobe Reader Version 4.0 which is downloadable free from Adobe's
Website, www.adobe.co, or also available on our Website,
www.commandfinancial.com.
PROXY/VOTING INSTRUCTION CARD
CIGNA CORPORATION
PROXY
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 under-
signed and vote all shares of the Corporation held of record by the undersigned
on February 28, 2002 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 and the Intracorp 401(k) Performance Sharing Plan at the
Annual Meeting of Shareholders, to be held at The Gregg Conference Center at The
American College, 270 S. Bryn Mawr Avenue, Bryn Mawr, PA 19010 on April 24,
2002, at 3:30 p.m. or at any adjournment thereof, on the matters set forth
below:
1. ELECTION OF DIRECTORS, Nominees for terms expiring April 2005.
01. Peter N. Larson, 02. Joseph Neubauer, 03. Carol Cox Wait, 04.
Marilyn Ware.
2. RATIFY the Appointment of PricewaterhouseCoopers LLP as Independent
Accountants.
3. Approve the CIGNA Executive 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,
so long as you submit your proxy.
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 LOGO]
CIGNA CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 2002
3:30 P.M.
THE GREGG CONFERENCE CENTER AT
THE AMERICAN COLLEGE
270 S. BRYN MAWR AVENUE
BRYN MAWR, PA 19010
[x] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
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.
FOR WITHHELD
1. Election of [ ] [ ]
Directors.
(see reverse)
For, except vote withheld from the following nominee(s):
FOR AGAINST ABSTAIN
2. Ratify the Appointment of [ ] [ ] [ ]
PricewaterhouseCoopers
LLP as Independent Accountants.
3. Approve the CIGNA
Executive Incentive Plan.
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 and the
Intracorp 401(k) Performance Sharing 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 -
[CIGNA LOGO]
Dear Shareholder:
We encourage you to take advantage of the convenient ways to submit your proxy
or voting instructions. You can do so electronically 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.
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 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.
TRAVEL DIRECTIONS
FROM CENTER CITY PHILADELPHIA AND SOUTH JERSEY
Take I-76 West (Schuylkill Expressway) to I-476 (Blue Route) South. Proceed on
I-476 south to next exit. Exit 5 (US 30-St. Davids/Villanova). Bear right and
follow signs for US 30 East (Lancaster Ave.) Continue with directions for "Once
On US 30 (Lancaster Ave.)..."
FROM PA TURNPIKE
(EAST OF VALLEY FORGE) AND NORTH
Exit PA Turnpike at Exit 25A (MidCounty). Proceed through toll plaza, follow
signs for I-476 (Blue Route) South. Proceed I-476 South for 8 miles, to Exit 5
(US 30-St. Davids/Villanova). Bear right and follow signs for US 30 (Lancaster
Ave.) Continue with directions below for "Once On US 30 (Lancaster Ave.)..."
FROM PHILADELPHIA INTERNATIONAL
AIRPORT AND DELAWARE
From Airport follow signs for I-95 South. From Delaware take I-95 North. Proceed
on I-95. Follow signs for I-476 (Blue Route) North (near MacDade Boulevard
exit). Travel on I-476 North for 14 miles to Exit 5 (US 30-St.
Davids/Villanova). Bear right and follow signs for US 30 (Lancaster Ave.)
Continue with directions for "Once On US 30 (Lancaster Ave.)..."
FROM KING OF PRUSSIA, VALLEY FORGE
AND PA TURNPIKE
(WEST OF VALLEY FORGE)
Exit PA Turnpike at Exit 24 (Valley Forge). Proceed through tolls onto I-76 East
(Schuylkill Expressway). From King of Prussia area, take Rt. 202 to I-76 East
(Schuylkill Expressway). Travel on I-76 East to Exit 28A, follow signs for I-476
(Blue Route) South (Chester). Proceed on I-476 South; Exit 5 (US 30-St.
Davids/Villanova). Bear right and follow signs for US 30 (Lancaster Ave.)
Continue with directions for "Once On US 30 (Lancaster Ave.)..."
ONCE ON US 30
(LANCASTER AVENUE, FROM I-476)
Continue on Route 30 East for approximately 2.5 mles (12 traffic lights). Along
the way you will pass Villanova University. You will enter the town of Bryn
Mawr. Pass an ACME Market. At the 12th traffic light, just past the Bryn Mawr
Movie Theatre on the right, turn right onto Bryn Mawr Avenue (Bryn Mawr Trust is
on the left). Continue on Bryn Mawr Avenue through 2 traffic lights. The
American College campus entrance is on the right. Once on campus, follow signs
for Gregg Center Visitor Parking.
BY TRAIN
There is frequent SEPTA commuter service, on the R5, between Bryn Mawr and
Philadelphia's 30th Street Station and Suburban Station. Travel time is
approximately 20 minutes. The Bryn Mawr Station is four blocks from the Gregg
Center. The Route 100 Line is only 2 blocks from the Gregg Center.
