Voting Matters and Board Recommendations | | | PROPOSALS | | BOARD
RECOMMENDATION
| | | Proposal 1. Election of Directors. The Board and the Corporate Governance Committee believe that the fournine director nominees David M. Cordani, Isaiah Harris, Jr., Jane E. Henney, M.D., and Donna F. Zarcone,named in this Proxy Statement bring a combination of diverse qualifications, skills and experienceexperiences that is required forcontribute to a well-rounded Board. EachAs determined by the Board and Corporate Governance Committee as part of the most recent Board evaluation, each director nominee has proven leadership ability, good judgment and has been an active and valued participant on the Board during his or her tenure. | | FOR each of the nominees | | | Proposal 2. Advisory Approval of Executive Compensation. The Board believes that Cigna’s executive compensation program design effectively aligns the interests of our executive officers with those of our shareholders by tying a significant portion of their compensation to Cigna’s performance and rewarding our executive officers for the creation of long-term value for Cigna’s shareholders. Because your vote is advisory, it will not be binding upon the Board. However, the Board and People Resources Committee value your opinion and will review and consider the voting results when making future executive compensation decisions. | | FOR | | | Proposal 3. Ratification of the Appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for 2016.2018. The Audit Committee approved the appointment of PricewaterhouseCoopers LLP as Cigna’s independent registered public accounting firm for 2016.2018. The Audit Committee and the Board believe that the continued retention of PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders. As a matter of good corporate governance, the Board is seeking shareholder ratification of the appointment. | | FOR | | | Proposal 4. Approval of an Amendment to the Company’s Restated Certificate of Incorporation to Eliminate the Supermajority Voting Requirement. The Board recognizes that the elimination of the supermajority vote required to amend Section 2 of Article III of the Company’sBy-Laws, which relates to the number, qualifications, election and term of office of the Board of Directors, aligns with best practices in corporate governance. | | FOR | 2018 Annual Meeting of Shareholders Wednesday, April 25, 2018 8:00 a.m. Delamar Hotel, Ballroom 1 Memorial Drive West Hartford, Connecticut 06107 |
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| CORPORATE GOVERNANCE MATTERS |
Election of Directors (Proposal 1) TheBeginning with this Annual Meeting, the entire Board of Directors is elected annually by Cigna’s shareholders. Based on input from shareholders, we began the phased implementation of the Board’s declassified structure at the 2016 annual meeting. The classified structure is now fully eliminated. At thethis Annual Meeting, the Board is nominating fourthe nine directors named in this Proxy Statement forone-year terms expiring in 2017 for election byto expire at the next annual meeting of shareholders. The role of the Board, its leadership structure and governance practices are described below in the Corporate“Corporate Governance Policies and Practices section beginning on page 16.Practices.” This section describes the process for director elections and director nominations, identifies the director responsibilitiesexpectations and qualifications considered by the Board and the Corporate Governance Committee in selecting and nominating directors, discusses our board refreshment activities and presents the biographies, skills and qualifications of the director nominees and those directors continuing in office.nominees.
PROCESS FOR DIRECTOR ELECTIONS In 2012, in response to feedback from shareholders, the Board decided to employ a measured, phased approach to implementing a declassified board structure. At the Annual Meeting, the phased implementation of the Board’s declassified structure begins. Directors elected at the Annual Meeting will serve a one-year term, expiring at the 2017 annual meeting of shareholders. A director (or his or her successor) who has been elected to a three-year term that does not expire at the 2016 Annual Meeting will complete such three-year term, and thereafter will stand for election for a one-year term. At the 2018 annual meeting of shareholders, all directors will be elected to one-year terms and the classified structure will be fully eliminated.
Cigna has adopted a majority voting standard for the election of directors in uncontested elections. Under this standard, each director must receive a majority of the votes cast with respect to that director.for him or her. This means that the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee for the director to be elected. Each director has agreed to tender, and not withdraw, his or her resignation if he or she does not receive a majority of the votes cast at the Annual Meeting. The Corporate Governance Committee will make a recommendation to the Board on whether to accept the resignation. The Board has discretion to accept or reject the resignation. A director whose resignation is under consideration will not participate in the decisions of the Corporate Governance Committee or the Board concerning his or her resignation. In a contested elections,election, where the number of director nominees exceeds the number of directors to be elected, the voting standard is a plurality of votes cast. PROCESS FOR SELECTING AND NOMINATING DIRECTORS Director Selection and Nomination Process The Corporate Governance Committee assesses the Board’s composition as part of the annual self-evaluation of the Board (described in “Corporate Governance Policies and Practices — Board Evaluations and Board Effectiveness”). When considering whether to nominate current directors forre-election, the Corporate Governance Committee and the Board review the individual director’s performance against the expectations for Board membership (identified below under “Director Expectations and Qualifications”). The Board considers its composition as part of its annual evaluation. The Board may nominate for election, and appoint to fill vacant or new Board positions, only those persons who agree to adhere to the Company’s majority voting standard (described above). From time to time, the Corporate Governance Committee retains a third-party search firm to assist in identifying and evaluating candidates for Board membership. In 2017, the Corporate Governance Committee retained an outside firm to assist the Committee and the Board with its board refreshment plan, as further described on page 9. The Corporate Governance Committee also considers suggestions for Board nominees submitted by shareholders, which are evaluated using the same criteria as new director candidates and current director nominees. Once a potential candidate has been identified, the Corporate Governance Committee reviews the background of the new director candidate and presents him or her to the Board for consideration. When considering director candidates and the current and future composition of the Board, the Corporate Governance Committee and the Board consider how each candidate’s background, experiences, skills and/or prior board and committee service will contribute to the diversity of the Board. In addition, the Corporate Governance Committee and the Board consider the Company’s business strategy and how each director candidate’s background complements that strategy. Candidates interview with the Chief Executive Officer, the Chair of the Corporate Governance Committee and the Chairman of the Board, as well as other members of the Board, as appropriate. The Corporate Governance Committee assesses the Board’s composition as part of the annual self-evaluation of the Board (described on page 18). When considering whetherShareholders that want to nominate current directors for re-election,inclusion in our proxy statement or directly at an annual meeting in accordance with ourBy-Laws should follow the Corporate Governance Committee and the Board review the Board’s annual self-evaluation and the individual director’s performance against the expectations for Board membership (identified below under Director Expectations and Qualifications). The Board considered its composition as part of its annual evaluation. The Board may nominate for election and appoint to fill vacant or new Board positions only those persons who agree to adhere to the Company’s majority voting standard (described above under Process for Director Elections).instructions described in “Annual Meeting Information.”
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| CORPORATE GOVERNANCE MATTERS |
Director Expectations and Qualifications The Corporate Governance Committee, in consultation with the Board, has identified individual director expectations and qualifications, characteristics, skills and experience that it believes every member of the Board should have. In addition, the Corporate Governance Committee has developed a list ofidentified areas of expertise that it believes supportssupport Cigna’s business strategy in the short- and contributeslong-term, enable the Board to exercise its oversight function and contribute to a well-rounded Board. These expectations and qualifications, as well as the identified areas of expertise, are considered and reviewed as part of the Board’s annual evaluation and as part of each individual Director’s evaluation. In developing these areas of expertise, the Board also considered the skills necessary to support the business strategy and the skills and experiences reflected on the boards of companies within Cigna’s peer group, as well as best practices among other large companies. The Board regularly reviews the identified areas to ensure they support changes in the Company’s strategy and the Board’s needs. The Corporate Governance Committee and the Board take into consideration these criteria and the mix of skills and experience as part of the director recruitment, selection, evaluation and nomination process. While the Board does not have a formal policy with regard to diversity, the Corporate Governance Committee works to ensure that the Board is comprised of individuals with expertise in fields relevant to Cigna’s business, experience from different professions and industries, a diversity of age, ethnicity, gender and global experience and a range of tenures to provide a balance of fresh perspective and continuity. | | | | | | | | | | | | | Expectations of Every Director | | | | | | | | | | | • Understand Cigna’s businesses and the importance of the creation of shareholder value • Participate in an active, constructive and objective way at Board and committee meetings • Review and understand advance briefing materials • Contribute effectively to the Board’s evaluation of executive talent, compensation and succession
planning | | | | | | • Contribute effectively to the Board’s assessment of strategy and risk | | | | | | • Share expertise, experience, knowledge and insights as related to theon matters before the Board • Advance Cigna’s business objectives and reputation • Demonstrate an ongoing commitment to consult and engage with the CEO and senior management outside of Board and committee meetings on matters affectingimpacting Cigna | | | | | | | | | | | | | |
| | | | | | | | | | | | | Qualifications, Characteristics, Skills and Experience of Every Director | | | | | • Good judgment and strong commitment to ethics and integrity • Ability to analyze complex business and public policy issues and provide relevant input concerning the Company’s business strategy • Free offrom conflicts of interest | | | | | | • Ability to assess different risks and impact on shareholder value • Contribution to the Board’s overall diversity of thought • High degree of achievement in their respective fields | | | | | | | | | | | | | |
While the Board does not have a formal policy with regard to diversity, the Board remains committed to diversity and the Corporate Governance Committee works to ensure that the Board is comprised of individuals with expertise in fields relevant to Cigna’s business, experience from different professions and industries, a diversity of age, ethnicity, gender and global experience and a range of tenures. The Board believes that a range of tenure allows both new perspective and continuity. This continuity has proven beneficial given the complexities of, and the significant change and uncertainty in, the health care industry over the past several years. The above tables show the diversity of our nine independent board members. | | | 8 | | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
| CORPORATE GOVERNANCE MATTERS |
AREAS OF EXPERTISE REFLECTED ON CIGNA’S | | | AREAS OF EXPERTISE
THAT CONTRIBUTE TO A
WELL-ROUNDED BOARD
| | RELEVANCE TO BUSINESS STRATEGY
| Business Leader
| | Directors who have served as a chief executive officer, a CEO-equivalent or a business unit leader of a large company bring a practical understanding of large organizations, processes, strategy and risk management.
| Finance
| | An understanding of finance, capital markets and financial reporting processes is necessary for a well-rounded Board because of the importance we place on accurate financial reporting and robust financial controls and compliance. In addition, Cigna’s business involves complex financial transactions.
| Healthcare and Delivery Systems
| | As we work to create a sustainable health care ecosystem, the Board requires directors with experience on issues related to reducing health costs to patients through provision of care management and the use of innovative delivery system solutions.
| Information Technology
| | Our business is highly dependent on maintaining both effective information systems and the integrity and timeliness of the data we use to serve our customers and health care professionals and to operate our business. For this reason, the Board needs directors with leadership experience related to the development, installation, implementation, security or maintenance of computer systems, applications and digital informatics.
| International/Global
| | In furtherance of ourGo Global strategy, the Board requires directors with leadership experience overseeing non-U.S. operations and working in diverse cultures around the world.
| Marketing and Consumer Insights
| | TheGo Deep andGo Individual aspects of our strategy necessitate that the Board include directors with leadership experience over marketing, advertising and consumer insight functions. These directors also have experience with product development and brand building, particularly as it focuses on end-user consumers.
| Regulated Industry/Public Policy
| | Our business is highly regulated at the federal, state, local and international levels. For this reason, the Board needs directors with experience in regulated industries and public policies to help us identify, assess and respond to new trends in the legislative and regulatory environment.
|
BOARD OF DIRECTORS Business Leader Directors who have served as a chief executive officer, aCEO-equivalent or a business unit leader of a large company bring a practical understanding of large organizations, processes, strategy and risk management. Finance An understanding of finance, capital markets and financial reporting processes is necessary for a well-rounded Board because of the importance we place on accurate financial reporting and robust financial controls and compliance. In addition, Cigna’s business involves complex financial transactions. Healthcare and Delivery Systems As we work to create a sustainable health care ecosystem, the Board values directors with experience on issues related to improving access to care and reducing health costs to patients through the provision of care management and the use of innovative delivery system solutions. Information Technology Effective information systems and the integrity and timeliness of data we use to serve our customers and health care professionals are integral to the operation of our business. For this reason, the Board benefits from directors with leadership experience related to the development, installation, implementation, security or maintenance of computer systems, applications and digital informatics. International/Global The Board values directors with leadership experience overseeingnon-U.S. operations and working in diverse cultures around the globe. Marketing and Consumer Insights Our customer-focused strategy benefits from inclusion of directors with leadership experience in marketing, advertising and consumer insight functions. These directors also have experience with product development and brand building, particularly as it focuses onend-user consumers. Regulated Industry/Public Policy Our business is highly regulated at the federal, state, local and international levels. For this reason, the Board benefits from directors with experience in regulated industries and public policy to help us identify, assess and respond to new trends in the legislative and regulatory environment. Board Refreshment and Succession Planning The Corporate Governance Committee is responsible for identifying new director candidates, reviewing the composition of the Board and its committees and for making recommendations to the full Board on these matters. On an ongoing basis, the Corporate Governance Committee engages in Board succession planning, taking into account input from Board discussions and from the Board and committee evaluation process regarding the specific backgrounds, skills and experience that would contribute to overall Board and committee effectiveness. In 2017, the Corporate Governance Committee began a long-term board refreshment plan. The Corporate Governance Guidelines require that directors retire no later than the annual meeting of shareholders coinciding with or following his or her 72nd birthday. As a result, within the next five years, four of the directors nominated for election are expected to retire from the Board. To assist with board refreshment planning, the Corporate Governance Committee engaged Russell Reynolds Associates, Inc. to provide advisory services related to board succession planning and to assist with the recruitment of director candidates. The plan includes a needs assessment and an interview with each director to understand his or her perspective on Cigna’s strategy, the culture of the Board and the Board’s relationship with management, and to seek the Board’s views on the skills that may be relevant in the coming years and in light of upcoming retirements. The Corporate Governance Committee is focused on identifying candidates that possess skills and qualifications that will support the Company’s short- and long-term strategy, while being mindful of the skills that the retiring directors bring to the Board and the ongoing significant complexity and uncertainty within the health care industry. The goal of the refreshment plan is to balance the knowledge that results from long-term service on the Board with the new skills and experience that results from adding new directors to the Board, at a pace that allows the Board to maintain its high-performing and diverse culture. | | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 9 | |
| CORPORATE GOVERNANCE MATTERS |
Other Practices and Policies Related to Director Service In addition to requiringworking to ensure that the Board is comprised of diverse and qualified individuals, the Board has adopted the following governance policies and practices that contribute to a highly functioningwell-functioning Board. | | | Limits on Public Company Directorships | | To ensure each director is able to devote sufficient time and attention to his or her responsibilities as a board member, the Board has established the following limits on outside directorships: • Each director who also is a chief executive officer of a public company may not serve on more than one other public company board in addition to Cigna’s Board and the board of his or her employer (for a total of three public company directorships); and • Each director who is not a chief executive officer of a public company may serve on no more than four boards of other public companies (for a total of five such directorships). All of our directors are in compliance with these limits on outside directorships. | Change in Director’s Principal Position | | If a director changes his or her principal employment position, that director is required to tender his or her resignation from the Board to the Corporate Governance Committee. The committeeCommittee will then recommend to the Board whether to accept or decline the resignation. | Mandatory Retirement Age | | A director is required to retire no later than the annual meeting of shareholders coinciding with or following his or her 72nd birthday. | Continuing Education for Directors | | The Board is regularly updated on Cigna’s businesses, strategies, customers, operations and employee matters, as well as external trends and issues that affect the Company. Directors also are encouraged to attend continuing education courses relevant to their service on Cigna’s Board.Board at Cigna’s expense. Cigna regularly makes the Board aware of continuing education opportunities that may be of interest. The Corporate Governance Committee oversees the continuing education practices, and the Company is kept apprised of director participation. |
BOARD OF DIRECTORS’ NOMINEES Upon the recommendation of the Corporate Governance Committee, the Board is nominating the fournine directors listed below forre-election for toone-year terms to expire in April 2017.at the next annual meeting of shareholders. All nominees have consented to serve, and the Board does not know of any reason why any nominee would be unable to serve. If a nominee becomes unavailable or unable to serve before the Annual Meeting, the Board may either reduce its size or designate another nominee. If the Board designates a nominee, your proxy will be voted for the substitute nominee. On March 12, 2018, Dr. Henney informed the Company of her intention to not seekre-election as a Director in light of her role as Lead Independent Director of AmerisourceBergen Corporation and Cigna’s announcement regarding the proposed acquisition of Express Scripts Holding Company. Dr. Henney will leave the Board at the expiration of her current term on April 25, 2018. The Board and Cigna’s management thank Dr. Henney for her many years of service. Below are biographies, skills and qualifications for each of the nominees and for each of the directors continuing in office.nominees. Each of the director nominees currently serves on the Board. The Board believes that the combination of the various experiences, skills and qualifications represented contributes to an effective and well-functioning Board and that the nominees and directors continuing in office possess the qualifications, based on the criteria described above, to provide meaningful oversight of Cigna’s business and strategy. | | | | | | | | | | | | | | | | | | | | | | The Board of Directors unanimously recommends that shareholders vote FOR the nominees listed below. | | | | | | | | | | | | | | | | | | | |
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| CORPORATE GOVERNANCE MATTERS |
| | | | | | |   | | | DAVID M. CORDANI President, Chief Executive Officer
and Director of Cigna
AGE: 5052 DIRECTOR SINCE: 2009 COMMITTEES: Executive |
Mr. Cordani has served as Cigna’s Chief Executive Officer since December 2009 and as President since June 2008. He served as Chief Operating Officer from June 2008 until December 2009; President, Cigna HealthCare from 2005 until 2008; and Senior Vice President, Customer Segments & Marketing, Cigna HealthCare from 2004 until 2005. He has been employed by Cigna since 1991. Mr. Cordani has served as a director of General Mills, Inc., a publicly traded global manufacturer and marketer of branded consumer foods, since 2014. He is a member of the Business Roundtable and serves on the U.S.-India Business Council Board of Directors. In 2017, he was also named Chairman of the U.S. Chamber of Commerce’s U.S.-Korea Business Council. In 2016, Mr. Cordani received the Leadership in the Nation’s Interest award from the Committee for Economic Development, a nonprofit, nonpartisan,business-led public policy organization. Mr. Cordani was named one of Fortune Magazine’s Top Business Persons of the Year in 2015. His current term as a DirectorMr. Cordani received his Bachelor of Cigna began in 2013Business Administration from Texas A&M University and expires in 2016.his MBA from the University of Hartford.
Other Public Company Directorships: General Mills, Inc. (2014-Present) Business Leader.Mr. Cordani has extensive executive leadership and management experience, including through his current role as President and Chief Executive Officer of Cigna. Mr. Cordani has spearheaded Cigna’s transformation into a leading global health service company, more than doubling the size of the business since 2009. His prior role as Chief Operating Officer also encompassed broad responsibility for Cigna’s global business and corporate functions. Finance.Mr. Cordani served as Business Financial Officer for Cigna’s healthcare division and in senior roles in corporate accounting and planning. He was formerly a CPA with public accounting experience at Coopers & Lybrand. Healthcare and Delivery Systems.Mr. Cordani isCordani’s long tenure with Cigna, as President and Chief Executive Officer of Cigna Corporation, a global health service company and previously served as President of the Cigna HealthCare business segment. His long tenure with Cignasegment provides Mr. Cordanihim with unique perspective of the evolution of the healthcare service sector and the innovation of health delivery models. Information Technology.Mr. Cordani manages Cigna’s information technology investments in support of business and strategic objectives. Marketing and Consumer Insights. As Chief Executive Officer, he leads the development and execution of Cigna’sGo Deep, Go Global, Go Individualstrategy to deliver value in more than 9095 million customer relationships around the world. Regulated Industry/Public Policy. Mr. Cordani is actively engaged in public policy related to the highly regulated healthcare industry and other global business markets. | | | | | | |  | | | ISAIAH HARRIS, JR.
Former President and Chief
Executive Officer of AT&T
Advertising & Publishing — East
AGE: 63
DIRECTOR SINCE: 2005
COMMITTEES: Executive (Chair)
|
Mr. Harris has served as Chairman of the Board since December 2009 and served as Vice-Chairman of the Board from July 2009 through December 2009. Mr. Harris served as President and Chief Executive Officer of AT&T Advertising & Publishing — East (formerly BellSouth Advertising & Publishing Group), a communications services company, from 2005 until his retirement in 2007; as President, BellSouth Enterprises, Inc. from 2004 until 2005 and as President, Consumer Services, BellSouth Corporation from 2000 until 2004. Mr. Harris has served as an Independent Trustee of Wells Fargo Advantage Funds, a provider of mutual funds, since 2008 and served as a Director of Deluxe Corporation, a provider of customized products and services including financial services and direct checks, from 2004 until 2011. Mr. Harris was nominated as NYSE 2014 Chairman of the Year and was recognized by the Outstanding Directors Exchange as a 2010 Outstanding Director. His current term as a Director of Cigna began in 2013 and expires in 2016.
Business Leader. In his executive business leadership roles, including as CEO of AT&T Advertising and Publishing, Mr. Harris managed large organizations, developed and executed business strategies and led transformational change initiatives in both domestic and international operations.
Finance. Mr. Harris’ extensive finance experience includes 19 years of corporate finance and operational experience in multi-national organizations, including as Vice President of Finance, BellSouth Corporation, preceded by 13 years as a CPA with KPMG LLP. Through service on the Deluxe board of directors and as a trustee of Wells Fargo Advantage Funds, he has insight into financial services-related issues.
Marketing and Consumer Insights. Throughout his career with AT&T Advertising & Publishing, and particularly as President, Consumer Services, BellSouth Corporation (2000 to 2004), Mr. Harris focused on marketing communication services to end-user consumers.
Regulated Industry/Public Policy.Throughout his career at AT&T Advertising & Publishing, Mr. Harris navigated a heavily regulated and dynamic legal environment.
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| CORPORATE GOVERNANCE MATTERS
|
| | | | | |  | | | JANE E. HENNEY, M.D.
Former Senior Vice President,
Provost and Professor of Medicine,
University of Cincinnati College of
Medicine
AGE: 68
DIRECTOR SINCE: 2004
COMMITTEES: Corporate
Governance (Chair), Executive,
People Resources
|
Dr. Henney served as a Professor of Medicine at the University of Cincinnati College of Medicine, an educational institution, from 2008 until 2012. She served as Senior Vice President and Provost, Health Affairs at the University of Cincinnati Academic Health Center from 2003 until 2008. Appointed by President Bill Clinton, Dr. Henney served as the first female U.S. Commissioner of Food and Drugs from 1998 to 2001. Dr. Henney was appointed to the position of Home Secretary of the National Academy of Medicine, a division of The National Academies of Sciences designed to advise the nation on health issues, in April 2014. She has been a Director of AmerisourceBergen Corporation, a publicly traded bio-pharmaceutical company, since 2002, and was elected Lead Independent Director effective in March 2016. She also served as a director of Cubist Pharmaceuticals, Inc., a publicly traded pharmaceutical and biologics company, from 2012 until January 2015, and as a Director of AstraZeneca PLC, a publicly traded global pharmaceutical company, from 2001 until 2011. Dr. Henney has also served on the China Medical Board since 2004. She received recognition from the National Association of Corporate Directors as an NACD Directorship 100 “Class of 2011” and “Class of 2012” member. Dr. Henney also is an NACD Board Leadership Fellow. Her current term as a Director of Cigna began in 2013 and expires in 2016.
Healthcare and Delivery Systems.Dr. Henney’s positions as Medical Doctor, Home Secretary of the National Academy of Medicine, Commissioner of Food and Drugs, and Executive of Academic Health Center provide her with direct experience regarding emerging health care issues and complex health delivery systems.
Regulated Industry/Public Policy. As former Commissioner of Food and Drugs and Home Secretary of the National Academy of Medicine, Dr. Henney has extensive insight into the highly regulated health industry in the U.S. and abroad.
| | | | | |  | | | DONNA F. ZARCONE
President and Chief Executive
Officer of The Economic Club of
Chicago
AGE: 58
DIRECTOR SINCE: 2005
COMMITTEES: Audit, Finance
|
Ms. Zarcone has been the President and Chief Executive Officer of The Economic Club of Chicago, a civic and business leadership organization, since February 2012. She served as Interim President of The Economic Club of Chicago from October 2011 until February 2012 and as President and Chief Executive Officer of D. F. Zarcone & Associates LLC, a strategic advisory firm, from 2007 until February 2012. Ms. Zarcone served as the President and Chief Operating Officer of Harley-Davidson Financial Services, Inc., a provider of wholesale and retail financing, insurance and credit card programs and a wholly owned subsidiary of Harley-Davidson, Inc., from 1998 until 2006. She has been a Director of CDW Corporation, a publicly traded provider of technology products and services, since 2011. She also served as a Director of The Jones Group, Inc., a publicly traded designer, marketer and wholesaler of branded clothing, from 2007 to 2012 and Chairman of the Board of Eaglemark Savings Bank, a financial services provider, from 2002 to 2006. She received recognition from the National Association of Corporate Directors as an NACD Directorship 100 “Class of 2012” member. Ms. Zarcone is also an NACD Board Leadership Fellow. Her current term as a Director of Cigna began in 2013 and expires in 2016.
Finance.As an executive at Harley Davidson Financial Services and as the Chairman of the Board of Eaglemark Savings Bank, an FDIC-regulated entity, Ms. Zarcone oversaw end-user consumer financial services matters. She is a certified public accountant. As President and CEO of The Economic Club of Chicago, she monitors social and economic issues facing the U.S. and global markets.
Marketing and Consumer Insights. As President of Harley-Davidson Financial Services, Ms. Zarcone oversaw direct marketing initiatives to end-user consumers for a portfolio of financial products. As head of Enthusiast Services at Harley-Davidson, she oversaw brand loyalty initiatives. As a director of The Jones Group, she focused on end-user consumer-related issues.
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| CORPORATE GOVERNANCE MATTERS
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DIRECTORS WHO WILL CONTINUE IN OFFICE
| | | | | |   | | | ERIC J. FOSS Chairman, President and Chief
Executive Officer of ARAMARK
Corporation AGE: 5759 DIRECTOR SINCE: 2011 COMMITTEES: Corporate
Governance, People Resources
|
Mr. Foss has been Chairman of the Board of ARAMARK Corporation, a publicly traded provider of food services, facilities management and uniform services, since February 2015, and President and Chief Executive Officer since May 2012. He served as Chief Executive Officer of Pepsi Beverages Company, a beverage manufacturer, seller and distributor and a division of PepsiCo, Inc., from 2010 until December 2011. He served withwas the Chairman and Chief Executive Officer of The Pepsi Bottling Group, Inc. as its Chairman and Chief Executive Officer from 2008 until 2010; President and Chief Executive Officer from 2006 until 2008; and Chief Operating Officer from 2005 until 2006. Mr. Foss served on the Boardreceived his Bachelor of Science degree from Ball State University. Other Public Company Directorships: ARAMARK Corporation (2012-Present), UDR, Inc. (2003-2015), a publicly traded real estate investment trust, from 2003 until May of 2015. His current term as a Director of Cigna began in 2015 and expires in 2017.The Pepsi Bottling Company (2006-2010) Business Leader.Mr. Foss has extensive leadership experience through his roles as Chairman, President and CEO of ARAMARK Corporation, combined with his30-year career at Pepsi Beverages Company and The Pepsi Bottling Group, including his role as Chairman and CEO. Finance.As Chairman, President and CEO of ARAMARK and as CEO of Pepsi Beverages Company and The Pepsi Bottling Group, his experience includes oversight of financial operations, financial reporting, merger and acquisition activities and corporate restructurings. He led ARAMARK’s initial public offering in 2013 and was instrumental in The Pepsi Bottling Group’s initial public offering and oversaw its acquisition by PepsiCo. International/Global.Mr. Foss’ responsibilities at ARAMARK, Pepsi Beverages Company and The Pepsi Bottling Group included international business leadership, managing the challenges of operating a global business and strategic planning. At ARAMARK, he has oversight of operations in 20 countries, and throughout his tenure at Pepsi Beverage Company and The Pepsi Bottling Group, had responsibilities for global operations including international assignments. Marketing and Consumer Insights.Mr. Foss’ service as CEO of Pepsi Beverages Company and The Pepsi Bottling Group provided him experience as an executive officer of a consumer oriented company. | | | | | |  | | | MICHELLE D. GASS
Chief Merchandising & Customer
Officer of Kohl’s Corporation
AGE: 48
DIRECTOR SINCE: 2014
COMMITTEES: Audit, Corporate
Governance
|
Ms. Gass has served as Chief Customer Officer of Kohl’s Corporation, a publicly traded retailer, since 2013, and Chief Merchandising & Customer Officer since June 2015. Prior to this, Ms. Gass held various roles with Starbucks Coffee Company, a publicly traded manufacturer and retailer, for more than 16 years, including President, Starbucks Coffee, EMEA, from 2011 to 2013; President of the Seattle’s Best Coffee Unit and Interim President of the Global Consumer Products Division from 2009 to 2010; Executive Vice President, Global Marketing and Category and Chief Global Strategist from 2008 to 2009. Ms. Gass also served as a director of Ann, Inc., a publicly traded retailer, from 1998 to 2013. Her current term as a Director of Cigna began in 2014 and expires in 2017.
Business Leader.Ms. Gass’ business leadership experience includes her position as the Chief Merchandising & Customer Officer of Kohl’s Corporation, and various roles of increasing responsibility over her 15-year career at Starbucks Coffee Company.
International/Global. As President, Starbucks EMEA (Europe, Middle East and Africa), Ms. Gass oversaw and grew the company’s 1,900 owned and licensed store operations across the region and fulfilled international assignments.
Marketing and Consumer Insights.Ms. Gass is responsible for Kohl’s overall customer engagement strategy, including the company’s digital, marketing, public relations, and social responsibility efforts, as well as the high growth omni-channel business. During her Starbucks tenure, she held a variety of leadership roles across marketing, global strategy and category management, playing a key role in the company’s overall strategic blueprint.
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| CORPORATE GOVERNANCE MATTERS |
| | | | | | |   | | | ISAIAH HARRIS, JR. Former President and Chief
Executive Officer of AT&T
Advertising & Publishing — East AGE: 65 DIRECTOR SINCE: 2005 COMMITTEES: Executive (Chair) |
Mr. Harris has served as Cigna’s Chairman of the Board since December 2009 and served as Vice-Chairman of the Board from July 2009 through December 2009. Mr. Harris served as President and Chief Executive Officer of AT&T Advertising & Publishing — East (formerly BellSouth Advertising & Publishing Group), a communications services company, from 2005 until his retirement in 2007; as President, BellSouth Enterprises, Inc. from 2004 until 2005 and as President, Consumer Services, BellSouth Corporation from 2000 until 2004. Mr. Harris has served as an Independent Trustee of Wells Fargo Advantage Funds, a provider of mutual funds, since 2008. Mr. Harris was nominated as NYSE 2014 Chairman of the Year. Mr. Harris received his Bachelor of Science degree from Iowa State University and his MBA from the University of Minnesota.
Other Public Company Directorships: Deluxe Corporation (2004-2011) Business Leader. In his executive business leadership roles, including as CEO of AT&T Advertising and Publishing, Mr. Harris managed large organizations, developed and executed business strategies and led transformational change initiatives in both domestic and international operations. Finance.Mr. Harris’ extensive finance experience includes 19 years of corporate finance and operational experience in multi-national organizations, including as Vice President of Finance, BellSouth Corporation, preceded by 13 years as a CPA with KPMG LLP. Through service on the board of directors of Deluxe Corporation, a provider of customized products and services including financial services and direct checks, and as a trustee of Wells Fargo Advantage Funds, he has insight into financial services-related issues. Marketing and Consumer Insights.As President, Consumer Services, BellSouth Corporation, Mr. Harris focused on marketing communication services toend-user consumers. Regulated Industry/Public Policy.Throughout his career at AT&T Advertising & Publishing, Mr. Harris navigated a heavily regulated and dynamic legal environment. | | | | | |  | | | ROMAN MARTINEZ IV Private Investor AGE: 6870 DIRECTOR SINCE: 2005 COMMITTEES: Audit (Chair),
Executive, Finance
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Mr. Martinez has been a private investor since 2003. In 2003, he retired as Managing Director of Lehman Brothers, an investment banking firm, following a31-year career with the firm. He served as a director of Alliant Techsystems Inc., a publicly traded aerospace, defense and commercial products company, from 2004 until February 2015, when Alliant Techsystems, Inc. merged with Orbital Sciences, Inc. to create Orbital ATK, Inc. and simultaneously spun-off its commercial products company. Mr. Martinez has served as a director of Orbital ATK, Inc. since February 2015. Mr. Martinez has served on the Board of Trustees of New York Presbyterian Hospital since 1996. His current term as a DirectorMr. Martinez received his Bachelor of Cigna began in 2014Science degree from Boston College and expires in 2017.his MBA from the Wharton School of the University of Pennsylvania. Other Public Company Directorships:Orbital ATK, Inc. (2015-Present), Alliant Techsystems, Inc. (2004-2015) Finance.Mr. Martinez has over ten years of experience as a private investor and serves on the Investment Committees of severalnon-profit organizations. He previously served on the Investment Advisory Council of the State of Florida, which provides independent oversight of the Florida Retirement System funds and other state funds, which aggregated in excess of $150 billion. He has extensive experience in investment banking through his31-year tenure with Lehman Brothers where he was involved in a broad spectrum of U.S. and international investment banking activities covering financing, mergers and acquisitions and restructuring advisory assignments as well as financing transactions for governments and corporations. Healthcare and Delivery Systems.Through his over 1520 years serving on the Board of Trustees of New York Presbyterian Hospital, Mr. Martinez developed insights into the issues facing health care systems in a rapidly changing environment, including the provision of care management and delivery systems. | | | 12 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
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| | | | | | |   | | | JOHN M. PARTRIDGE Former President of Visa, Inc. AGE: 6668 DIRECTOR SINCE: 2009 COMMITTEES: Finance (Chair),
Executive, People Resources
|
Mr. Partridge served as President of Visa, Inc., a publicly traded consumer credit company, from 2009 until 2013 and as Chief Operating Officer from 2007 to 2009. He joined Visa USA in October 1999 and served as President and Chief Executive Officer of Inovant (a Visa subsidiary) from 2000 to 2007 and as Interim President of Visa USA in 2007. From 1998 until joining Visa USA, Mr. Partridge served as Senior Vice President and Chief Information Officer of Unum Provident Corp., a publicly traded disability insurance company. From 1989 to 1998, Mr. Partridge was Executive Vice President for Credicorp Inc., a commercial banking, insurance and investment banking company, where he was responsible for consumer banking, technology and operations. Prior to joining Credicorp Inc., Mr. Partridge held various management positions with Wells Fargo Bank. Mr. Partridge has beenserved as Chairman and Chief Executive Officer of Velo Payments, a Directorglobal smart data network for business disbursements, since March 2017 and as an operating partner of Corsair Capital, a private equity firm focused on the financial services industry, since October 2015. Mr. Partridge received his Bachelor of Science degree from the University of California. Other Public Company Directorships: Global Payments, Inc., a publicly traded provider of electronic transaction processing services, since 2013. His current term as a Director of Cigna began in 2015 and expires in 2018. (2013-Present) Business Leader.Mr. Partridge has extensive senior leadership experience through his positions with Visa, Inc., Visa USA, Inovant, Unum and Credicorp. Finance. As President and CEO of Inovant, he had direct oversight of financial operations, financial reporting, merger and acquisition activities and corporate restructurings. As President of Visa, he was involved with financial oversight and reporting and strategic transactions. His responsibilities at Credicorp provided significant financial services experience. Information Technology. Mr. Partridge has experience managing and overseeing information technology investments in support of business objectives which he gained through each of his executive leadership positions, including as Chief Information Officer of Unum and as a director of Global Payments.Payments, a provider of electronic transaction processing services. As President of Inovant, he oversaw Visa’s electronic payment processing service. International/Global. As President of Visa, Mr. Partridge’s responsibilities included international business leadership. He also serves as a director of a large public company with extensive international operations. His responsibilities with Credicorp included international assignments. Marketing and Consumer Insights. Through his tenure with Visa, Mr. Partridge focused heavily on consumer credit and oversaw marketing, product, client service, support and processing services. As Executive Vice President of Credicorp, his responsibilities included consumer banking. | | | 14
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| | | | | | |   | | | JAMES E. ROGERS Former Chairman, President and
Chief Executive Officer of Duke
Energy Corporation
AGE: 6870 DIRECTOR SINCE: 2007 COMMITTEES: Audit, Finance |
Mr. Rogers served as Chairman of Duke Energy Corporation, a publicly traded electric power company, from 2007 until 2013 and as the President and Chief Executive Officer from 2006 until 2013. He co-founded and has served as Chairman of Brightlight Foundation, a non-profit provider of globally accessible and affordable energy solutions, since 2011. He was formerly the Chairman, President and Chief Executive Officer of CINERGY Corp. (which merged with Duke Energy Corporation in 2006) from 1994 until 2006. Mr. Rogers has served as a Directorsenior operating partner of Stonepeak Infrastructure Partners, a private equity firm focused on infrastructure investments since October 2016. Heco-founded and has served as Chairman of Brightlight Foundation, anon-profit provider of globally accessible and affordable energy solutions, since 2011. He has served as Chairman and Chief Executive Officer of Intrepid Energy Partners LLC, an advisory business that specializes in energy sector transactions, since 2014. Mr. Rogers received his Bachelor of Business Administration and his juris doctor from the University of Kentucky. Other Public Company Directorships: Duke Energy Corporation (2007-2013), Applied Materials, Inc. (2008-2015), a publicly traded provider of equipment services and software, from 2008 until April 2015, and a director ofCINERGY Corp. (1994-2005), Fifth Third Bancorp a regional banking corporation from 1995 until 2009. He received recognition from the National Association of Corporate Directors as an NACD Directorship 100 “Class of 2011” member. His current term as a Director of Cigna began in 2015 and expires in 2018.(1995-2009) Business Leader. Mr. Rogers has extensive senior leadership experience through his positions with Duke Energy and in the utility industry for 25 years. Over the course of his career, he served on the boards of eight Fortune 500 companies. Finance. As President and CEO of Duke Energy, he had oversight of financial operations, financial reporting, merger and acquisition activities and corporate restructurings. As a director of Fifth Third Bancorp, a regional banking corporation, Mr. Rogers developed expertise ina deeper understanding of several facets of commercial and consumer financial services. Regulated Industry/Public Policy. Throughout his career at Duke Energy and CINERGY, Mr. Rogers operated in a heavily regulated environment and oversaw and implemented strategic policy initiatives. Before his corporate career, he served as the Deputy General Counsel for the Federal Energy Regulatory Commission and as a partner in the law firm of Akin Gump Strauss Hauer & Feld in Washington, D.C. | | | | | | | | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 13 | |
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| | | | | | |   | | | ERIC C. WISEMAN Former Executive Chairman,
President and Chief Executive
Officer of VF Corporation
AGE: 6062 DIRECTOR SINCE: 2007 COMMITTEES: Finance, People
Resources
|
Mr. Wiseman has served as Executive Chairman of VF Corporation, a publicly traded apparel and footwear company, sincefrom August 2008 until October 2017. He served as Chief Executive Officer sincefrom January 2008 Director since 2006,until December 2016 and President from 2006 until June 2015. He served as Chief Operating Officer of VF Corporation from 2006 to 2008; Executive Vice President, Global Brands from 2005 to 2006; and Vice President and Chairman, Sportswear and Outdoor Coalitions from 2004 until 2005; and Vice President and Chairman, Global Intimates and Sportswear Coalition from 2003 until 2004.2005. Mr. Wiseman has been a Directorreceived his Bachelor of Science degree and MBA from Wake Forest University. Other Public Company Directorships: VF Corporation (2006-2017), Lowe’s Companies, Inc., a publicly traded retail home improvement and appliance company, since 2011. His current term as a Director of Cigna began in 2015 and expires in 2018. (2011-Present) Business Leader. Mr. Wiseman has extensive senior leadership experience through his positions with VF Corporation. Finance.As Chairman and CEO of VF Corporation, he has had oversight of financial operations, merger and acquisition activities and corporate restructurings. International/Global. Through leadership positions at VF Corporation, Mr. Wiseman overseesoversaw operations and product sales in over 150 countries. Prior to joining VF Corporation, he held executive leadership roles at Sara Lee Corporation that included international business leadership and international assignments. Marketing and Consumer Insights.Through leadership roles at VF Corporation, Mr. Wiseman overseesoversaw marketing of 30 differenta variety of brands through all channels of distribution, both domestically and internationally. As a director of Lowe’s, a retail home improvement and appliances company, he focuses onend-user consumer-related issues. | | | | | | | |  | | | DONNA F. ZARCONE President and Chief Executive Officer of The Economic Club of Chicago AGE: 60 DIRECTOR SINCE: 2005 COMMITTEES: Audit, Corporate Governance |
Ms. Zarcone has been the President and Chief Executive Officer of The Economic Club of Chicago, a civic and business leadership organization, since February 2012. She served as Interim President of The Economic Club of Chicago from October 2011 until February 2012 and as President and Chief Executive Officer of D. F. Zarcone & Associates LLC, a strategic advisory firm, from 2007 until February 2012. Ms. Zarcone served as the President and Chief Operating Officer of Harley-Davidson Financial Services, Inc., a provider of wholesale and retail financing, insurance and credit card programs and a wholly owned subsidiary of Harley-Davidson, Inc., from 1998 until 2006. She also served as Chairman of the Board of Eaglemark Savings Bank, a financial services provider, from 2002 to 2006. She received recognition from the National Association of Corporate Directors as an NACD Directorship 100 “Class of 2012” member. Ms. Zarcone is also an NACD Board Leadership Fellow. Ms. Zarcone received her Bachelor of Science degree from Illinois State University and her MBA from the University of Chicago Booth School of Business. Other Public Company Directorships: CDW Corporation (2011-Present), The Jones Group (2007-2012) Finance.As an executive at Harley-Davidson Financial Services and as the Chairman of the Board of Eaglemark Savings Bank, an FDIC-regulated entity, Ms. Zarcone oversawend-user consumer financial services matters. She is also a certified public accountant. As President and CEO of The Economic Club of Chicago, she monitors social and economic issues facing the U.S. and global markets. Information Technology. As a director of CDW, a leading provider of integrated information technology solutions, Ms. Zarcone oversees issues facing the information technology industry. Marketing and Consumer Insights. As President of Harley-Davidson Financial Services, Ms. Zarcone oversaw direct marketing initiatives toend-user consumers for a portfolio of financial products. As head of Enthusiast Services at Harley-Davidson, she oversaw brand loyalty initiatives. As a director of The Jones Group, a designer, marketer and wholesaler of branded clothing, she gained further insight intoend-user consumer-related issues. | | | 14 | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 15
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| | | | | | |   | | | WILLIAM D. ZOLLARS Former Chairman, President and Chief Executive Officer of YRC Worldwide, Inc. AGE: 6870 DIRECTOR SINCE: 2005 COMMITTEES: People Resources (Chair), Executive, and Corporate Governance |
Mr. Zollars served from 1999 to 2011 as Chairman, President and Chief Executive Officer of YRC Worldwide, Inc., a holding company whose subsidiaries provide regional, national and international transportation and related services. Prior to that, Mr. Zollars was President of Yellow Transportation, Inc., from September 1996 through November 1999. From 1994 to 1996, he was Senior Vice President of Ryder Integrated Logistics. He also held various executive positions with Eastman Kodak. Mr. Zollars served as Directorreceived his Bachelor of Arts degree from the University of Minnesota. Other Public Company Directorships: Cerner Corporation (2005-Present), ProLogis Trust a real estate investment trust, from 2004 through 2010 and rejoined the Board of ProLogis in 2011. He has served as a Director of(2001-2010; 2011-Present), YRC Worldwide, Inc. (1999-2011) Cerner Corporation, a publicly traded supplier of health care information technology, since 2005. His current term as a Director of Cigna began in 2014 and expires in 2017.