Cigna Corporation
2002 Telephone Voting Script
Toll Free: 1-877-PRX-VOTE or 1-877-779-8683
1. Welcome to the electronic voting system. Please have your proxy card or
voting instruction sheet or ballot available before voting.
2. Enter the Voter Control Number as it appears on the card followed by
the pound sign.
3. One moment please while we verify your information.
4. Enter the last four digits of the U.S. Social Security number or the
U.S. taxpayer identification number for this account followed by the
pound sign.
5. The company that you are voting is Cigna Corporation.
6. 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 the stockholders.
7. 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.
If 1, go to 8.
If 2, go to 9.
8. If you would like your voting instructions to be confidential press 1
(see A). If not press 2 (see B)
(A): you have cast your votes as follows. You have voted in the manner
recommended by the board of directors. To confirm your vote, press 1
(see A1). To cancel your vote, press 2 (see B1).
(B): You have cast your votes as follows. You have voted in the manner
recommended by the board of directors. To confirm your vote, press 1
(see A1). To cancel your vote press 2 (B1)
(A1): Your vote has been successfully recorded. It is not necessary for
you to mail in your card. If you wish to vote another card or change
your vote, press
Page 1 of 1
1 (go to beginning). Otherwise please hang up and mark, sign and return
your card in the envelope provided. Thank you for calling.
9. Item # 1. To vote for all nominees press 1. To withhold from all
nominees press 2. To withhold from individual nominees press 3.
If 1, go to 10.
If 2, go to 10.
If 3, go to Director Exception.
Director Exception
Enter the 2-digit number next to the nominee from whom you
would like to withhold your vote followed by the pound key. Or
if you have completed voting on directors, press the pound key
again.
If pound key entered twice, go to the next item. If
valid nominee number, go to Next Nominee.
Next Nominee
To withhold your vote from another nominee, enter the 2-digit
number next to the nominee followed by the pound key, or if
you have completed voting on directors press the pound key
again.
If pound key entered twice, go to the next item. If
valid nominee number, go to Next Nominee.
Invalid Nominee Number
You have entered an invalid nominee number.
{Go to Next Nominee.}
10. Item # 2. To vote for, press 1; against, press 2; abstain, press 3.
If 1, go to 11.
If 2, go to 11.
If 3, go to 11.
11. Item # 3. To vote for, press 1; against, press 2; abstain, press 3.
If 1, go to 12.
If 2, go to 12.
If 3, go to 12.
12. See # 8.
Playback {Playback the appropriate vote for this proxy card.}
Page 2 of 2
DEFAULT PLAYBACK You have voted in the manner recommended by
the Board of Directors.
DIRECTOR PROPOSAL PLAYBACK
VOTED FOR ALL NOMINEES: Item #. You have voted for all
nominees.
WITHHOLD FROM ALL NOMINEES: Item #. You have voted to withhold
your vote from all nominees.
WITHHOLD FROM INDIVIDUAL NOMINEES: Item #. You have voted for
all nominees except for the following nominee numbers
FOR/AGAINST/ABSTAIN PROPOSAL PLAYBACK
Item # {For | Against | Abstain}
INVALID CONTROL NUMBERS
We are unable to authenticate the information that you
entered.
NO KEY PRESSED
Go to the same item (repeat three times); otherwise, go to
Error.
INVALID NUMBER
Go to the same item (repeat three times); otherwise, go to
Error.
ERROR
We are unable to process your request at this time. Thank you
for calling.
{Call ends.}
Page 3 of 3
[CIGNA LOGO]
CIGNA Corporation
One Liberty Place
1650 Market Street
Philadelphia, PA
19192-1550
March 22, 2002
NOTICE OF 2002 ANNUAL MEETING OF SHAREHOLDERS
CIGNA and Intracorp 401(k) Participants:
The annual meeting of shareholders will be held on Wednesday, April 24, 2002 at
3:30 p.m. at The Gregg Conference Center at The American College, at 270 S. Bryn
Mawr Avenue, Bryn Mawr, Pennsylvania. Directions to The Gregg Conference Center
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 2005;
2. Ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for 2002; and
3. Approve the CIGNA Executive 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.
These proposals are described in the proxy statement. CIGNA's 2002 Proxy
Statement and 2001 Annual Report to Shareholders 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, 2002 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 2002 Annual Meeting based on the amount of
money you had invested in the CIGNA Stock Fund on February 28, 2002. CIGNA
encourages you to exercise your right to vote by any of the following means:
1. By returning the completed, signed and dated voting instruction card in the
enclosed envelope;
2. By telephone at 1-877-779-8683 (or 1-201-536-8073 if outside the United
States or Canada) or;
3. Over the Internet at http://www.eproxyvote.com/ci.
Your vote is important even if you have a small investment in the CIGNA Stock
Fund. Your vote must be received by 5:00 E.D.T on April 19, 2002.