Business Leader. Mr. Zollars’ role as Chairman, President and Chief Executive Officer of YRC Worldwide and various executive leadership positions with Yellow Transportation, Ryder Integrated Logistics and Eastman Kodak provided him extensive senior leadership experience. Finance. As Chairman, President and CEO of YRC Worldwide, Mr. Zollars had oversight of financial operations, merger and acquisition activities and corporate restructurings and led YRC’s comprehensive recovery plan to reduce cost structure and improve operating results, cash flow from operations, liquidity and financial condition. Healthcare and Delivery Systems. As a director of Cerner, a supplier of health care information technology, he focuses onoversees issues facing the healthcare industry, particularly health information technology. International/Global. As President and CEO of YRC, Mr. Zollars oversaw global operations and strategic planning, and throughout his YRC tenure,he undertook international assignments.assignments at Kodak. | | | | | | | | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 15 | |
| CORPORATE GOVERNANCE MATTERS |
Corporate Governance Policies and Practices Cigna is committed to ensuring strong corporate governance practices on behalf of our shareholders. We believe that strong corporate governance and an independent Board provide the foundation for financial integrity and shareholder confidence and attractive performance.confidence. The Corporate Governance Committee regularlyannually reviews Cigna’s governance program based on, among other things, developments in corporate governance, feedback received during shareholder interactions,engagement, legal or regulatory actions, proxy advisory firm positions, Securities and Exchange Commission (SEC) guidance and NYSENew York Stock Exchange (NYSE) requirements. In 2015, theThe Board and the Corporate Governance Committee conducted a thorough review of its governance practices and developed a set ofthe Board Corporate Governance Guidelines (the Guidelines). The Guidelines which set forth the key governance principles that guide the Board while also meeting the NYSE listing standards.Board. The Guidelines, together with the charters of the Audit, Corporate Governance, Finance, People Resources and Executive Committees, provide a framework of policies and practices for our effective governance. The Board and the Corporate Governance Committee review the Guidelines, and the committees review their respective charters, at least annually and update these governing documents as necessary to reflect changes in the regulatory environment, evolving practices and input from shareholders. The full text of the Guidelines and committee charters are available on our website atwww.cigna.com/about-us/corporate-governancecorporate-governance// and are available to any shareholder who requests a copy.1(1) | | | | | | | | | | | | | | | | Corporate Governance Highlights | | | | | | | | | • Independent board of directors with diversity in composition, skills and experience • Independent Chairman of the Board • Regular executive sessions of the Board and its committees without management present • Director elections by majority voting • Annual election of all directors • Proxy access right for shareholders | | | | • Separate Code of Business Conduct and Ethics for the Board of Directors | | | | | | • Independent Audit, Corporate Governance, Finance and People Resources Committees • Annual self-evaluations of the Board, its committees and individual directors, including periodic independent third party assessments • Majority of director compensation delivered in Cigna common stock • Meaningful stock ownership guidelines for directors | | | | | | | | | | | | | |
PROXY ACCESS At our 2017 Annual Meeting, shareholders voted on anon-binding shareholder proposal regarding shareholder proxy access. As we described in our 2017 proxy statement, the Cigna Board was not opposed to proxy access, but at that time, due to the merger agreement with Anthem, Inc. (Anthem), we were restricted in our ability to amend our bylaws or propose or commit to any bylaw amendment. The Board strongly believed that any proxy access framework should be thoughtfully and carefully considered. The Board committed to conducting a full evaluation of proxy access in 2017, with a goal of implementing a proxy access bylaw amendment on terms that reflected input from our shareholders and that the Board believed were in Cigna’s shareholders’ best interests in advance of the 2018 Annual Meeting. In advance of the 2017 Annual Meeting, at the direction of the Board, Cigna’s Office of the Corporate Secretary reached out to discuss the shareholder proposal with our 50 largest shareholders (representing approximately 65% of outstanding shares) and engaged with holders of approximately 40% of shares outstanding. During this engagement, shareholders provided feedback on their views of the shareholder proposal and proxy access generally. At the 2017 Annual Meeting, just over 50% of the votes cast supported the proxy access shareholder proposal. Following the 2017 Annual Meeting and after the Company was no longer subject to the restrictions of the merger agreement with Anthem, the Board resumed its evaluation of proxy access. As part of this review, the Corporate Governance Committee evaluated and considered the terms of the bylaw proposed by the shareholder proponent as compared to current market practice, other bylaw features not specified by the shareholder proponent that are necessary to provide for a balanced and effective proxy access framework, the views of proxy advisory firms and the input of Cigna’s shareholders received in connection with Cigna’s outreach efforts. In the fall of 2017, at the direction of the Board, the Office of the Corporate Secretary engaged again with our largest shareholders to 1(1) Throughout this Proxy Statement, we reference information available on our website. The information on our website is not, and shall not be deemed to be, part of this Proxy Statement or incorporated herein or into any of our other filings with the SEC.
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further discuss proxy access and potential terms for a proxy access bylaw, as well as other areas of interest, such as board refreshment and corporate responsibility. The Office of the Corporate Secretary reached out to our top 20 shareholders (representing approximately 50% of outstanding shares) as well as the shareholders we had engaged with in the spring of 2017 that had requested further discussions in connection with the Board’s consideration of the implementation of a proxy access bylaw. Holders of approximately 33% of shares outstanding engaged with the Office of the Corporate Secretary as part of this shareholder outreach effort. Shareholders indicated their support for a proposed proxy access bylaw incorporating a 3% ownership requirement, a three-year holding requirement, a cap of 20 shareholders that may form a group to meet the ownership requirement, and a right to nominate directors in an amount equal to the greater of two or 20% of the Board — terms that are consistent with current market practice. Several of the shareholders that had voted for the shareholder proposal at the 2017 Annual Meeting indicated that their vote was not intended as a vote on the specific terms proposed, but rather a vote in favor of the Company’s adoption of proxy access generally. Many shareholders also provided input regarding other terms of proxy access. The Corporate Governance Committee discussed and carefully considered all feedback when constructing the proxy access bylaw and, following this review, the Corporate Governance Committee recommended and the Board approved amendments to ourBy-Laws to implement proxy access in December 2017. As a result, a shareholder or a group of up to 20 shareholders owning 3% or more of Cigna’s outstanding common stock continuously for at least three years may nominate and include in the Company’s proxy materials director nominees constituting up to the greater of 20% of the Board or two individuals, provided the shareholder(s) and the nominee(s) satisfy the requirements specified in theBy-Laws. The Board believes that this proxy access bylaw framework provides meaningful proxy access rights, reflects generally accepted governance practices around proxy access and is consistent with the overall feedback received as part of our shareholder engagement. DIRECTOR INDEPENDENCE Cigna believes in the importance of a board comprised largely of independent,non-employee directors. The current Board includes 10 ninenon-employee directors. On an annual basis, the Board, through its Corporate Governance Committee, reviews relevant relationships between directors, their immediate family members and the Company, consistent with Cigna’s independence standards. Cigna’s independence standards, which are detailed in the Guidelines, are consistent with the independence requirements set forth in the NYSE’s listing standards. To be independent under Cigna and NYSE standards, the Board must affirmatively determine that a director has no material relationships with the Company directly or as an officer, shareholder or partner of an organization that has a relationship with the Company. In making its assessment, the Board considers all relevant facts and circumstances, including whetherthe nature of transactions with such organizations are in the ordinary course of Cigna’s business and/or the amount of such transactions (in aggregate or as a percentage of the organization’s revenues or assets). The Board also considers that, in the ordinary course of business, the Company may sell products and services to, and/or purchase products and services from, organizations affiliated with our directors and may hold investments (generally, debt securities) in organizations affiliated with our directors. Based on its review of director relationships, the Board has affirmatively determined that there are no material relationships between thenon-employee directors and the Company and allnon-employee directors (Dr. Henney, Ms. Gass, Ms. Zarcone and Messrs. Foss, Harris, Martinez, Partridge, Rogers, Wiseman and Zollars, as well as former director Mr. Joseph Sullivan)Zollars) are independent as defined in both Cigna’s Guidelines and the NYSE listing standards. In addition, at the committee level, all committee members of the Audit, Corporate Governance, Finance and People Resources Committees are independent and the members of the Audit Committee and the People Resources Committee meet the NYSE’s heightened independence requirements for service on those committees. BOARD LEADERSHIP STRUCTURE The Board is committed to the long-term growth of the business and the successful execution of our mission to improve the health, well-being and sense of security of the people Cigna serves around the globe. To fulfill its responsibilities to our shareholders, Cigna’s Board, both directly and through its committees, regularly engages with management, ensures management accountability and reviews the most critical issues that face Cigna. The Board is committed to meeting the dynamic needs of the Company and focusing on the interests of its shareholders and, as a result, regularly evaluates and adapts its composition, role and relationship with management. Independent Chairman of the Board We currently separate the roles of the Chairman of the Board and CEO. Our CEO sets the strategic direction for the Company, working with the Board, and providesday-to-day leadership, while our Chairman leads the Board in the performance of its duties and serves as the principal liaison between the independent directors and the CEO. We believe that having an independent Chairman assists the Board in ensuring independent oversight of the Company and the management team. The Board regularly assesses the appropriateness of this leadership structure and has concluded that this structure best suits Cigna’s needs at this time. | | | | | | | | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 17 | |
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In February 2015,2018, the Boardre-elected Isaiah Harris, Jr. to serve as our independent Chairman. The Board elects the Chairman to a three-year term, expiring at the annual meeting occurring at the end of the third year. Mr. Harris’ current term as Chairman will expire in April 2018.2021, subject to his annual election to the Board by shareholders. The full Board evaluates the Chairman’s performance on an annual basis as part of the annual Board evaluation. | | | | | | | | | | | | | | | | | Chairman Responsibilities | | | | | | | • Serve as principal representative of the Board • Facilitate discussion among independent directors on key issues • Preside over Board and shareholder meetings
• Advise the CEO on issues of concern for the Board • Develop agenda for Board meetings, in consultation with the CEO and other directors | | | | | | • Act as liaison between Board and management • Lead the Board in CEO succession planning • Preside over Board and shareholder meetings • Engage in the director recruitment process • Represent the Company in interactions with external stakeholders, at the direction of the Boardas appropriate | | | | | | | | | | | | | |
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Annual Board Evaluations
Each year, the Corporate Governance Committee oversees the self-evaluation of the Board and its committees, as well as a review of each individual director’s performance (including the Chairman’s) against the established responsibilities of Cigna Board members. Each committee also is responsible for conducting a self-assessment to identify potential areas of improvement. On an ongoing basis, directors offer suggestions and recommendations intended to further improve Board performance. Periodically, the Board engages an independent third party to conduct a Board assessment.
Access to Management and Advisors A member of senior management is assigned to each committee to act as a staff officer. StaffThe Chief Financial Officer serves as the staff officer for the Audit and Finance Committees; the General Counsel serves as the staff officer for the Corporate Governance Committee; and the Executive Vice President — Human Resources and Services serves as the staff officer for the People Resources Committee. These executive officers attend committee and Board meetings and work with their respective committee chair to assist in setting and developing meeting agendaagendas and materials.materials and attend meetings as appropriate. Committee chairs communicate frequently with staff officers, the other executive officers and other members of management between scheduled Board meetings with respect to committee issues.issues and management is expected to update the Board on any significant Company matters or competitive developments between Board meetings. The Board and its committees are able to access and retain independent advisors as, and to the extent, they deem necessary or appropriate. BOARD EVALUATIONS AND BOARD EFFECTIVENESS Evaluation Process A meaningfully designed director evaluation process allows the Board to gain insights into the effectiveness of and challenges facing the Board, its committees and its individual members, with the goal of enhancing Board performance and, as a result, increasing shareholder value. Cigna’s Board is committed to ongoing improvement and the evaluation process is an important vehicle that fosters and supports effectiveness. Our board evaluations are designed to solicit input and perspective on various matters, including: board leadership structure; board configuration, including size, diversity and skillset; board dynamics, including individual director preparation and participation; governance policies and practices; strategy and risk oversight; interaction with management; and progress achieved against prior year evaluation initiatives. As set forth in its charter, the Corporate Governance Committee oversees the Board, committee and individual director evaluation process. Annually, the Corporate Governance Committee and the Chairman of the Board determine the appropriate form of evaluation and consider the design of the process to ensure it is both meaningful and effective. In 2017, each director was interviewed by either the Chair of the Corporate Governance Committee or the Chairman of the Board. In response to feedback provided from directors regarding the Board evaluation process, the Chairman of the Board and the Chair of the Corporate Governance Committee also interviewed various members of management to better understand management’s perspective on the Board. In addition, each member of the Board was able to submit anonymous written feedback to the Corporate Secretary. The Chair of the Corporate Governance Committee summarized the feedback from the individual director interviews in a report for the Chairman of the Board and each of the Committee Chairs. The Chair of the Corporate Governance Committee and the Chairman of the Board then presented the report to the full Board for review, discussion and determination of action items. The chairs of each committee led a similar self-assessment discussion for their particular committee. From time to time, the Board has engaged an independent third party to conduct the Board evaluation, most recently | | | 18 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
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in 2014. The Corporate Governance Committee and Board have agreed to use an independent third party to facilitate the Board evaluation process approximately every three to five years, or on an as needed basis. The results of the evaluation process support the Board’s belief that the Board and committees are operating effectively. Board Refreshment and Succession Planning The Corporate Governance Committee is responsible for identifying new director candidates, reviewing the composition of the Board and its committees and for making recommendations to the full Board on these matters. As further described on page 9, in 2017, the Corporate Governance Committee began a long-term board refreshment plan and engaged an outside firm to provide advisory services related to succession planning and to assist with the recruitment of director candidates. RESPONSIBILITIES OF THE BOARD Board Oversight of Risk and Enterprise Risk Management The Board of Directors has the ultimate responsibility for risk oversight under Cigna’s risk management framework. The Board executes its duty both directly and through its Audit, Corporate Governance, Finance and People Resources Committees. The Audit Committee oversees Cigna’s enterprise risk management (ERM) framework. ERM is a Company-wide initiative that involves the Board, Cigna’s management, Cigna’s Chief Risk Officer and General Auditor (CRO) and internal audit function in an integrated effort to (1) identify, assess, prioritize and monitor a broad range of risks and (2) formulate and execute plans to monitor and, to the extent possible, mitigate the effect of those risks. The CRO meets with the Audit Committee regularly during its executive sessions and reports to the Board at least annually. Cigna has implemented practices so that the Board and its committees are regularly briefed on issues related to the Company’s risk profile. These reportsbriefings are designed to provide visibility to the Board about the identification, assessment and management of critical risks and management’s risk mitigation strategies. These areas of focus includebriefings address strategic, operational, financial reporting, succession and compensation, cyber-security, compliance, reputational, governance and other risks.risks, as appropriate. The Board, including its committees, oversees risks associated with their respective areas of responsibility, as summarized below. Each committee meets in executive session without management present and with key management personnel and representatives of outside advisors as necessary. | | | BOARD/COMMITTEE | | PRIMARY AREAS OF RISK OVERSIGHT | | | Full Board | | Strategic, financial and execution risks and exposures associated with Cigna’s business strategy, including impact of changes to laws and regulations, significant litigation and regulatory exposures and other current matters that may present material risk to financial performance, operations, infrastructure, plans, prospects, reputation, acquisitions and divestitures. | | | | | | Audit
Committee | | In addition to overseeing Cigna’s ERM framework, oversees risks related to the Company’s financial statements, the financial reporting process, accounting, cyber-security and certain legal and compliance matters. The Audit Committee also oversees the internal audit function and the Company’s ethics and compliance program. | | | | | | Corporate
Governance Committee | | Oversees risks and exposures associated with director succession and refreshment planning, corporate governance and overall Board effectiveness. Also oversees the Company’s risks related to political and charitable contributions. In exercising this oversight, the Corporate Governance Committee reviews and discusses financial contributions to such organizations. | | | | | | Finance
Committee Committee
| | Oversees the Company’s deployment of capital, technology and investment-related initiatives. In exercising this oversight, the Finance Committee regularly reviews and discusses the technology, financial market and capital management risks that are monitored through the Company’s ERM process. | | | | | | People Resources Committee | | Oversees compensation related-risks and management succession planning. For additional information regarding the People Resources Committee’s role in evaluating the impact of risk on executive compensation, see page 47 of“Processes and Procedures for Determining Executive Compensation — Risk Oversight” in the CD&A.Compensation Discussion & Analysis (CD&A). | | | |
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| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 19 | |
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Oversight of Business Strategy Our directors provide keenunique insights into the strategic issues facing the Company, including changes in the regulatory environment, changing market dynamics and the competitive landscape. As part of its oversight of business strategy, the Board: Formally reviews Cigna’s annual and longer-term strategic plan, financial targets and strategies for achieving those targets; Regularly reviews and assesses Cigna’s results of operations, financial performance, prospects and competitive position; Regularly discusses external factors that affect the Company, such as regulatory developments and trends impacting the health care industry generally; Regularly reviews our performance compared to our competitors; and Regularly evaluates potential strategic alternatives relating to Cigna and our business, including possible acquisitions, divestitures and business combinations. Management Succession Planning At the direction of the Chairman, the Board oversees management succession planning, including for the CEO.CEO role. With the assistance of the People Resources Committee, the Board reviews and approves regular and emergency succession plans and, as part of those plans, develops and evaluates potential candidates who have the skills and experience that the Board believes are necessary for executive leadership positions.plans. The People Resources Committee is responsible for overseeing the Company’s policies and processes for people development in general. In fulfilling that responsibility, theThe People Resources Committee considers an annualalso ensures that management succession planning meets the Board’s expectations. Annually, the CEO presents to the Board a review of executive officers and key senior management, presented by the CEO, including a discussion of those employees who are considered to be potential successors to executive and senior level positions with regard to their readiness and development opportunities. This assessment is presentedIn 2017, succession planning related to the promotions of Brian C. Evanko, Christopher J. Hocevar, Alan M. Muney, Eric P. Palmer and reviewed byMichael W. Triplett to executive officer roles, and the full Board.retirements of Thomas A. McCarthy and Matthew G. Manders.
Shareholder Interests The Board has oversight of aand the Corporate Governance Committee oversee the Company’s shareholder engagement practice whereby senior management and the investor relations team regularly meet with shareholders and respond to their questions and feedback throughout the year.practice. The Office of the Corporate Secretary engages with shareholders on issues related to corporate governance, executive compensation and social issues.responsibility. In 2017, the Office of the Corporate Secretary engaged in extensive outreach with shareholders, particularly regarding proxy access, as further described on page 16. During these meetings, shareholders also expressed an interest in learning more about our board refreshment plans and our corporate responsibility efforts. As a result, we have included additional disclosure on these topics, which can be found on pages 9 and 23, respectively. Senior management and the Investor Relations team regularly meet with shareholders and respond to their questions and feedback throughout the year. In June 2017, Cigna hosted an Investor Day. During Investor Day, Cigna’s management discussed our track record of delivering value and our growth path moving forward. Investor Day was a highly interactive event, providing the investment community with many formal and informal opportunities to further understand Cigna’s strategy toGo Deeper, Go Local and Go Beyond, as well as the depth and breadth of Cigna’s management team. In addition, the Board has adopted a number of practices that align the interests of the directors with those of the shareholders, including: Aa director compensation program whereby a majority of compensation is delivered in common stock;
Robustrobust stock ownership requirements for directors; and
Nono shareholder rights plan and, at this time, the Board has no intention of adopting such a plan.
Information regarding how our executive compensation policies and practices align with the interests of shareholders can be found in the CD&A. | | | | | | | 20 | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 19
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BOARD MEETINGS AND COMMITTEES In 2017, the Board held 11 meetings and the committees of the Board held a total of 33 meetings. At all regular meetings held in 2017, the independent members of the Board met in executive session without management present. As part of all regularly scheduled Board meetings, the Chairman presides over all executive sessions of the Board. At a significant number of meetings held in 2015, the independent members of the Board met in executive session. Each Board committee also met in executive session without management on a regular basis in connection with their respective meetings. In 2015, the Board held 25 meetings and the committees of the Board held a total of 29 meetings. Overall director attendance at Board and committee meetings was approximately 95%. Each director attended more than 75% or more of the aggregate of all meetings of the Board and committees on which he or she served during 2015.2017. During 2017, Board and committee attendance averaged 93% for the Board as a whole. In addition to formal Board meetings, the Board engages with management regularly throughout the year on critical matters and topics.year. The Board encouragesexpects directors to attend the annual meeting of shareholders. In 2015, allAll directors attended the 2017 annual meeting and Mr. Harris chaired the special shareholder meeting held in December.meeting. All directors are expected to attend the Annual Meeting in 2016.2018. The Board has the five committees: Executive, Audit, Corporate Governance, Finance and People Resources. Complete copies of the committee charters are available on Cigna’s website atwww.cigna.com/about-us/company-profile/corporate-governance/cigna-board-committee-members.. The directors serve oncomposition of the following committees.Audit, Corporate Governance, Finance and People Resources Committees is set forth below. | | | | | | | | | | | | | | | | | | | | | | Executive | | Audit* | | Corporate
Governance | | Finance | | People Resources | | Audit* | | Corporate Governance | | Finance | | People Resources | David M. Cordani | | ü | | | | | | | | | | | | | Eric J. Foss | | | | | | ü | | | | ü | | | | ✓ | | | | ✓ | Michelle D. Gass | | | | ü | | ü | | | | | | Isaiah Harris, Jr. | | Chair | | | | | | | | | | | | | Jane E. Henney, M.D. | | ü | | | | Chair | | | | ü | | ✓ | | Chair | | | | | | | | Roman Martinez IV | | ü | | Chair # | | | | ü | | | | Chair # | | | | ✓ | | | | | | John M. Partridge | | ü | | | | | | Chair | | ü | | | | | | Chair | | ✓ | | | | James E. Rogers | | | | ü# | | | | ü | | | | ✓ # | | | | ✓ | | | | | | Eric C. Wiseman | | | | | | | | ü | | ü | | | | | | ✓ | | ✓ | | | | Donna F. Zarcone | | | | ü# | | | | ü | | | | ✓ # | | ✓ | | | | | | | | William D. Zollars | | ü | | | | ü | | | | Chair | | | | ✓ | | | | Chair | Meetings in 2015 | | 0 | | 9 | | 7 | | 5 | | 8 | | | | | Meetings in 2017 | | | 9 | | 8 | | 8 | | 8 | | | | | | | | | | | |
| # | Designated “audit committee financial expert” as defined in the SEC rules. |
| * | All members of the Audit Committee are financially literate within the meaning of the NYSE listing standards. |
The Executive Committee may exercise the power and authority of the Board as specifically delegated by the Board when convening a meeting of the full Board of Directors is impracticable. Mr. Harris is Chairman of the Executive Committee and Dr. Henney and Messrs. Cordani, Martinez, Partridge and Zollars serve on the Executive Committee. In 2017, the Board of Directors did not delegate any actions to the Executive Committee and, therefore, the Executive Committee did not meet in 2017. | | | | | | | 20
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 21 | |
| CORPORATE GOVERNANCE MATTERS |
| | | | | | | | Committee | | Responsibilities | | | | | | Executive Committee
| | • Exercises the power and authority of the Board as specifically delegated by the Board when convening a meeting of the full Board of Directors is impracticable.
• Serves as an advisory body to the Chairman of the Board as needed.
| | | | | | Audit Committee | | • Assesses the qualification and independence of, appoints, compensates, oversees the work of and removes, if appropriate, Cigna’s independent registered public accounting firm. • Represents and assists the Board in fulfilling its oversight responsibilities regarding the adequacy and effectiveness of internal controls and the integrity of financial statements. • Reviews annual and quarterly financial statements, earnings releases, earnings guidance and significant accounting policies with management and, if appropriate, the independent registered public accounting firm. • Oversees compliance with material legal and regulatory requirements.requirements, including those that apply to federal and state health care programs. • Oversees the Company’s enterprise risk management program and internal audit function and advises the Board on financial and enterprise risks, including risks related to the security of information technology systems. • Maintains procedures for and reviews the receipt, retention and treatment of complaints and concerns regarding accounting, controls, auditing, reporting and disclosure matters. | | | | | | | | | | | | | | | | Corporate Governance Committee | | • Reviews, advises and reports to the Board on the Board’s membership, structure, organization, governance practices and performance, as well as shareholder engagement activities. • Assists the Board in the oversight and governance of director succession plans.board refreshment planning. • Reviews committee assignments and director independence. • Oversees director nomination and compensation and develops specific director recruitment criteria. • Oversees communications with external stakeholders, including shareholders. • Oversees corporate political and charitable contributions.contributions and the Company’s corporate responsibility and sustainability efforts. | | | | | | | | | | | | | | | | Finance Committee | | • Oversees the structure and use of Cigna’s capital. • Oversees Cigna’s long-term financial objectives and progress against those objectives. • Reviews Cigna’s strategic operating plan and budget. • Oversees Cigna’s investment strategy and sets investment policies and guidelines. • Oversees on information technology strategy and execution. | | | | | | | | | | | | | | | | People Resources Committee | | • Oversees the policies and processes for people development and assessments of executive officers and key senior management and assists the Board in developing and evaluatingreviewing executive officer succession plans. • Establishes company goals and objectives relevant to the CEO’s compensation, evaluates the CEO’s performance in light of those established goals and objectives, and based on this evaluation, recommends the CEO’s compensation to the independent members of the Board for approval. • Reviews and approves compensation targets, base salaries, cash and equity-based incentive compensation payments and arrangements, severance, and other compensation and benefits arrangements for any current or prospective executive officers other than the CEO, subject to required Board or shareholder approvals. • Establishes performance measures and goals and assesses whether these goals are met for awards under short-term and long-term cash-based and equity-based compensation plans. • Reviews and monitors the Company’s diversity program. |
| | | | | | | 22 | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 21
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CODES OF ETHICS Cigna is committed to conducting business in accordance with the highest standards of integrity, legal compliance and ethical conduct. In 2015, at the recommendation of the Corporate Governance Committee, the Board adopted a Director Code of Business Conduct and Ethics, available on Cigna’s website atwww.cigna.com/about-us/corporate-governancecorporate-governance//. While having a universal code of ethics appears to be the majority practice, companies are beginning to adopt separate codes of conduct to meaningfully tailor the content to boards of directors. The Board believes that having a separate code of conduct for the Board meaningfully enhances Cigna’s governance framework by making Board-specific policies clearer, while also representing an approach to addressing general shareholder concerns over transparency of company and board practices. All directors and employees, including our executive officers, must comply with the Company’s Code of Ethics, available on Cigna’s website atwww.cigna.com/about-us/corporate-governance/. Both the Director Code of Business Conduct and Ethics and the Company Code of Ethics, together with Cigna’s related policies and procedures, address major areas of professional conduct, including, among others, conflicts of interest, protection of private, sensitive or confidential information, insider trading and adherence to laws and regulations affecting the conduct of Cigna’s business. Directors and employees affirm their adherence to the Code of Ethics and the Director Code of Business Conduct and Ethics, as applicable, annually. CORPORATE RESPONSIBILITY As a global health service company with the mission of helping improve the health, well-being and sense of security of the people we serve, Cigna believes that its success depends on earning trust through responsible business practices, corporate citizenship and providing superior services that meet our customers’ individual needs. Inspired by our mission, Cigna works to positively impact the health of people, communities and the environment. As evidence of this, in 2015, Cigna was the first U.S. health insurance company to sign on to the United Nations Global Compact (UNGC), a policy initiative for companies committed to areas such as human rights, labor standards, environmental responsibility and business integrity in business operations. In 2017, Cigna became a member of the UNGC Health is Everyone’s Business action platform, which is a coalition working to develop a global business agenda to address goals related to good health and well-being. In 2017, Cigna was named to the Dow Jones Sustainability Index, a benchmark for investors who integrate sustainability considerations into their portfolios. We achieved the leading spot among the Health Care Providers & Services industry sector. Cigna was recognized in both the Dow Jones Sustainability World Index and the Dow Jones Sustainability North America Index. Our inclusion on the index was driven by our responsible business practices. The Corporate Governance Committee is responsible for overseeing Cigna’s positions on, and policies with respect to, Cigna’s corporate responsibility efforts around the globe. To support the Corporate Governance Committee’s responsibility, Cigna has established the Cigna Connects Corporate Responsibility Governance Council to provide input on Cigna’s policies, initiatives and reporting relative to corporate responsibility. Led by Cigna’s Director of Corporate Responsibility & Civic Affairs, this Council is a cross-functional team of leaders from various areas of the Company, including ethics and compliance, global real estate, risk management, supply chain, human resources and the Cigna Foundation. Cigna annually publishes a corporate responsibility report, Cigna Connects, highlighting our corporate responsibility goals and initiatives. Cigna Connects covers areas such as Cigna’s practices around ethics and governance, diversity, environmental sustainability, and our Cigna Foundation. It also provides more information about our recent recognitions, including being named to Corporate Responsibility Magazine’s 100 Best Corporate Citizens List, our listing on the MSCI Sustainability Index, and our “Innovation in Advancing Health Equity” award from the National Business Group on Health. Cigna Connects is presented to the Corporate Governance Committee, which reviews the report with the Board. We encourage our shareholders to review our most current report, which is available on Cigna’s website atwww.cigna.com/about-us/corporate-responsibility/report/. Cigna’s corporate responsibility efforts are focused on the following areas: Health and Well-Being. Cigna’s goal is to make health care better for all, by striving to build a sustainable health care system that lowers health risks, fosters health equality, improves health status and promotes preventative health interventions. For example, Cigna is committed to being a national leader on modernizing the approach to the prevention, treatment and communication of substance use disorders, and pledged to reduce opioid usage among our customers by 25% by 2019. Cigna is addressing the needs of our communities through efforts such as empowering veterans to address difficult health and life circumstances and establishing the free Cigna Health Improvement Tour. In 2017, we provided more than10,000 free Cigna Health Improvement Tour biometric screenings (blood pressure, cholesterol, blood sugar and body-mass index) and health coaching to participants in 100 locations. Environment.As a health service company, Cigna takes a precautionary approach to its environmental sustainability efforts, recognizing that environmental stewardship can have a health impact and also make sound business sense. We currently have 16 LEED certified buildings and 25 sites | | | | | | | | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 23 | |
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are enrolled in the U.S. Environmental Protection Agency’s ENERGY STAR® program. In 2017, Cigna’s greenhouse gas emissions data was verified by an independent third party expert. Cigna considers managing the risks and opportunities associated with climate change and resource scarcity as a significant aspect of our corporate responsibility platform. Our Environmental Policy Statement, which is described in greater detail in the Corporate Responsibility section of www.cigna.com, outlines our environmental sustainability policies and practices. Ethical and Inclusive Business Practices. We strive to foster relationships with various stakeholders to help us better understand their priorities and to further Cigna’s goal of bringing positive changes in areas such as human capital, diversity and inclusion, supply chain management, stakeholder engagement and human rights. Cigna seeks to partner with organizations that are guided by similar principles. Our Supplier Code of Ethics, with which all of our suppliers are expected to comply, explicitly prohibits the use of child or forced labor, and requests that our suppliers demonstrate ethics, compliance and integrity in human rights, business conduct and the environment. The Supplier Code of Ethics is an important part of the internal control structure and helps promote ethical business practices. As an example of our focus on inclusive business practices, in 2017, we welcomed the inaugural class of our diverse supplier Mentor Protégé Program. This program, consisting of certified minority, veteran and LGBT business enterprises, providesone-on-one mentoring with Cigna management, and insights into growth strategies and best practices to help grow their businesses. The Cigna Foundation The Cigna Foundation, established more than 50 years ago, carries out our corporate philanthropy goals of bringing Cigna’s mission and brand promise to life for individuals and communities around the globe. The Cigna Foundation accomplishes these goals through strategically focused charitable grants to nonprofit organizations whose work enhances the health of individuals and families and the well-being of their communities. Cigna’s World of Difference grants center around collaborations with nonprofits pursuing projects that help people overcome barriers to their health and well-being related to factors such as ethnicity, race, gender, age, education, economic status or place of residence. In 2017, we added a focus on community health workers. Cigna funded 27 Cigna Foundation Grants to address health disparities and advance community health navigation in 2017. ANNUAL POLITICAL CONTRIBUTIONCONTRIBUTIONS AND LOBBYING ACTIVITY REPORT Cigna is committed to transparency and strives to provide clarity about our goals and positions related to the Company’s federal and state lobbying and advocacy efforts as well as why we believe active engagement in the public policy arena is important to our mission, business and customers. Cigna has regularly engaged with shareholders to gain feedback regarding desired political contribution disclosure and published its first annual political contributions and lobbying activity report in 2011. The initial report provided information about Cigna’s political contributions, lobbying activities, trade association affiliations and related matters. Since then, we have significantly enhanced this report to incorporate subsequent input from shareholders and to provide greater clarity on our overall lobbying framework, including the areas in which we focus our advocacy efforts and why we believe active engagement in the public policy arena is necessary to support the achievement of our mission, the success of our business and the well-being of our customers. The report also provides information about: (1) direct political contributions that Cigna makes at a corporate level; (2) contributions that Cigna makes through the Cigna Political Action Committee; and (3) the total amount of dues paid to any industry trade association to which Cigna pays $50,000 or more in annual dues, as well as the portion of any such dues that such trade associations inform us are allocable to anynon-deductible lobbying expenses. The Corporate Governance Committee provides guidance and oversees Cigna’s political and lobbying activities. The Company updates the report annually and we encourage you to review our 20152017 report which is available on Cigna’s website atwww.cigna.com/about-us/corporate-governancecorporate-governance//. CORPORATE RESPONSIBILITY REPORT
As a global health service company with the mission of helping improve the health, well-being and sense of security of the people we serve, Cigna strongly believes that its success depends on earning trust through responsible business practices, corporate citizenship and providing superior services that meet our customers’ individual needs. Inspired by this mission, Cigna works to positively impact the health of people, communities and the environment. Cigna annually publishes a Corporate Responsibility Report highlighting our corporate responsibility goals and initiatives. The Corporate Responsibility Report is presented to the Corporate Governance Committee, which reviews the report with the Board. We encourage our shareholders to review our most current report which is available on Cigna’s website atwww.cigna.com/about-us/corporate-responsibility/report.
CERTAIN TRANSACTIONS Transactions with Related Persons Cigna has not adopted a written policy concerning review, approval or ratification of related person transactions. Cigna compiles information about transactions between Cigna and Cigna’s directors, director nominees, and executive officers and any immediate family members and affiliated entities identified by directors, director nominees and executive officers as having any form of relationship with Cigna.Cigna, as well as shareholders that identified themselves during 2017 as holding 5% of Cigna’s common stock. Cigna’s Office of the Corporate Secretary analyzes the nature of any transaction to determine whether the transaction may require disclosure under SEC rules as a related person transaction. On an annual basis, the Corporate Governance Committee reviews the analysis prepared by the Company, and presents its assessment to the full Board of Directors. Based on this review, there are no related person transactions requiring disclosure under SEC rules. Compensation Committee Interlocks and Insider Participation The People Resources Committee is comprised of the fivefour independent directors listed on page 20.directors: William D. Zollars (Chair), Eric J. Foss, John M. Partridge and Eric C. Wiseman. There are no compensation committee interlocks. | | | 2224
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NON-EMPLOYEE DIRECTOR COMPENSATIONNon-Employee Director Compensation
OVERVIEW The Corporate Governance Committee reviewsCigna’s director compensation program is designed to attract and makes recommendations toretain highly qualified independent directors, by addressing the Board about the compensation paid to non-employee directors for service on the Cigna Boardtime, effort, expertise and accountability required of Directors. A director who also is an employee of the Company does not receive payment for service as a director. The CEO is the only employee who currently serves as a director.