Sincerely,
[/s/ H. EDWARD HANWAY]
H. EDWARD HANWAY
Chairman and Chief Executive Officer
By order of the Directors
[/s/ CAROL J. WARD]
CAROL J. WARD, Corporate Secretary
[EQUISERVE LOGO] [VOTE BY NET LOGO]
[CIGNA LOGO]
STEP 1
WELCOME TO THE EQUISERVE ONLINE VOTING WIZARD!
Just follow a few simple steps to complete the secure online voting process:
AUTHENTICATION: Login using your voter control number
DELIVERY PREFERENCE: Setup future delivery of your annual meeting materials
VOTING: Cast your vote and receive your confirmation online
FINISH: Update your address and review other options
If you have more than one proxy card, instruction card or ballot, please vote
them one card at a time. To get started now, login below and click "Continue".
STEP 1: AUTHENTICATION
Enter the voter control number as it appears on your
proxy card, instruction card or ballot [ ]
Enter the last 4 digits of the U.S. social security
number (SSN) or the U.S. taxpayer identification
number (TIN) for this account* [ ]
*If you do not have a SSN or TIN for this account, please leave this box blank.
[CONTINUE >>]
[EQUISERVE LOGO] [VOTE BY NET LOGO]
[CIGNA LOGO]
STEP 2
WELCOME
SOLAR HUNTER
1000 MAIN STREET
ANYWHERE, NJ 12345
DELIVERY PREFERENCE
Select how you would like to receive your future annual meeting materials:
[ ] Postal mail -or-
[ ] Electronically (View Terms and Conditions for Electronic Delivery)
E-mail address (e.g., name@xyz.com) [ ]
Enter e-mail address again for validation [ ]
[CONTINUE >>]
[EQUISERVE LOGO] [VOTE BY NET LOGO]
[CIGNA LOGO]
STEP 3
CIGNA CORPORATION
THIS PROXY 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, 2002 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 and the Intracorp 401(k) Performance Sharing Plan at the
Annual Meeting of Shareholders, to be held at The Gregg Conference Center at The
American College, 270 S. Bryn Mawr Avenue, Bryn Mawr, PA 19010 on April 24,
2002, at 3:30 p.m. or at any adjournment thereof, on the matters set forth
below:
1. ELECTION OF DIRECTORS, nominees for terms expiring April 2005:
01. Peter N. Larson 02. Joseph Neubauer 03. Carol Cox Wait 04. Marilyn Ware;
2. RATIFY the Appointment of PricewaterhouseCoopers LLP as Independent
Accountants;
3. APPROVE the CIGNA Executive Incentive Plan; and
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 and the
Intracorp 401(k) Performance Sharing Plan will be held confidential.
CIGNA CORPORATION DIRECTORS RECOMMEND A VOTE:
"FOR" ALL NOMINEES
"FOR" PROPOSAL 2
"FOR" PROPOSAL 3
Check this box to cast your vote in accordance with the recommendations of Cigna
Corporation Directors: [ ]
CIGNA CORPORATION DIRECTORS RECOMMEND A VOTE "FOR" ALL NOMINEES.
1. Election of Directors
[ ] FOR ALL NOMINEES, EXCEPT AS NOTED BELOW [ ] WITHHOLD AS TO ALL NOMINEES
[ ] Peter N. Larson
[ ] Joseph Neubauer
[ ] Carol Cox Wait
[ ] Marilyn Ware
CIGNA CORPORATION DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL 2.
2. Ratify the Appointment of PricewaterhouseCoopers LLP as Independent
Accountants. [ ] FOR [ ] AGAINST [ ] ABSTAIN
CIGNA CORPORATION DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL 3.
3. Approve the CIGNA Executive Incentive Plan. [ ] FOR [ ] AGAINST [ ] ABSTAIN
IF APPLICABLE, CLICK THE OPTION BOX:
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.
To cast your vote please click "Submit". [SUBMIT >>]
(NOTE: Your vote will not be counted until you click "Submit".)
[EQUISERVE LOGO] [VOTE BY NET LOGO]
[CIGNA LOGO]
STEP 3
[X] [E-MAIL A COPY]
SOLAR HUNTER
1000 MAIN STREET
ANYWHERE, NJ 12345
CONTROL NUMBER: 11671999999912
CONFIRMATION NUMBER: 592379
DATE: THU MAR 21 2002 11:09:52 CDT
Thank you for using EquiServe's Vote-By-Net facility.
STEP 3: SUMMARY OF YOUR VOTE
Your vote was recorded by EquiServe as follows:
1. Election of Directors FOR ALL NOMINEES
2. Ratify the Appointment of PricewaterhouseCoopers LLP FOR
as Independent Accountants.
3. Approve the CIGNA Executive Incentive Plan. FOR
Please keep a copy for your records. To change your vote click "Back".
You can now vote another ballot or go to Cigna Corporation Homepage or click
"Finish" to exit to EquiServe Homepage.
[BACK] [FINISH]