active board membership. The Board believes that the current director compensation program: aligns with shareholder interests because it includes a significant equity-based compensation component, the value of which is tied to Cigna’s stock price; and is competitive based on the work required of directors serving on the board of an entity of the Company’s size, complexity and scope. The Corporate Governance Committee’s charter provides that it will periodically review director compensation and assist the Board in the administration of director compensation plans. The Board approves the amount and form of director compensation. The Corporate Governance Committee may from time to time engage aan independent compensation consultant to assist in its review of director compensation. Under our policies, this compensation consultant must be independent from the Company. The independence requirements for a director compensation consultant engaged by the Corporate Governance Committee are identical to those required by the People Resources Committee for its executive compensation consultant, as described on page 48. DIRECTOR COMPENSATION PROGRAM The Corporate Governance Committee reviews Cigna’snon-employee director compensation program on an annual basis. The Corporate Governance Committee last engaged an independent compensation consultant in 2011 to assist in the Committee’s review of director compensation amount and pay mix. As a periodic basis. In October 2011,result of that review, the Board, upon recommendation from the Corporate Governance Committee, approved the current director compensation program, effective as of January 2012. The Board has not increased compensation since that time. In 2015,2017, the Board and the Corporate Governance Committee reviewed the director compensation program and did not make any changes. As part of this review, the Corporate Governance Committee reviewed benchmarking data from the Company’s compensation peer group (as described in “Executive Compensation Policies and Practices — 2017 Peer Groups” in the CD&A), as well as the top 200 companies of the S&P 500, to ensure that our pay practices were competitive and aligned with those companies. The following chart summarizes the retainer compensation provided to directors for their service on Cigna’s boardBoard and each committee on which they serve. Payments are made in equal, quarterly installments. | | | | | RETAINER TYPE | | ANNUAL AMOUNT | | METHOD OF PAYMENT | Board
| | $275,000 | | Cigna common stock ($180,000)
Cash ($95,000)
| Committee chair
| | $ 15,000
| | Cash
| Committee member
| | $ 10,000
| | Cash
|
its committees. A director who also is an employee of the Company does not receive payment for service as a director. The CEO is the only employee who currently serves as a director. There is no retainer for service on the Executive Committee. In addition to the BoardAll retainer the Chairman of the Board receives $225,000payments are made in cash for his service as Chairman.equal, quarterly installments. | | | | | RETAINER TYPE | | ANNUAL AMOUNT | | METHOD OF PAYMENT | | | | Board | | $275,000 | | Cigna common stock ($180,000) Cash ($95,000) | | | | Chairman of the Board | | $225,000 | | Cash | | | | Committee chair | | $ 15,000 | | Cash | | | | Committee member | | $ 10,000 | | Cash | | | | | |
Deferral of Payments Under the Deferred Compensation Plan of 2005 for Directors of Cigna Corporation (Deferral Plan), directors may elect to defer the payment of the cash and/or common stock portion of their annual retainers. Deferred common stock compensation is credited to a director’s deferred compensation account as a number of shares of hypothetical common stock and ultimately paid in shares. Deferred cash compensation is ultimately paid in cash, and directors have a choice of hypothetical investment funds whose rates of return are credited to that account. These funds include a Cigna stock fund and several other funds selected from those offered to all Cigna employees under the Cigna 401(k) Plan. Directors may elect to receive payments under the Deferral Plan in a lump sum or installments. Lump sum payments are made, or payment installments begin, in January of the year following a director’s separation from service. | | | | | | | | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 25 | |
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Stock Ownership Guidelines Cigna requires directors to maintain a stock ownership level of at least $500,000 in value of Cigna common stock, which is more than five times the annual Board cash retainer. Under the guidelines, directors have five years from their election to the Board to satisfy this ownership obligation. Common stock, deferred common stock, restricted stock units and hypothetical shares of Cigna common stock held by a director count toward the stock ownership guidelines for directors whose service started before February 2014. Directors whose service started after February 2014 may only count common stock and deferred common stock for compliance.compliance with stock ownership guidelines. As of December 31, 2015,2017, all of the directors are in compliance with the stock ownership guidelines. Ms. Gass does not yet hold $500,000 in value of Cigna common stock, but has until April 2019 to satisfy her stockguidelines and met or exceeded their ownership obligations.requirement. | | | | | | | | | Cigna 2016 Notice of Annual Meeting of Shareholders and Proxy Statement
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Financial Planning and Matching Charitable Gift Programs Directors may participate in the same financial planning and tax preparation program available to Cigna executive officers. Under this program, Cigna will make direct payments or reimburse directors for financial planning services that are provided by firms designated by Cigna and for tax preparation services in the amount of up to $6,500 annually. Each director whose service started before 2006 and has at least nine years of board service upon separation from service also is eligible for direct payments or reimbursement in the amount of up to $5,000 for financial planning and tax preparation services during theone-year period following separation from service. Directors also may participate in the matching charitable gift program available to Cigna employees, under which Cigna will make a matching charitable gift of up to $5,000 annually. In addition, upon a director’s retirement, in recognition of the retiring director’s service, the Board may make a donation in the amount of $10,000 to a charitable organization of the director’s choice. Insurance Coverage Cigna offers toprovides each director, on the same basis as employees and at no cost to the director, group term life insurance coverage equal to the annual Board retainer ($275,000 during 2015)2017), and business travel accident insurance coverage equal to three times the annual Board retainer ($825,000 during 2015)2017). Directors also may purchase or participate in, by paying premiums on anafter-tax basis, additional life insurance, medical care, long-term care, property/casualty personal lines and various other insurance programs available on a broad basis to Cigna employees. Directors also may elect to purchase worldwide emergency assistance coverage. This program, which provides international emergency medical, personal, travel and security assistance, also is available to Cigna executive officers and certain other Cigna employees who frequently travel abroad for business. In addition, Cigna provides each retired director whose service started before 2006 and who has at least nine years of Board service upon separation from service with $10,000 of group term life insurance coverage, with premiums paid by Cigna. TheseIn addition, these directors may also participate for two years following separation from service in the medical care programs currently offered by Cigna to retired employees, with premiums paid by the director on anafter-tax basis.
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DIRECTOR COMPENSATION TABLE FOR 20152017 The table below includes information about the compensation paid tonon-employee directors in 2015.2017. Mr. Cordani, the only Company employee on the Board of Directors, does not receive any director compensation for his Board service. | | NAME | | FEES EARNED OR PAID IN CASH ($) | | STOCK AWARDS ($) | | ALL OTHER
COMPENSATION ($) | | TOTAL
COMPENSATION ($) | | FEES EARNED OR PAID IN CASH ($) | | STOCK AWARDS ($) | | ALL OTHER
COMPENSATION ($) | | TOTAL
COMPENSATION ($) | (a) | | (b) | | (c) | | (d) | | (e) | | (b) | | (c) | | (d) | | (e) | | | | Eric J. Foss | | | | 115,000 | | | | | 180,000 | | | | | 338 | | | | | 295,338 | | | | | 115,000 | | | | | 180,000 | | | | | 365 | | | | | 295,365 | | Michelle D. Gass | | | | 115,000 | | | | | 180,000 | | | | | 338 | | | | | 295,338 | | | | | | Michelle D. Gass(1) | | | | | 28,750 | | | | | 45,000 | | | | | 61 | | | | | 73,811 | | | | | Isaiah Harris, Jr. | | | | 320,000 | | | | | 180,000 | | | | | 892 | | | | | 500,892 | | | | | 320,000 | | | | | 180,000 | | | | | 918 | | | | | 500,918 | | | | | Jane E. Henney, M.D. | | | | 120,000 | | | | | 180,000 | | | | | 6,131 | | | | | 306,131 | | | | | 120,000 | | | | | 180,000 | | | | | 6,157 | | | | | 306,157 | | | | | Roman Martinez IV | | | | 118,750 | | | | | 180,000 | | | | | 1,242 | | | | | 299,992 | | | | | 120,000 | | | | | 180,000 | | | | | 1,373 | | | | | 301,373 | | | | | John M. Partridge | | | | 120,000 | | | | | 180,000 | | | | | 338 | | | | | 300,338 | | | | | 120,000 | | | | | 180,000 | | | | | 5,365 | | | | | 305,365 | | | | | James E. Rogers | | | | 115,000 | | | | | 180,000 | | | | | 688 | | | | | 295,688 | | | | | 115,000 | | | | | 180,000 | | | | | 820 | | | | | 295,820 | | Joseph P. Sullivan(1) | | | | 28,750 | | | | | 45,000 | | | | | 83,806 | | | | | 157,556 | | | | | | Eric C. Wiseman | | | | 115,000 | | | | | 180,000 | | | | | 688 | | | | | 295,688 | | | | | 115,000 | | | | | 180,000 | | | | | 820 | | | | | 295,820 | | | | | Donna F. Zarcone | | | | 117,500 | | | | | 180,000 | | | | | 6,185 | | | | | 303,685 | | | | | 115,000 | | | | | 180,000 | | | | | 6,316 | | | | | 301,316 | | | | | William D. Zollars | | | | 120,000 | | | | | 180,000 | | | | | 990 | | | | | 300,990 | | | | | 120,000 | | | | | 180,000 | | | | | 1,017 | | | | | 301,017 | | | | | | | | | | | | |
(1) Mr. Sullivan retiredMs. Gass resigned from the Board inof Directors on February 2015.21, 2017. Fees Earned or Paid in Cash (Column (b)) In addition to the annual cash retainer for Board service received by each director (prorated for Mr. Sullivan):director: Dr. Henney and Messrs. Martinez, Partridge and Zollars Dr. Henney and Ms. Zarcone each served as a committee chair and as a member of another committee for all or part of 2015.committee. Ms. Zarcone and Messrs. Foss, Rogers Sullivan,and Wiseman and Ms. Gass each served as a member of two committees. Mr. Harris served as Chairman of the Board. Director fees listed in this column may be deferred by directors under the Deferral Plan (see Deferral“Deferral of Payments as described on page 23)Payments” above). Stock Awards (Column (c)) Column (c) lists the aggregate grant date fair value of Cigna common stock awarded to directors as part of their Board retainer, computed in accordance with FASB Accounting Standards Codification (ASC) Topic 718, applying the same model and assumptions that Cigna applies for financial statement reporting purposes as described in Note 2016 to Cigna’s consolidated financial statements in the Company’s Annual Report onForm 10-K for the year ended December 31, 20152017 (disregarding any estimates for forfeitures). Common stock awards listed in this column may be deferred by directors under the Deferral Plan. See Director Ownership“Director Ownership” below for amounts and a description of equity-based awards outstanding as of December 31, 2015.2017. All Other Compensation (Column (d)) Column (d) includes: reinvested dividends on certain share equivalent awards and on deferred Cigna common stock, and dividends paid in cash on restricted stock units, as described below under Director“Director Ownership;” matching charitable awards made by Cigna as part of its matching gift program (also available on a broad basis to Cigna employees) in the amount of $5,000 each for Dr. Henney, Ms. Zarcone and Ms. Zarcone; for Mr. Sullivan, a payment of $73,750, equivalent to the total dollar value of his second quarter board and committee service retainer and a charitable donation in the amount of $10,000 to a non-profit organization in honor of his retirement from the Board;Partridge; and
the dollar value of Company-paid life insurance premiums for all directors. Column (d) does not include the value of premiums, if any, paidThere were no perquisites or personal benefits provided tonon-employee directors that exceeded $10,000, as permitted by the directors for additional life insurance, medical care programs, long-term care, property/casualty personal lines, and various other insurance programs that also are available on a broad basis to Cigna employees.
SEC rules. | | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 2527
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| CORPORATE GOVERNANCE MATTERS |
DIRECTOR OWNERSHIP The table shows Cigna securities held by eachnon-employee director as of December 31, 2015.2017. The value of these securities was calculated using $146.33,$203.09, which was Cigna’s closing stock price on December 31, 2015.29, 2017, the last business day of the year. | NAME | | COMMON STOCK (a) | | DEFERRED COMMON STOCK (b) | | RESTRICTED STOCK UNITS (c) | | HYPOTHETICAL SHARES OF COMMON STOCK (d) | | TOTAL OWNERSHIP (e) | | TOTAL OWNERSHIP VALUE (f) | | COMMON STOCK (a) | | DEFERRED COMMON STOCK (b) | | RESTRICTED STOCK UNITS (c) | | HYPOTHETICAL SHARES OF COMMON STOCK (d) | | TOTAL OWNERSHIP (e) | | TOTAL OWNERSHIP VALUE (f) | | | | Eric J. Foss | | | | 11,017 | | | | | — | | | | | — | | | | | — | | | | | 11,017 | | | | $ | 1,612,118 | | | | | 13,413 | | | | | — | | | | | — | | | | | — | | | | | 13,413 | | | | $ | 2,724,046 | | Michelle D. Gass | | | | 2,753 | | | | | — | | | | | — | | | | | — | | | | | 2,753 | | | | $ | 402,846 | | | | | | Isaiah Harris, Jr. | | | | — | | | | | — | | | | | 13,500 | | | | | 23,242 | | | | | 36,742 | | | | $ | 5,376,457 | | | | | 1,937 | | | | | — | | | | | 13,500 | | | | | 23,255 | | | | | 38,692 | | | | $ | 7,857,958 | | | | | Jane E. Henney, M.D. | | | | 1,840 | | | | | — | | | | | 13,500 | | | | | 19,024 | | | | | 34,364 | | | | $ | 5,028,484 | | | | | 1,836 | | | | | — | | | | | 13,500 | | | | | 19,024 | | | | | 34,360 | | | | $ | 6,978,172 | | | | | Roman Martinez IV | | | | 9,496 | | | | | 20,384 | | | | | 13,500 | | | | | 15,414 | | | | | 58,794 | | | | $ | 8,603,326 | | | | | 9,496 | | | | | 22,780 | | | | | 13,500 | | | | | 15,423 | | | | | 61,199 | | | | $ | 12,428,905 | | | | | John M. Partridge | | | | 30,871 | | | | | — | | | | | — | | | | | — | | | | | 30,871 | | | | $ | 4,517,353 | | | | | 33,267 | | | | | — | | | | | — | | | | | — | | | | | 33,267 | | | | $ | 6,756,195 | | | | | James E. Rogers | | | | — | | | | | 35,124 | | | | | — | | | | | 9,913 | | | | | 45,037 | | | | $ | 6,590,264 | | | | | — | | | | | 37,520 | | | | | — | | | | | 11,299 | | | | | 48,819 | | | | $ | 9,914,651 | | | | | Eric C. Wiseman | | | | 4,200 | | | | | 9,721 | | | | | — | | | | | 2,121 | | | | | 16,042 | | | | $ | 2,347,426 | | | | | 4,200 | | | | | 12,117 | | | | | — | | | | | 3,652 | | | | | 19,969 | | | | $ | 4,055,504 | | | | | Donna F. Zarcone | | | | 5,971 | | | | | 5,834 | | | | | 13,500 | | | | | 2,795 | | | | | 28,100 | | | | $ | 4,111,873 | | | | | 5,971 | | | | | 8,230 | | | | | 13,500 | | | | | 2,797 | | | | | 30,498 | | | | $ | 6,193,839 | | | | | William D. Zollars | | | | 971 | | | | | — | | | | | 13,500 | | | | | 9,779 | | | | | 24,250 | | | | $ | 3,548,503 | | | | | 212 | | | | | — | | | | | 13,500 | | | | | 9,784 | | | | | 23,496 | | | | $ | 4,771,803 | | |
Deferred Common Stock (Column (b)) Column (b) includes the equity portion of the 20152017 and any previous year’s Board retainer granted in Cigna common stock or deferred stock units that have been deferred under the Deferral Plan. Restricted Stock Units (Column (c)) Column (c) includes restricted stock units that were issued in April 2014 upon the cancellation and exchange of 13,500 restricted share equivalents held by each of Dr. Henney, Ms. Zarcone and Messrs. Harris, Martinez and Zollars, Dr. Henney and Ms. Zarcone.Zollars. The restricted share equivalents were originally granted pursuant to the terms of the compensation program in place at the times of the directors’ election to the Board between 2004 and 2006. The restricted share equivalents and the restricted stock units have the same terms and conditions, except that, upon separation of service, the restricted share equivalents would have settled in cash and the restricted stock units will settle in shares of Cigna common stock. The restricted stock units vest after nine years of service or upon reaching age 65. All of these restricted stock units are vested. Hypothetical Shares of Common Stock (Column (d)) Column (d) includes (1) share equivalents resulting from voluntary deferrals of cash compensation hypothetically invested in the Cigna stock fund; (2) hypothetical shares of Cigna common stock credited to directors’ restricted deferred compensation accounts under the terms of the retirement plan in effect between 1997 and 2005; and (3) hypothetical shares of Cigna common stock acquired pursuant to apre-2006 requirement that directors invest or defer a portion of their Board retainer in shares of hypothetical Cigna common stock. Although these securities are not common stock, the value of the hypothetical shares of Cigna common stock credited to a director’s deferred compensation account is tied directly to the value of Cigna common stock. | | | 2628
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
Advisory Approval of Executive Compensation (Proposal 2) Our Board is committed to strong governance and recognizes that Cigna shareholders have an interest in our executive compensation policies and practices. Section 14A of the Securities Exchange Act of 1934, as amended (the Exchange Act) requires that we provide our shareholders with the opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers (NEOs). In recognition of the preference of shareholders expressed at our 2011 annual meeting and reaffirmed at our 2017 annual meeting, the Board has adopted a policy that provides for annualheld “say on pay” advisory votes.votes on an annual basis. Consistent with this policypractice and SEC rules, we are asking you to approve the following advisory resolution: Resolved, that the shareholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in the Company’s Proxy Statement for the 20162018 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, Executive Compensation Tables and accompanying narrative disclosure. We believe that our executive compensation program design effectively aligns the interests of our executive officers with those of our shareholders by tying a significant portion of their compensation to Cigna’s performance and rewarding our executive officers for the creation of long-term value for Cigna’s shareholders.shareholder value. In considering your vote, we encourage you to review the Proxy Statement Summary, beginning on page 1, the Compensation Discussion and Analysis beginning on page 28 and the Executive Compensation Tables beginning on page 51.Tables. This advisory vote is intended to address our overall compensation policies and practices related to the NEOs rather than any specific element of compensation. Because your vote is advisory, it will not be binding upon the Board. However, the Board and People Resources Committee value your opinion and will review and consider the voting results when making future executive compensation decisions. | | | | | | | | | | | | | | | | | | | | | | The Board of Directors
unanimously recommends
that shareholders vote
FOR the advisory approval of
the Company’s executive
compensation. | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 2729
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Compensation Discussion and Analysis SUMMARY
Cigna’s executive compensation program is based on the philosophy that executive pay should strongly align with the interests of our shareholders, directly link to Company and individual performance, and attract and retain executive talent. We believe the achievement of our corporate goals will result in the creation of meaningful and sustained long-term value for our shareholders. The primary principles underlying our compensation philosophy are to:
Motivate superior enterprise results with appropriate consideration of risk and while maintaining commitment to the Company’s ethics and values.
Align the interests of the Company’s executives with those of its shareholders and reward the creation of long-term value for Cigna shareholders.
Emphasize performance-based short-term and long-term compensation over fixed compensation.
Reward the achievement of favorable long-term financial results more heavily than the achievement of short-term results.
Provide market competitive compensation opportunities designed to attract and retain highly qualified executives.
This Compensation Discussion and Analysis (CD&A) describes the compensation policies, programs and decisions regarding our named executive officers (NEOs) for 2015,2017, who include our Chief Executive Officer, Chief Financial Officer, and the three most highly-compensated executive officers as of the end of 2015.2017, as well as our former Chief Financial Officer and one other executive officer who retired during 2017. The People Resources Committee (the Committee) is charged with oversight of the Company’s executive compensation policy and plans and makes all compensation decisions for our executive officers with the exception of our CEO, for whom the Committee makes recommendations to the Board of Directors. This section also describes why the Committee has chosen each element of compensation and how it made compensation decisions. For 2015,2017, our NEOs are: | | | | | NAME | | TITLE | | | David M. Cordani | | President and Chief Executive Officer | | | Thomas A. McCarthyEric P. Palmer(1)
| | Executive Vice President and Chief Financial Officer | | | Herbert A. FritchChristopher J. Hocevar(2)
| | President, Cigna–HealthSpringStrategy, Segments and Solutions | | | Nicole S. Jones | | Executive Vice President and General Counsel | | | Matthew G. MandersJason D. Sadler(3)
| | President, U.S. CommercialInternational Markets and Global Health Care Operations | | | Thomas A. McCarthy(4) | | Retired Executive Vice President and Chief Financial Officer | | | Matthew G. Manders(5) | | Retired President, Government & Individual Programs and Group Insurance | | | |
Company Performance
| (1) | Mr. Palmer was appointed Executive Vice President and Chief Financial Officer effective June 16, 2017. |
| (2) | Mr. Hocevar was appointed President, Strategy, Segments and Solutions effective February 23, 2017. |
| (3) | Mr. Sadler is based in Hong Kong. His base salary and annual incentive award are paid in Hong Kong dollars and, throughout this CD&A, have been converted to U.S. dollars using an exchange rate of $1 Hong Kong dollar = $0.12799676 U.S. dollar, the average of the dailymid-points between the bid and the ask prices for each trading day in the month of December 2017. |
| (4) | Mr. McCarthy retired from the Company effective June 16, 2017. |
| (5) | Mr. Manders retired from the Company effective November 3, 2017. |
This CD&A is organized as follows: Cigna’s mission is to improve the health, well-being and sense of security of the people we serve in our more than 90 million customer relationships around the globe. Our strategic focus is centered on delivering high quality, affordable and personalized solutions to our customers and clients by leveraging our insights, brand, talent and localized approach. Creating value for our customers, and in turn, our shareholders, is a direct result of the effective execution of ourGo Deep, Go Global, Go Individual strategy that we implemented in 2010.
| | | | | | | Executive Summary provides an overview of our compensation philosophy and ourpay-for-performance alignment. | | | Pages 31 — 33 | | | | | | | | | | | Executive Compensation Policies and Practicesdescribes our compensation objectives and practices, as well as how we set target total direct compensation and target pay mix. | | | Pages 33 — 36 | | | | | | | | | | | Elements of Compensationdescribes each form of compensation we pay and how our executive compensation program is tied strongly to performance. | | | Pages 37 — 47 | | | | | | | | | | | Employment Arrangements and Post-Termination Paymentssummarizes any employment agreements, our severance and other post-termination arrangements as well as our change of control arrangements. | | | Pages 48 — 49 | | | | | | | | | | | Processes and Procedures for Determining Executive Compensationprovides an overview of the Committee’s role in executive compensation, the process for determining executive officer compensation and the compensation consultant’s role. | | | Pages 49 — 50 | | | | | | | | | | | Other Practicesdescribes our stock ownership guidelines, our hedging and pledging restrictions, our clawback policy and the impact of tax and accounting treatment on our executive compensation program. | | | Pages 51 — 53 | |
| | | 2830
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
In 2015, Cigna again delivered strong resultsEXECUTIVE SUMMARY
Cigna’s executive compensation program is based on the philosophy that executive pay should strongly align with revenuethe interests of our shareholders, directly link to Company and earnings contributions acrossindividual performance and attract and retain executive talent. We believe the Company’s diversified portfolioachievement of businesses. Consolidated revenue increased 8% over 2014our enterprise goals will result in the creation of meaningful and sustained long-term value for our shareholders. Each of the measures in our performance-based plans are designed to $37.9 billion. Consolidated adjusted income from operations* increased to $2.3 billion compared to $2.1 billion for 2014. This reflects strong revenuealign with and support our business strategy. We focus on driving enterprise profitability, growth and continued favorable medicaloperating expense efficiency to support investment in innovation, customer loyalty and operating costs in the Global Health Care segment. stock performance. The following charts illustrateprimary principles underlying our revenue and adjusted income from operations growth, two key measures in determining the performance awards for our NEOs.compensation philosophy are to: | | | | | | | | | | | | | | | | | | CONSOLIDATED REVENUES
(IN BILLIONS)
enterprise results
with appropriate
consideration of risk
while maintaining a
commitment to the
Company’s ethics and
values.
| | CONSOLIDATED ADJUSTED INCOME
FROM OPERATIONS*Align the interests of
the Company’s
executives with
those of its
shareholders and
reward the creation
of long-term value
for Cigna
shareholders.
(IN BILLIONS)
| | 
performance-based
short-term and
long-term
compensation over
fixed
compensation.
| | Reward the
achievement of
favorable long-
term financial
results more
heavily than the
achievement of
short-term results. | | Provide market-
competitive
compensation
opportunities
designed to attract
and retain highly
qualified
executives. | | | | | | | | | |
Pay-for-Performance Alignment *We encourage youCigna’s compensation program is heavily weighted to review our Annual Report on Form 10-K foremphasize performance-based pay over fixed compensation. Our Management Incentive Plan (MIP) is a cash-based program designed to reward the year ended December 31, 2015 for more complete financial information. Consolidatedachievement of annual enterprise results. Long-term performance is rewarded through annual long-term incentive (LTI) awards, including Strategic Performance Shares (SPSs), the payout of which is based upon performance over a three-year period. Financial measures within the MIP and SPS program, such as adjusted income from operations, is a measure of profitability used by Cigna’s management because it presents(1) revenue and operating expense ratio improvement, are tied to the underlying results of operationsperformance of Cigna’s businessesthree ongoing business segments — Global Health Care, Global Supplemental Benefits and permits analysis of trends in underlying revenue, expensesGroup Disability and shareholders’ net income. This consolidated measure is not determined in accordance with accounting principles generally accepted in the United States (GAAP)Life. Our MIP and should not be viewed as a substituteSPS plans are designed to reward our NEOs for the most directly comparable GAAP measure, shareholders’ net income. Company’s performance relative topre-established enterprise goals.
Short- and Long-Term Performance For a reconciliation of consolidated2017, adjusted income from operations(1) for Cigna’s ongoing business segments was $2.8 billion, compared to shareholders’ net income, see Annex A. In July 2015, we entered into a merger agreement with Anthem, Inc. (Anthem). Our shareholders overwhelmingly approved this merger at our special meeting$2.3 billion in December 2015, with approximately 99%2016, reflecting significantly increased earnings contributions across each of the votes cast voting in favor of the adoption of the merger agreement, representing approximately 82% of Cigna’s outstanding shares as of the record dateGlobal Health Care, Global Supplemental Benefits and Group Disability and Life. Revenue for the special meeting. We continuethree ongoing business segments grew to expect the merger to close$40.9 billion, reflecting continued growth in the second half of 2016.
Until the merger with Anthem closes, we remain a separate and independent company, focused on delivering competitively attractive earnings and revenue growth to Cigna shareholders, as we have over the past several years through the successful executionCigna’s targeted customer segments. Our results included strong performance across each of our strategy.priority growth platforms — Commercial Employer, U.S. Seniors, Global Supplemental Benefits, and Group Disability and Life. These results provide us with momentum for continued growth in 2018.
| | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 2931
| |
Total Shareholder Return2017 Management Incentive Plan
Payouts under the 2017 Management Incentive Plan rewarded our NEOs for our strong performance in 2017, reflectingpay-for-performance alignment. MIP awards reward the achievement of annual enterprise results relative topre-established goals, as well as individual performance, accomplishments and Relative Peer Performancecontributions. The chart below shows the growth trend of a $100 investment in Cigna stock on December 31, 2012 over the past three years. For comparison purposes, we also have included the TSR of Cigna’s 2015
| | | | | Measure | | Result | | Award | | | | Adjusted income from operations(1)(2) | | 24.5% growth was above target range | | Individual payouts ranged from 130% to 155% of target for each of the NEOs serving as executive officers at the end of 2017. | Revenue(2) | | 4.9% growth was within target range | | Operating expense ratio improvement(2) | | 2.3% improvement was within target range | | Strategic Priorities | | Above target performance reflects: • Strong progress in community health and client retention • A higher NPS score relative to 2016 • Strong employee engagement results • Advancement of enterprise compliance initiatives | |
2015—2017 Strategic Performance Share Program Long-term performance was rewarded through the payout of our 2015—2017 SPSs. Our TSR over this three-year period, which accounts for 50% of the SPS payout, was 25.5%, placing Cigna at the 78th percentile relative to the SPS performance peer group (see page 33) andfor the S&P 500 Index overperiod. Over the same time period. 
* | | | | | Measure | | Result ($ in million) | | Award | | | | Relative TSR(3) | | 78th percentile (183% of target) | | 2015—2017 SPSs were paid out at 139.8% of target. | Adjusted income from operations(1)( 2) | | $7,532 (97.1% of target) | |
| Assumes that(1) | We encourage you to review our Annual Report on Form10-K for the valueyear ended December 31, 2017 for more complete financial information. Cigna uses adjusted income from operations as the principal financial measure for operating performance because management believes it presents the underlying results of our business operations and permits analysis of trends in underlying revenue, expenses and profitability. For a reconciliation of adjusted income from operations for the Global Health Care, Global Supplemental Benefits and Group Disability and Life segments to shareholders’ net income for each of the investment in Cigna common stockthree businesses, see Annex A to this Proxy Statement. As appropriate, adjustments are made for acquisitions, dispositions and each index was $100 on December 31, 2012the implementation of accounting changes to ensure comparability of actual results and that all dividends were reinvested.targets. |
** | Includes(2) | Reflects results for Cigna’s three ongoing business segments — Global Health Care, Global Supplemental Benefits and Group Disability and Life. |
| (3) | The peer group used to measure relative TSR is the SPS performance peer group which, at the time of the 2015—2017 SPS payout, included: Aetna, Inc., Aflac Incorporated, Anthem, Inc., The Hartford Financial Services Group, Inc., Health Net, Inc., Humana, Inc., Manulife Financial Corporation, MetLife, Inc., UnitedHealth Group Incorporated and Unum Group. Market returns are weighted by relative market capitalization. |
2017 Long-Term Incentive Award In February 2017, the Committee (and, for Mr. Cordani, the Board, upon the recommendation of the Committee) approved the annual LTI award for each NEO, 50% of which was awarded in stock options and 50% of which was awarded in an SPS award with a 2017—2019 performance period. The exercise price of the stock options awarded was $149.135, which means our stock must trade above that price for the NEOs to realize value from these awards. The payout of the 2017—2019 SPS award will be based on the Company’s performance over the three-year period ending December 31, 2019. In determining the annual LTI award, the Committee primarily evaluates individual contributions, but also may consider the other factors described in “Elements of Compensation — Long-Term Incentives.” | | | 3032
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
2015 Performance-Based Compensation Awards
For 2015, the Committee approved the following awardsShareholders Continue to the NEOs to reward the achievement of enterprise goals and to incent ongoing superior performance. The 2015 Management Incentive Plan performance measures and targets were determined in 2015 and awards were paid in 2016 based on 2015 performance. The 2013–2015 Strategic Performance Shares were paid out in 2016 based on 2013–2015 performance. The 2015 Long-Term Incentive was granted in 2015 based on the factors discussed on page 41.
| | | | | Management Incentive Plan (MIP)
| Measure
| | Result
| | Award
| Adjusted income from operations*
| | 5.9% growth was within target range
| | Individual payouts ranged
from 70% to 135% of each
NEO’s target. | Revenue
| | 9.0% growth was within target range
| | Operating expense ratio improvement
| | 0.1% growth was within target range
| | Net promoter score
| | 2015 NPS score decreased from 2014
| | 2013–2015 Strategic Performance Shares (SPS) ($ in millions)
| Measure
| | Result
| | Award
| Relative TSR
| | 90th percentile (200% of target)
| | 2013–2015 SPSs were paid out at 155.5% of target. | Adjusted income from operations*
| | $6,612 (113.3% of target)
| | Revenue
| | $103,296 (108.6% of target)
| | Long-Term Incentive (LTI)
| Description | | Award | In determining awards for the NEOs, the Committee (and, for Mr. Cordani, the Board, upon the recommendation of the Committee) primarily evaluates individual contributions, but also may take into consideration enterprise performance, Long-Term Incentive Plan (LTIP) share utilization, succession planning needs and other factors as circumstances warrant. In addition, the Committee takes into account market data and an individual’s competitive position. | | LTI awards ranged from 85% to 121% of each NEO’s target. The LTI awards were delivered 50% in stock options and 50% in strategic performance shares with a 2015–2017 performance period. |
* Cigna uses adjusted income from operations as the principal financial measure for operating performance because management believes it best reflects the underlying results ofSupport our business operations and permits analysis of trends in underlying revenue, expenses and profitability. Effective January 1, 2015, adjusted income from operations is defined as shareholders’ net income (loss) excluding the following after-tax adjustments: net realized investment results, net amortization of other acquired intangible assets and special items. Prior to 2015, and at the time that the Committee approved the 2013–2015 SPS program, Cigna did not exclude net amortization of other acquired intangible assets in the calculation of adjusted income from operations. For this reason, net amortization of other acquired intangible assets is not excluded from the calculation of adjusted income from operations for the 2013–2015 SPS program. For a reconciliation of adjusted income from operations for the Global Health Care, Global Supplemental Benefits and Group Disability and Life segments to shareholders’ net income for each of the three businesses, see Annex A to this Proxy Statement. As appropriate, adjustments are made for acquisitions, dispositions and the implementation of accounting changes to ensure comparability of actual results and targets.
In addition to these awards, the Committee also made changes to the base salary and 2015 MIP and LTI targets for certain NEOs, as further described on pages 36, 39 and 41, to ensure that target total direct compensation remained competitive.
Annual Shareholder Vote on Executive Compensation and Other Shareholder FeedbackProgram
The Committee and the Board consider the results of the annual shareholder executive compensation say-on-pay“say-on-pay” vote, as well as other compensation-related shareholder votes, in determining the ongoing design and administration of the Company’s executive compensation programs. Shareholders have expressed their overwhelmingstrong support for our executive compensation program, with 93.7%approximately 93% of votes cast at the 20152017 annual meeting in favor of the advisory vote on executive compensation. Also, in 2017, shareholders recommended that Cigna hold an annual advisory vote on executive compensation. In light of and consistent with the vote of Cigna shareholders, the Board determined that Cigna will continue to hold future“say-on-pay” votes on an annual basis until the next required vote on the frequency of shareholder votes for this purpose (which will occur no later than 2023). The Committee also considers feedback on our executive compensation program received as part of our ongoing communications with shareholders. | | | | | | | | | Cigna 2016 Notice of Annual Meeting of Shareholders and Proxy Statement
| | | 31
| |
EXECUTIVE COMPENSATION POLICIES AND PRACTICES Compensation Objectives and Practices Cigna’s executive compensation program is based on the philosophy that executive pay should strongly align with the interests of our shareholders, directly link to Company and individual performance and attract and retain executive talent. By emphasizing performance-based awards over fixed compensation, we strive to motivate superior enterprise results that we believe will result in the creation of meaningful and sustained long-term value for our shareholders.shareholders and exceptional service for our customers. To further our compensation philosophy, the Committee uses the following compensation practices, processes and instruments: A regular and rigorous analysis of relevant market compensation data for each executive officer.officer position. The analysis includes market data for competitors and the broad-based general industry usingbased on companies of similar in size and scope; Annualpay-for-performance assessment of the degree of achievement of the Company’s short-andshort-term and long-term goals and an evaluation of each executive officer’s contribution to the Company’s performance; OurA MIP is designed to motivate executive officers to achieve the Company’s annual performance goals. No MIP awards are made unless the Company achieves apre-defined minimum level of adjusted income from operations;operations for the ongoing businesses;
An equity-based incentive plan (the Cigna Long-Term Incentive Plan or LTIP) focused on long-term shareholder value creation. OurWe grant SPS plan rewardsawards and stock options to executives under the LTIP. SPS awards reward executives for relative TSR performance as compared to our competitors and the achievement of financial goals over a three-year performance period. Through stock options, executives have the potential to realize value as a result of stock price appreciation; and The retention of an independent compensation consultant to assist the Committee in its design and implementation of the Company’s executive compensation programs.programs; and Ongoing monitoring of compensation best practices and investors’ views on compensation and the modification of our compensation programs as appropriate to align with good governance standards. For information on the oversight of the executive compensation program, see Processes“Processes and Procedures for Determining Executive Compensation beginning on page 47. Compensation Governance and Controls
Our governance practices and controls include:
“Double trigger” requirement for change of control benefits.
No tax gross-up of severance pay upon a change of control.
Regular review of executive compensation governance market practices, particularly when considering the adoption of new practices or changes to existing programs or policies.
Robust stock ownership guidelines and share holding requirements for equity awards to align executives’ interests with shareholders.
Prohibition of hedging of Cigna stock by all directors and employees, including the executive officers, and restrictions on pledging of Cigna stock by directors and Section 16 officers.
A disgorgement of awards (clawback) policy beyond the mandates of Sarbanes-Oxley.
Management of LTIP annual share usage (or burn rate) and total dilution by setting an annual share usage limit, which is below the maximum permitted under the plan.
Limited executive officer perquisites.
Ongoing review by the Committee of people development, including assessments of executive officers and key senior management.
CEO and executive officer succession plans overseen by the Board of Directors, with assistance from the Committee.
An annual assessment by the Committee of any potential risks and associated internal controlsCompensation” in our incentive compensation programs and policies.
this CD&A. | | | | | | | 32
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 33 | |
These practices are described in more detail throughout this CD&A. For more information about the Committee’s review of people developmentStrong Compensation Governance and succession planning and its role in risk oversight, see pages 18 to 19 and page 47.Controls
| | | What We Do | | • Strong alignment between pay and performance. • “Double trigger” requirement for change of control benefits. • Regular review of executive compensation governance market practices, particularly when considering the adoption of new practices or changes to existing programs or policies. • Robust stock ownership guidelines and shareholding requirements for equity awards to align executives’ interests with shareholders. • A disgorgement of awards (clawback) policy beyond the mandates of Sarbanes-Oxley. • Management of LTIP annual share usage (or burn rate) and total dilution by setting an annual share usage limit, which is below the maximum permitted under the plan. • Oversight of people development policies and processes, including consideration of assessments of executive officers and key senior management. • CEO and executive officer succession plans overseen by the Board of Directors, with assistance from the Committee. • An annual assessment by the Committee of any potential risks and associated internal controls in our incentive compensation programs and policies. • Minimum acceptable level of financial performance required in order for any payments under the MIP to be made. • Approximately 90% of our CEO’s target total direct compensation is performance based. |
| | | What We Don’t Do | | • No taxgross-up of severance pay upon a change of control. • No excessive perquisites. • No hedging of Cigna stock by any directors, executive officers or employees, and no pledging of Cigna stock by directors or Section 16 officers unless approved in limited circumstances. • No discounting, reloading or repricing of stock options without shareholder approval. • No payment of dividends on unvested shares. |
Compensation Data The Committee establishes target compensation levels based on a variety of factors, including a rigorous analysis of relevant published information regarding the pay practicesmarket compensation data of the Company’s compensation peer group and a general industry peer group. 20152017 Peer Groups
Compensation Peer Group. In 2014, the The Committee requestedperiodically requests that its independent compensation consultant conduct a review of the currentcomposition of the Company’s compensation peer group and offer suggested modifications for benchmarking future executive pay decisions. The Committee’s consultant utilizedutilizes multiple sources to develop and recommend potential peer companies for the Committee to consider. Sources includedfor possible peers include companies screened by industry and business focus, peer groups developed by proxy advisory firms, peers identified in various analyst reports, and peers of companies in Cigna’s 2014compensation peer group. As a result of this review, the Committee added Prudential Financial, Inc. to its peer group and adopted the following as its compensation peer group, effective beginning in 2015. | | | 34 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
The table below lists the companies included in the 2017 compensation peer group. | | | | 2017 Compensation Peer Group | ACE Limited
| | Aetna, Inc. | Aflac Incorporated
| Anthem, Inc.
| The Hartford Financial Services Group, Inc. | | | Aflac Incorporated | | Humana, Inc. Health Net,
| | | American International Group, Inc. | | Manulife Financial Corporation | | | Humana,Anthem, Inc.
| Manulife Financial Corporation
| MetLife, Inc. | | | Centene Corp. MetLife,
| | Prudential Financial, Inc. | | | Chubb Limited Prudential Financial, Inc.
| | Unum Group | Unum Group
| | |
A broader cut of survey data, representingsize-adjusted health and life insurance companies, was used to benchmark Mr. Sadler’s compensation because peer group data were insufficient or unavailable for his specific role. A list of the companies used to determine Mr. Sadler’s 2017 target total direct compensation and target total pay mix is included on Annex B. General Industry Peer Group.The Committee also recognizedrecognizes that Cigna often competes for talent from companies beyond that of its compensation peer group. As an additional reference to provide a broader perspective on market practices, particularly for those executive officers with job functions that could apply to a variety of industries, the Committee developedutilizes a general industry peer group, effective beginninggroup. For 2017, the Committee, with the assistance of its independent compensation consultant, reviewed the companies included in 2015. Theits general industry peer group was developed by screening publicly traded, U.S.-based companies within relevantcertain industry classifications.classifications, including insurance, banking and financial services, healthcare equipment and services, pharmaceutical, biotechnology and life sciences, household and personal products, software services and telecommunications. The list was then narrowed to companies whose revenues were within the range of 0.4 to 2.5 times that of Cigna and whose market capitalization was within the range of 0.20.25 to 104 times that of Cigna. The screening process resulted in a group of 4335 companies, that the Committee approved as a general industry peer group. A list of the general industry peer companies is includedwhich are listed on Annex B.C. SPS Performance Peer Group. Before 2015, Cigna’s compensation peer group was used to track relative TSR for our long-term incentive program. In consultation with its compensation consultant, the Committee also created a performance peer group to be used exclusively to track relative TSR within the SPS program, effective beginning with the 2015–2015—2017 performance period. The Committee recognized that certain of our competitors were not included in the 2015 compensation peer group due to their relative size. While size is a relevant factor in determining a compensation peer group, it is less relevant when measuring relative performance. Other companies were included in the 2015 compensation peer group because Cigna competes with them for talent; however, because of significant differences in business focus, these companies do not make optimal comparators for performance purposes. For these reasons, the Committee created an SPS performance peer group comprising the same companies in its 2015 compensation peer group, but adding UnitedHealth Group Incorporated and removing ACEChubb Limited and Prudential Financial, Inc. Beginning with the 2017—2019 performance period, the Committee added Centene, Inc. to the SPS performance peer group. Updates to Peer Groups for 2018.The Committee removed MetLife, Inc. from the SPS performance peer group beginning in 2018. The Committee determined that, due to a major divestiture and changes in the business focus at MetLife, Inc., it was no longer an optimal comparator for performance purposes given industry differences and differences in business models. In order to keep the SPS performance peer group robust, the Committee added Prudential Financial Inc., which has overlap with the Company’s businesses and is of similar scope and complexity. The Committee did not make changes to the compensation peer group or general industry peer group for 2018. Tally Sheets The Committee reviews tally sheets for all of its executive officers first when targets are being reviewed in December and again beforeas part of its annual compensation award decisions are made in February.determination process. The tally sheets summarize historical actual compensation and current target compensation.compensation for each officer. The Committee believes that tally sheets are a useful reference tool when considering whether compensation decisions reflect Cigna’s compensation philosophy and performance, but are not a determining factor when making executive compensation decisions. | | | | | | | | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 35 | |
Target Total Direct Compensation and Target Pay Mix Emphasizes Performance-Based Compensation The Committee’s decisions regarding target total direct compensation and target pay mix are consistent with its principles that (1) performance-based compensation should be emphasized over fixed compensation; and (2) long-term incentives should be more heavily weighted than annual incentives. Actual compensation, however, is driven by Company performance. Target total direct compensation consists of base salary, the annual incentive target and the long-term incentive target. On an annual basis, theThe Committee approves each of these amounts for each NEO and seekson an annual basis, seeking to target an executive officer’s total direct compensation in a “competitive range” of within plus or minus 15% of the 50th percentile of the relevant market data for the compensation peer group and the general industry peer group. When setting total target direct compensation, the Committee evaluates survey data.data and other public information, such as proxy data, available for both peer groups. | | | | | | | | | Cigna 2016 Notice of Annual Meeting of Shareholders and Proxy Statement
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While the Committee targets total direct compensation in the competitive range, there may be variation in the target pay mix such that target amounts for individual compensation elements may be above or below the competitive range for the individual element. Target total direct compensation for a NEO also may vary outside of the competitive range of the 50th percentile of the survey data for the compensation peer group or general industry peer group due to factors such as performance, tenure in role, range of data available and market and economic conditions. In general, compensation levels for an executive officer who is newer to a position tend to be at the lower end of the competitive range, while seasoned executive officers with strong performance are typically positioned at the higher end of the competitive range. Internal pay comparisons among the NEOs are not generally considered by the Committee for purposes of the Committee’s determination ofdetermining target pay mix and target total direct compensation.
The table below presents each primary element of compensation for the NEOs subject to annual review by the Committee and the position of For 2017, target total direct compensation relative to Cigna’sof our NEOs as a group resulted in a target compensation opportunity in the aggregate of within 15% of the 50th percentile of both our compensation peer group and our general industry peer groups. Target total direct compensation reflects the sum of annual base salary and the 2015 targets for the MIP and LTI programs.group.
| | | | | | | | | | | | | NEO | | 2015
ANNUAL
BASE
SALARY
($) | | 2015 MIP
TARGET
($) | | 2015 LTI
TARGET ($) | | TARGET TOTAL DIRECT
COMPENSATION
($) | | TARGET TOTAL DIRECT COMPENSATION POSITION TO COMPENSATION PEER GROUP(1) | | TARGET TOTAL DIRECT COMPENSATION POSITION TO GENERAL INDUSTRY
PEER GROUP(2) | David M. Cordani | | 1,200,000 | | 2,200,000 | | 9,600,000 | | 13,000,000 | | Within competitive range | | Within competitive range | Thomas A. McCarthy | | 740,000 | | 800,000 | | 2,400,000 | | 3,940,000 | | Within competitive range | | Below competitive range | Herbert A. Fritch(3) | | 1,000,000 | | 1,000,000 | | 2,000,000 | | 4,000,000 | | Above competitive range | | Above competitive range | Nicole S. Jones | | 581,138 | | 560,000 | | 1,424,500 | | 2,565,638 | | Within competitive range | | Within competitive range | Matthew G. Manders | | 750,000 | | 900,000 | | 2,200,000 | | 3,850,000 | | Within competitive range | | Within competitive range |
| (1) | Based on survey data available in December 2014 for the compensation peer group. |
| (2) | Based on survey data available in December 2014 for the general industry peer group. |
| (3) | Mr. Fritch’s target total direct compensation is driven by his former role as Chief Executive Officer of HealthSpring before Cigna acquired HealthSpring in January 2012. |
As illustrated in the charts below, performance-based compensation represents approximately 91%90% of Mr. Cordani’s target total direct compensation, including 74%70% in long-term incentives and 17%20% in annual incentives. On average, performance-based compensation represents 79% of target total direct compensation for the other NEOs, including an average of 56%57% in long-term incentives and 23%22% in annual incentives. These percentages are targets only and will not match the percentages calculable from the actual compensation amountspaid reflected in the Summary Compensation Table on page 51.Table. | | | | | CEO TARGET PAY MIX | | | | OTHER NEO AVERAGE TARGET PAY MIX |
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ELEMENTS OF COMPENSATION Cigna’s 20152017 executive compensation program consists of the following elements: | | | | | | | ELEMENT | | DESCRIPTIONPURPOSE | | COMMITTEE ACTIONS FOR 2015
| Base salary | | Fixed portion of total direct compensation, set with reference to competitive market data and designed to attract and retain key talent. | | Increased 2015 base salaries for certain NEOs to better align the base salaries with median market data, to reward individual performance and/or to reflect changes in role or responsibilities. See also page 36.
| | | | | | Management Incentive Plan (MIP) | | Performance-based cash compensation designed to reward the achievement of annual enterprise results relative topre-established goals, as well as individual performance, accomplishments and contributions. | | | Increased MIP targets for certain NEOs to ensure that target total direct compensation remained within a competitive range of the market median. See also page 39.
| | | | Long-Term
Incentives (LTI) | | Stock Options | | Performance-based compensation, the potential realized value of which is determined by stock price appreciation from the date of grant through the date of exercise. | | | Increased LTI targets for certain NEOs to ensure that target total direct compensation remained within a competitive range of the market median. See also page 41.
| | Strategic Performance Shares | | Performance-based compensation, the payout of which is based upon the achievement ofpre-determined enterprise goals and the Company’s relative TSR over a three-year performance period. | | | | | | Retirement and Deferred Compensation | | Fixed
Savings-based component of compensation that is aligned to competitive market practice includingand includes 401(k) plans and a voluntarynon-qualified deferred compensation program that does not have any Company contributions. U.S.-based NEOs hired before July 1, 2009 have accrued benefits from defined benefit pension plans that were frozen on July 1, 2009. | | | No changes in 2015.
| | | | Limited Perquisites and Other Benefits | | Limited perquisites that are designed to attract and retain key talent andor to provide for the safety and security of executive officers. | | | No changes in 2015.
| | | |
Actions Impacting 2017 Compensation Promotions. In connection with Mr. Palmer’s promotion to Executive Vice President, Chief Financial Officer in June 2017, the Committee reviewed and approved his base salary, 2017 MIP target and LTI target. In addition, Mr. Palmer was awarded transitional SPSs for the 2017-2019 performance period, as further described on page 44. In connection with Mr. Hocevar’s promotion to President, Strategy, Segments and Solutions in February 2017, the Committee reviewed and approved his base salary, 2017 MIP target and LTI target. The Committee approved the base salaries, 2017 MIP targets and LTI targets for Mr. Palmer and Mr. Hocevar following a review of the market data for both the compensation peer group and the general industry peer group. The base salaries, 2017 MIP targets and LTI targets for Mr. Palmer and Mr. Hocevar are reflected in the tables on pages 38, 41 and 44, respectively. Market-Based Adjustments. Due to the operating covenants in the merger agreement with Anthem that restricted adjustments to executive officer compensation, the Committee and, with respect to Mr. Cordani, the Board, had not approved increases to MIP targets since December 2014 or base salaries since March 2015 for most executive officers. In July 2017, following termination of the merger agreement, the Committee and, with respect to Mr. Cordani, the Board reviewed and approved adjustments to the base salary and 2017 MIP targets for Mr. Cordani, Ms. Jones and Mr. Sadler. The Committee believed that these adjustments were necessary to maintain the competitive positioning of target total direct compensation. The base salary increases were effective July 31, 2017 and are reflected in the table on page 38. The 2017 MIP targets are reflected in the table on page 41. Base Salary | | | | | | | | | | | | | | | | | | | | Base salary
represents only 10%
of CEO target pay
and an average of 21% for
all other NEOs, with the
balance of target
compensation being
performance-based. | | | | | | | | | | | | | | | | | | | |
Base salary representsis the only fixed portion of ana NEO’s total target direct compensation and, consistent with the Committee’s philosophy that executive pay should strongly align with the interests of our shareholders, represents a small portion of total target direct compensation. Base salary levels are set with reference to both competitive market data and individual performance. Base salaries are reviewed annually and may be adjusted as a result of updated market datainformation and an assessment of an executive’s role and performance contributions, including the executive’s demonstration of Cigna’s core values and the achievement of the expectations associated with his or her role. The overall salary budget also is a factor in determining the extent of base salary adjustments. | | | | | | | | | | | | | | | | | | | | Base salary
represents only 9%
of CEO target pay
and an average of 21% for
all other NEOs, with the
balance of target
compensation being
performance-based
compensation.
| | | | | | | | | | | | | | | | | | | |
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with his or her role. As further described above, the Committee, and with respect to Mr. Cordani, the Board, approved changes to Mr. Cordani’s, Ms. Jones’ and Mr. Sadler’s base salary to maintain the competitive positioning of their target total direct compensation. The average base salary increase for these NEOs was 12%. Base salaries for these executive officers had not been increased since March 2015 due to the operating covenants in the merger agreement with Anthem that restricted adjustments to executive officer compensation. The table below shows base salaries for each of the NEOs. In March 2015, as part ofThe base salaries for Mr. Cordani, Ms. Jones and Mr. Sadler reflect the annual review process,increases approved in July 2017. The base salaries for Mr. Palmer and Mr. Hocevar reflect the base salaries of Messrs. Cordani, McCarthy and Manders and Ms. Jones were increased by an average of 7.8%. These increases were drivensalary levels approved in part by the survey data available in December 2014 as well as by individual performance assessments. Base salaries listed below may differ from the values reported in the Summary Compensation Table on page 51, due to the timing of changes to the NEOs’ base salaries.connection with their promotions. | | | NEO | | 2015 Annual Base Salary2017 ANNUAL
BASE SALARY ($)
| David M. Cordani | | 1,400,000 | Eric P. Palmer | | 1,200,000
675,000 | Christopher J. Hocevar | | 550,000 | Nicole S. Jones | | 630,000 | Jason D. Sadler | | 648,837 | Thomas A. McCarthy | | 740,000 | Herbert A. Fritch(1)
| | 1,000,000
| Nicole S. Jones
| | 581,138
| Matthew G. Manders | | 750,000 |
| (1) | Mr. Fritch’s 2015 base salary is driven by his base salary in his former role as Chief Executive Officer of HealthSpring before Cigna acquired HealthSpring in January 2012. |
Annual Incentives | | | | | | | | | | | | | | | | | | | | | | Because profitability is critical to the long-term success of the business, no annual incentive award payments payments are made to executive officers unless the Company achieves a pre- definedpre-defined minimum level of
of adjusted income from operations. | | | | | | | | | | | | | | | | | | | | | | | |
Management Incentive Plan (MIP) Overview Annual incentives are paid primarily under the MIP. The MIP is designed to reward executives for the achievement of short-term, or annual, performance goals. On an annual basis, the Committee approves: Enterprise performance measures and goals, which are designed to align with, and drive execution of, the Company’s business strategy; Aggregate funding levels for actual MIP awards;
Individual targets for the NEOs, except for Mr. Cordani’s target, which is approved by the Board upon the recommendation of the Committee; Aggregate funding levels for actual MIP awards; and Actual MIP awards for the NEOs, except for Mr. Cordani’s award, which is approved by the Board upon the recommendation of the Committee. Subject to certain limits described below, the actual annual incentive can range from 0% to 200% of the individual’s target, allowing the Committee to differentiate awards based on an individual’s contributions toand how those contributions impacted the attainment of enterprise goals. Contribution reflects the way an executive officer impacts and adds value to the enterprise. This includes factors such as the extent to which an executive delivers results that provide improved financial results,performance, customer service or employee engagement and an executive’s level of innovation and thoughtful risk-taking. At times, the Committee may also use this flexibility to aid in the retention of select key talent. For 2015,2017, MIP awards ranged from 70%130% to 135%155% of target for the NEOs serving as executive officers at the end of 2017, based on Company results and individual contributions. MIP Performance Measures and Goals Each year, the Committee sets enterprise performance measures, weightings and goals for annual incentive awards based on Cigna’s business priorities.priorities and annual operating plan. The operating plan aligns with our strategy, long-term commitment to shareholders and expected performance in the industry. The Committee works with its independent compensation consultant to evaluate the appropriateness of these measures and weightings and the degree of challenge in the MIP performance goals. The measures are designed to align with and drive execution of the Company’s business strategy. For 2015,2017, performance measures included adjusted income from operations, revenue, operating expense ratio improvement and net promoter score (NPS).strategic priorities. More detailed information on these measures is included in the table2017 Performance Goals, Measures and Actual Results table. In past years, we have included net promoter score (NPS) as a performance measure in the MIP. In 2017, we replaced the former NPS measure with a “strategic priorities” measure to emphasize the importance of incentivizing and recognizing progress in certain areas beyond financial results that support our business strategy. The strategic priorities measure, weighted 20% of the overall MIP value, measures the Company’s progress in three key strategic categories: (1) customer, client and reputational focus (which includes NPS); (2) employee engagement; and (3) enterprise focus on page 38.compliance. The operating expense improvement ratio measure is now weighted 10%. The weightings for the adjusted income from operations and revenue measures, 50% and 20%, respectively, remain unchanged. For each MIP goal other than NPS,strategic priorities, the Committee specifies certain below target, target and | | | 38 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
above target levels of performance. For NPS,the strategic priorities measure, the Committee considers whether our score remainedevaluates the same, improved or decreased overCompany’s progress among the three key strategic categories against the Company’s performance in the prior year’s score.year. To aid the Committee in setting the financial performance targets, and to assess the reasonableness and rigor of those targets, the Committee’s compensation consultant annually presents a comprehensive report to the Committee that evaluates Cigna’s historical relationship between pay and performance in comparison with Cigna’s compensation peer group. The compensation consultant also reviews performance goals determined by the Committee in the context of historical performance and analyst expectations of future performance for Cigna and Cigna’s compensationSPS performance peer group. | | | 36
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Executive Officer MIP Funding and Award Determination Process The key considerations to funding the MIP and determining individual award amounts are discussed below.
STEP 1 Achieve Earnings Minimum.Minimum The Committee believes that achieving Cigna’s profitability goals is critically important to the long-term success of the business. In recognition of itsthis importance, a minimum acceptable level of financial performance relative to Cigna’s corporate objectives for the year must be achieved in order for the Committee to fund the MIP. If the Company does not meetestablishes a pre-defined minimum level of adjusted income from operations that must be achieved for the year in order for any MIP willaward to be earned. If the Company does not be funded andmeet thatpre-defined minimum level, then no annual incentives will be paid.paid to executive officers.
STEP 2 Company Performance Drives Funding Level.Level If the Company achieves the earnings minimum, the Committee may fund the executive officer MIP pool from 0% to 200% of targetthe aggregate targets based upon the followingwhether each performance ranges:measure is below target, at target, andor above target. The targetfollowing table sets forth the ranges between which the MIP pool may be funded for each performance range formeasure, in each case, assuming the adjusted income from operations, revenue and operating expense improvement goals results in funding at 80% to 120% of target award levels. An NPS score equal to or greater than the prior year’s score results in funding at 100% to 200% of target award levels.earnings minimum has been achieved: | | | | | Measure | | Performance | | Funding Range | Adjusted income from
operations | | Above target range | | Above 120% to 200% | Revenue | | Within target range | | 80% to 120% | Operating expense ratio
improvement | | Below target range | | Less than 80% | Strategic Priorities | | The Committee evaluates progress in the three key strategic
categories year over year. | | | | | |
The Company’s actual performance isrelative to each measure determines which funding range applies for purposes of that measure. However, the basis for establishing the range of funding available for awards. The Committee maintains the discretion to determine at which point within the limits of the pre-establishedthat range the actual funding of the MIP pool will be set. In setting the actual funding percentage for each measure, the Committee considers Cigna’s performance as a whole (both in absolute terms and relative to competitors), as well as Cigna’s achievement of the goals within eachthe performance measure. The MIP funding mechanisms ensure that a minimum level of performance is achieved and that NEOs are rewarded for strong Company performance. The Committee retains the flexibility to make incentiveNEOs’ MIP awards if target MIP goals are not achieved (provided that the earnings minimum has been met) to aid in the retention of select key talent over the long-term and the encouragement of management to make decisions that could yield lesser results in the short-term, but are in the best interests ofreflect the Company’s shareholders over the long-term.performance.
STEP 3 Award Amounts Based on Individual Contributions to Company Performance.Performance Once MIP funding has been determined, the Committee (and for Mr. Cordani, the Board of Directors upon the recommendation of the Committee) assesses each named executive officer’s individual contributions and how such contributions impacted the achievement of the MIP goals to determine the actual award amounts for each NEO. Actual awards can range from 0% to 200% of a NEO’s MIP target, allowing the Committee to differentiate payouts based on each individual’s contributions. | | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 3739
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20152017 Performance Goals, Measures and Actual Results
Each year, theThe Committee considers the appropriate measures for the MIP program for the upcoming year at its October and December meetings, and then considers and approves the actual performance targets at its meetings in January and February. For 2015,2017, the Committee established the performance measures, weightings and target performance goals below, which were used to determine the range of potential aggregate funding for MIP awards.
| | | | | | | | | MEASURE
| | RATIONALEMEASURE
| | WEIGHTINGALIGNMENT WITH
BUSINESS STRATEGY
| | WEIGHTING | | TARGET
PERFORMANCE GOALS | | ACTUAL RESULT | | | | | | Adjusted income from operations* | | Reinforces the importance
of profitable growth
across the enterprise. | | 50% | | 10.5% to 19.5%
growth | | 50%
24.5% growth was above target range | | (2.5)% to 7% growth
| | 5.9% growth was within
target range
| The target was set as a year-over-year growth goal for Cigna’s Global Health Care, Global Supplemental Benefits and Group Disability and Life segments. | | | | | | | | | | | | | | | Revenue | | Focuses on enterprise growth, encourages business decisions that optimize results for the enterprise, promotes cross-selling efforts and collaboration across business units, and drives customer focus.
| | 20%Focuses on enterprise
growth, encourages
business decisions that
optimize results for the
enterprise, promotes
collaboration across
business units and drives
customer focus. | | 6%20% | | 0.0% to 13% 6.0%
growth | | 9.0%4.9% growth was within
target range | | The target was set as a year-over-year growth goal for Cigna’s Global Health Care, Global Supplemental Benefits and Group Disability and Life segments. | | | | | | Operating expense ratio improvement | | Drives continued focus on
delivering ongoing
expense efficiency while
furthering investment
capacity for ongoing
innovation. | | 10% | | 1.0% to 5.5%
improvement | | 20% | | (1)% to 2.9%
improvement | | 0.1%2.3% improvement was
within target range | | The target was set as a composite objective, which measures operating expense improvement in Cigna’s Global Health Care, Global Supplemental Benefits and Group Disability and Life segments versus 2014.2016. Operating expenses are expressed as a percent of revenue for each segment. As further described below, this target considers the impact of the health insurance industry tax. | Net promoter score (NPS)
| | | | | | | | | | | | | | Reinforces our focus on customer retention and loyalty by measuring customer perception on matters such as our reputation, brand, product, service, pricing and providers, all of which we believe are critical to Cigna’s success.Strategic Priorities
| | 10%Emphasizes the
importance of recognizing
progress in areas beyond
financial results and of
aligning our goals,
contributions and rewards
with our business
strategy. | | Improve or maintain
2014 NPS score20% | | 2015The Committee evaluates
progress in each category
compared to 2016. | | Above target performance reflects: • Strong progress in community health and client retention • A higher NPS score decreased from 2014relative to 2016 • Strong employee engagement results • Advancement of enterprise compliance initiatives | | This is a measure of customer loyalty based on the results of externally conducted customer surveys. The target was set as a composite objective, measuring the year-over-year change in the NPS against 2014 results. NPS results from each of Cigna’s segments are weighted based on the Company’s 2015 operating plancategories for the segment’s premiumsstrategic priorities measure for 2017 include (1) customer, client and fees to establish both the NPS baselinereputational focus; (2) employee engagement; and final result for 2015.(3) enterprise focus on compliance.
|
| | * | Cigna uses adjusted income from operations as the principal financial measure for operating performance because management believes it best reflectspresents the underlying results of our business operations and permits analysis of trends in underlying revenue, expenses and profitability. For a reconciliation of adjusted income from operations for the Global Health Care, Global Supplemental Benefits and Group Disability and Life segments to shareholders’ net income for each of the three businesses, see Annex A to this Proxy Statement. As appropriate, adjustments are made for acquisitions, dispositions and the implementation of accounting changes to ensure comparability of actual results and targets. |
In setting the target performance goals for each measure in February 2015,2017, the Committee considered Cigna’s publicly disclosed earnings estimates, historical Company and compensationSPS performance peer company performance,results, analyst commentary and the Company’s then-current expectations for the industry and economic environment. The Committee considered | | | 40 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
various market forces impacting the Company and related uncertainty,uncertainties, including the expectation that the industry would continue to face significant market changes and disruption in 2015. Factors contributing2017 and initial reactions to thisthe 2016 U.S. election, as well as uncertainty included continued rate pressure forregarding the Medicare Advantage market, the incremental step up in the health insurance industry tax, and continued uncertainty in enrollment and margins associatedproposed merger with the individual business on the public exchanges.Anthem. The Committee believed that the target performance goals represented competitively attractive goals that would be challenging to achieve in light of the circumstances facing the Company in 2015. 2017. | | | 38
| | Cigna2016 Notice of Annual Meeting of Shareholders and Proxy Statement
|
20152017 Individual MIP Targets and Awards
MIP target levels for the 20152017 performance year for the NEOs are set forth in the table below. In December 2014, after updating the compensation peer group and adopting the general industry peer group,As further described on page 37, the Committee, increased 2015and with respect to Mr. Cordani, the Board, approved changes to Mr. Cordani’s, Ms. Jones’ and Mr. Sadler’s 2017 MIP targets to maintain the competitive positioning of their target total direct compensation. The average MIP target increase was 26%. MIP targets for certain NEOs.these executive officers had not been increased since December 2014 due to the operating covenants in the merger agreement with Anthem that restricted adjustments to executive officer compensation. The Committee increased2017 MIP targets in the 2015table below reflect the approved increases. The 2017 MIP targets for Mr. Cordani, Mr. McCarthy, Ms. JonesPalmer and Mr. Manders by $400,000, $200,000, $124,250 and $150,000, respectively. The Committee believed these changes were necessary to ensure that target total direct compensation remained within a competitive range ofHocevar reflect the market median.targets approved in connection with their promotions. In determining actual MIP awards, the Committee (and for Mr. Cordani, the Board of Directors upon the recommendation of the Committee) takes an integrated approach, assessing enterprise results together with each named executive officer’s individual contributions during 2015. For2017. Payouts under the 20152017 Management Incentive Plan rewarded our NEOs for our strong performance year, the Committee and the Board made annual incentive awards to the NEOs ranging from 70% to 135% of the target award value, as reflected in the following table.2017, reflectingpay-for-performance alignment. | | | | | | | | | | | | | NEO | | 2015 MIP TARGET ($) | | | MIP MAXIMUM AWARD ($) | | | ACTUAL MIP PAYOUT ($) | | | PAYOUT AS A PERCENT OF TARGET (%) | | | 2017 MIP TARGET ($) | | | ACTUAL MIP PAYOUT ($) | | | PAYOUT
AS A PERCENT OF TARGET (%) | | | | | David M. Cordani | | | 2,200,000 | | | | 4,400,000 | | | | 2,860,000 | | | | 130 | | | | 2,800,000 | | | | 4,000,000 | | | | 143 | | Thomas A. McCarthy | | | 800,000 | | | | 1,600,000 | | | | 1,000,000 | | | | 125 | | | Herbert A. Fritch(1) | | | 1,000,000 | | | | 2,000,000 | | | | 700,000 | | | | 70 | | | | | | Eric P. Palmer | | | | 750,000 | | | | 975,000 | | | | 130 | | | | | Christopher J. Hocevar | | | | 500,000 | | | | 775,000 | | | | 155 | | | | | Nicole S. Jones | | | 560,000 | | | | 1,120,000 | | | | 756,000 | | | | 135 | | | | 680,000 | | | | 1,054,000 | | | | 155 | | Matthew G. Manders | | | 900,000 | | | | 1,800,000 | | | | 1,080,000 | | | | 120 | | | | | | Jason D. Sadler | | | | 648,837 | | | | 908,371 | | | | 140 | | | | | Thomas A. McCarthy(1) | | | | 800,000 | | �� | | 400,000 | | | | 50 | | | | | Matthew G. Manders(2) | | | | 900,000 | | | | 900,000 | | | | 100 | |
| | (1) | Mr. Fritch’sMcCarthy’s Agreement and Release provided that he would receive a 2017 MIP payment of $400,000, or 50% of his target, is driven bysubject to the Company’s attainment of 2017 MIP targets. |
| (2) | Mr. Manders’ Agreement and Release provided that he would receive a 2017 MIP payment of $900,000, or 100% of his annual incentive target, in his former role as Chief Executive Officersubject to the Company’s attainment of HealthSpring before Cigna acquired HealthSpring in January 2012.2017 MIP targets. |
Mr. Cordani In early 2016,2018, the Committee, together with the independent Chairman of the Board, assessed the performance of Mr. Cordani.Cordani in the context of the overall Company performance. This assessment included a review of the overallCompany’s financial performance of the Company in 2015 against the established enterprise goals. They also considered2017 as well as Mr. Cordani’s individual contributions. Following this review, the Committee made certain recommendations to the Board relating to Mr. Cordani’s MIP award for 2015.2017. The Board considered these recommendations as part of its own independent review of Mr. Cordani’s performance. Under Mr. Cordani’s leadership, Cigna achieved its sixth consecutive year of competitively attractive results. More specifically, the Board considered the following factors: Enterprise Performance. Cigna’s 2017 results included strong performance across each of our priority growth platforms – Commercial Employer, U.S. Seniors, Global Supplemental Benefits, and Group Disability and Life, providing Cigna with momentum for continued growth in 2018. Specifically, 2017 enterprise performance included: strong leadershipConsolidated revenue of the organization throughout a year marked by significant complexity and change for Cigna as well as disruption and volatility in the industry;$41.6 billion, an increase of 5% over 2016;
| • | | the continued advancement of the Company’sGo Deep, Go Global, Go Individual strategy, highlighted by: |
| ¡ | | significant progress in Cigna’s evaluation of potential strategic alternatives, with the ultimate determination to enter into a combination with Anthem; |
| ¡ | | the launch of the Company’s localization strategy, which brings together leaders from across the U.S.-businesses with the objective of leveraging Cigna’s assets to win at the local level; |
| ¡ | | continued expansion of Cigna’s differentiated approach to partnerships with providers, including through the successful implementation and execution of two delivery system alliances and cultivation of additional opportunities for collaborative arrangements; and |
| ¡ | | continued momentum in targeted geographies in international markets, including revenue growth in China and customer growth in Turkey and Thailand; |
Consolidated adjusted income from operations of $2.7 billion, compared to $2.1 billion in 2016, reflecting increased earnings contributions from each of our business segments; Global medical customer growth of 700,000 customers during the year, totaling 15.9 million customers at year end, driven by strong enterprise performance, including:growth across our Commercial market segments; and | ¡ | | consolidated adjusted income from operations of $2.3 billion, compared with $2.1 billion in 2014; |
| ¡ | | consolidated revenue of $37.9 billion, representing 8% growth over 2014; |
| ¡ | | one-year TSR of 42.2%; and |
| | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 3941
| |
| ¡ | | medical customer base growth of 4% over year-end 2014 for a total of approximately 15 million customers; |
the successful negotiation of and entry into the definitive merger agreement with Anthem in July 2015, which will bring together complementary strengths of the two companies and further accelerate Cigna’s strategy to improve quality, choice and affordability in the marketplace;
An industry leading medical cost trend, reflecting benefits from increased alignment for our customers and clients, deeper collaborative relationships with providers and differentiated specialty integration models. Strategy Execution. During 2017, following termination of the audit bymerger with Anthem, Mr. Cordani led the Centers for Medicareevolution of Cigna’sGo strategy toGo Deeper, Go Local and Medicaid ServicesGo Beyond and effectively communicated this evolved strategy to investors, clients, customers and partners. Highlights of the execution of the Company’sGostrategy, include: Strategic investments through the acquisitions of Zurich Middle East, which enabled Cigna to provide more personalized products to individuals, employers and government entities in 2015 which resultedthe Middle East, and Brighter, an innovative technology company working with leading health service and dental organizations to engage patients and providers in sanctions being imposedpersonalized and seamlessly integrated experiences to more efficiently deliver higher-value healthcare; The increase in January 2016;number of members using Cigna One Guide, a personalized multi-modal service experience that supports consumers consultatively at the point they choose a plan, find care and other “moments that matter,” to more than two million Cigna customers; and effective representationTargeted initiatives and increased investments that benefit our customers and communities and further promote Cigna’s mission and global brand, including the TV Doctors of America campaign for preventive care, the creation of the Health Improvement Tours featuring health screening, opioid reduction initiatives and veterans support.
Enterprise Leadership. The Board recognized Mr. Cordani’s leadership during a year of significant change and uncertainty, focusing on talent retention, employee development and engagement initiatives. Despite two key retirements, he ensured a strong leadership team remained in place through a number of internal promotions. Throughout 2017, Cigna continued the implementation and execution of the operating model announced in early 2017, which is designed to ensure the executional focus necessary to deliver greater choice, quality, affordability and personalization to Cigna’s customers and clients. In addition, the results of employee engagement efforts were positive and turnover, particularly among key employees, remained low. Cigna also delivered meaningful results on diversity and inclusion efforts. Regulatory Environment and Compliance. Mr. Cordani represented Cigna and the health care industry in a number of forums globally, including engagement in Washington, D.C. and across the legislative, administrative and policy arenascountry to ensure focus onreinforce the needs of the Company’s customers and clients. Based on these factors, includingand in particular given the Board’s overall evaluation ofCompany’s strong 2017 financial performance, the positive momentum going into 2018 and Mr. Cordani’s performance,continued focus on execution of the Company’s strategy and leading the organization during a challenging year, the Board awarded Mr. Cordani a MIP payout for 20152017 of $2,860,000,$4,000,000, or 130%143% of his 20152017 MIP target. Other NEOs For all other NEOs, Mr. Cordani makes recommendations to the Committee regarding MIP awards based on his evaluation of each NEO’s performance and contributions to enterprise goals. The Committee considers Mr. Cordani’s recommendations when determining MIP awards. While not exhaustive, below are certain key factors the Committee considered when making award determinations. Mr. McCarthy.Under Palmer.Mr. McCarthy’s leadership asPalmer was appointed Executive Vice President and Chief Financial Officer in June 2017. Since that time, he has led the enterprise delivered strong financial results. He continues to lead productive engagementpartnership between the Company’s business teams and their financial counterparts includingand has provided critical guidance and leadership in support of the Company’s development and assessment of reporting and management processes to supportstrategic paths. Through this leadership, Mr. Palmer supported the delivery of strong results in each of our ongoing businesses in 2017. In addition, he successfully executed on Cigna’s localization strategy. Mr. McCarthy was critical in executing the Company’s capital management objectives, including a $1.6 billion debt offering and a tender offer for financial leverage$1 billion of outstanding debt. He also led the reorganization of the finance leadership team to align with and capital deployment andsupport the Company’s investment strategyevolved operating model and initiated a process to deliver investment income. His efforts led to securing Cigna’s most favorable credit agency ratings in over a decade, further strengthening Cigna’s financial flexibility. In addition to his other contributions, Mr. McCarthy also played a key role in Cigna’s evaluation of potential strategic alternativesstreamline and the due diligence and negotiationimprove efficiencies of the merger agreement with Anthem, as well as the integration planningCompany’s core finance and regulatory work related to the potential combination.underwriting disciplines. As a result of Mr. McCarthy’sPalmer’s contributions in 2015,2017, Mr. Cordani recommended, and the Committee approved, a 20152017 MIP payment of $1,000,000,$975,000, or 125%130% of his target. | | | 42 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
Mr. Fritch. Hocevar.Mr. Fritch continuedHocevar was appointed President, Strategy, Segments and Solutions in February 2017. In this role, Mr. Hocevar is responsible for the strategic, growth and profitability plans for the Company’s U.S. Commercial, Pharmacy and Group Insurance businesses. He also oversees the strategic development of product solutions and their market positioning and the enterprise informatics strategy and analytics teams, aligning internal resources to provide leadershipdeliver valuable solutions to our customers. During 2017, Mr. Hocevar led the Cigna-HealthSpring organization throughout 2015. The Cigna-HealthSpringdelivery of strong financial performance and robust customer growth within our U.S. Commercial business team partnered with Global Health Care on the successful implementation ofand made meaningful progress in advancing strategic initiatives, including the Company’s localization, strategy. Net promoter score showed improvement versus 2014personalization and disenrollment was at its lowest rate in several years. While core seniors businesses met or exceeded certain financial targets, Cigna-HealthSpring did not meet its overall earnings targets and results for the Cigna-HealthSpring business were below expectations.affordability strategies. In addition, he was key to the audit by the Centers for Medicaredevelopment and Medicaid Servicesexecution of Cigna’s sovereign strategy in 2015 resulted in sanctions being imposed in January 2016.2017. As a result of Mr. Fritch’sHocevar’s contributions in 2015,2017, Mr. Cordani recommended, and the Committee approved, a 20152017 MIP payment of $700,000,$775,000, or 70%155% of his target. Ms. Jones.As Cigna’s Executive Vice President and General Counsel, Ms. Jones continued to lead theCigna’s legal, compliance and government affairs functionsteams in 2015, further strengthening these areas2017 and the partnership withbetween those teams and the Company’s business leaders. Underbusinesses and other corporate functions. During the past year, Ms. Jones’ guidance, Cigna Legal successfully developed solutions alignedJones continued to enhance and strengthen the Company’s compliance organization and created and led cross-functional teams to identify and mitigate potential compliance risks across the enterprise. With respect to the strategic goals and objectives of the Company.proposed merger with Anthem, Ms. Jones demonstrated her leadership inprovided key strategic negotiations with third-party vendors and in the management of various litigation matters. In addition to her other contributions, Ms. Jones played a key role in Cigna’s evaluation of potential strategic alternatives and the due diligence and negotiation of the merger agreement with Anthem. In addition, she has been key to the integration planning and regulatory worklegal counsel. She also provided legal guidance related to the potential combination.Company’s global business and mergers and acquisitions strategy. As a result of Ms. Jones’ contributions in 2015,2017, Mr. Cordani recommended, and the Committee approved, a 20152017 MIP payment of $756,000,$1,054,000, or 135%155% of her target. Mr. Manders.Despite the breadth, scope and complexity of 2015, including the launch of Cigna’s localization strategy, intense marketplace competition and industry consolidation activity, under Sadler.Mr. Manders’ stewardship, U.S. Commercial Markets and Global Heath Care OperationsSadler continued to produce attractive businessserve as President, International Markets in 2017, delivering strong performance, value and service to clients, customers and partners across all businesses in our international markets, with particularly strong results in the Global Supplemental Benefits business. Mr. Sadler led the continued evolution of our International Markets strategy and make meaningful progress on strategic initiatives. U.S. Commercial Health Care,the reorganization of our International Markets team in support of that strategy.He also led continued growth in the Middle East, furthered by far Cigna’s largest operating segment, exceeded its earnings and revenue targets for 2015. This business also continued its industry leading medical cost trend, as evidenced by its claim accuracy and overall cost containment. Mr. Manders championed Cigna’s localization efforts within the United States in 2015, developing the infrastructure and operational models to support Cigna’s achievementCompany’s acquisition of this strategic objective.Zurich Insurance Middle East. As a result of Mr. Manders’Sadler’s contributions in 2015,2017, Mr. Cordani recommended, and the Committee approved, a 20152017 MIP payment of $1,080,000,$908,371, or 120%140% of his target. | | | | | | | 40
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 43 | |
Long-Term Incentives | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-term incentives are
designed to incent and
reward superior results
through long-term financial
achievementreward sustained financial
success and strategic
accomplishments that
benefit Cigna and its
shareholders over
the long-term. | | | | | | | | | | | | | | | | | | | | |
LTI Overview Long-term incentives are administered under the Cigna Long-Term Incentive Plan and are delivered annually through a mix of strategic performance shares (SPSs) and stock options. SPS award opportunitiesawards have a three-year performance period and are denominated in shares of Cigna common stock. At the end of the three-year performance period, the actual number of shares earned is based on Cigna’s performance againstpre-established enterprise goals. The SPSs earned will range from 0% to 200% of the target SPS award opportunity granted, based on individual performance.opportunity. Cigna’s stock options, whose actual value realized depends upon stock price appreciation at the time that the options are exercised, generally vest (or first become exercisable) in equal installments over three years beginning on the first anniversary of the grant and have aten-year term. 20152017 Individual LTI Targets and Awards
AnA named executive officer’s LTI target is expressed as a dollar value and is determined based on the compensation peer group and the general industry peer group market data for the officer’s role. The Committee sets the target as an absolute dollar value, not as a percentage of salary, with the primary consideration being the comparison to the 50th50th percentile LTI target level of the market data. Andata for both peer groups. For 2017, an executive cancould receive an awarda grant between 0% and 200% of thehis or her individual target value. In determining awards for the NEOs, the Committee (and, for Mr. Cordani, the Board, upon the recommendation of the Committee) primarily evaluates individual contributions, but also may take into consideration enterprise performance, LTIP share utilization, succession planning needs and other factors as circumstances warrant.
In December 2014, after updating the compensation peer group and adopting the general industry peer group, the Committee increased 2015 LTI targets for certain NEOs. The Committee increased the 2015 LTI targets for Mr. Cordani, Mr. McCarthy and Mr. Manders by $600,000, $300,000, and $100,000, respectively. The Committee believed these changes were necessary to ensure that target total direct compensation remained within a competitive range of the market median.
20152017 LTI awards ranged from 85%100% to 121%115% of each NEO’s target.target for the NEOs who served as an executive officer at the time of the 2017 LTI award. These awards were delivered 50% in stock options and 50% in SPS awards withhaving a 2015–20172017-2019 performance period. The Committee believes this mix provides an appropriate balance between emphasizing stock price appreciation and enterprise performance.
The table below provides more detail about the 20152017 LTI target values, grant values and percentages relative to LTI targets. | | | | 2015 LTI TARGET ($) | | | LTI MAXIMUM AWARD ($) | | | ACTUAL LTI GRANT VALUE(1) ($) | | | LTI AWARD AS A PERCENT OF TARGET (%) | | | 2017 LTI TARGET ($) | | | ACTUAL LTI GRANT
VALUE(1) ($) | | | LTI AWARD
AS A PERCENT OF TARGET (%) | | David M. Cordani | | | 9,600,000 | | | | 19,200,000 | | | | 11,600,000 | | | | 121 | | | | 9,600,000 | | | | 11,040,000 | | | | 115 | | Eric P. Palmer(2) | | | | 2,100,000 | | | | 1,266,000 | | | | — | (2) | Christopher J. Hocevar | | | | 1,250,000 | | | | 1,250,000 | | | | 100 | | Nicole S. Jones | | | | 1,424,500 | | | | 1,638,175 | | | | 115 | | Jason D. Sadler | | | | 1,000,000 | | | | 1,150,000 | | | | 115 | | Thomas A. McCarthy | | | 2,400,000 | | | | 4,800,000 | | | | 2,400,000 | | | | 100 | | | | 2,400,000 | | | | 2,400,000 | | | | 100 | | Herbert A. Fritch | | | 2,000,000 | | | | 4,000,000 | | | | 1,700,000 | | | | 85 | | | Nicole S. Jones | | | 1,424,500 | | | | 2,849,000 | | | | 1,638,175 | | | | 115 | | | Matthew G. Manders | | | 2,200,000 | | | | 4,400,000 | | | | 2,200,000 | | | | 100 | | | | 2,600,000 | | | | 2,600,000 | | | | 100 | |
| | (1) | Awarded in February 2015.2017. The LTI Grant Value referenced in the table differs from the sum of the Stock Award and Option Award grant date fair values referenced in the Summary Compensation Table on page 51.Table. This is largely due to the timing and determination of the grant date fair value of SPS awards under ASC Topic 718. Under ASC Topic 718, SPS grant date fair values reflect a probable achievement level of the TSR performance condition as of grant date. The TSR performance condition comprises fifty percent (of the weighting) of the SPS performance measures, anddate; however this probable achievement level is not determined until after the Committee arrives at each NEO’shas determined the dollar amount of the LTI grant value.grant. Thus, an SPS award’s grant date fair value for accounting purposes may be higher or lower than the Committee’sdollar amount of the LTI grant valueapproved by the Committee if the TSR probable achievement level is above or below target, respectively. For more information on the TSR performance condition, please see the “Stock Awards” footnote for the Summary Compensation table on page 51.Table. |
| (2) | Reflects the LTI target approved by the Committee in connection with Mr. Palmer’s promotion to Executive Vice President, Chief Financial Officer in June 2017. The actual LTI grant value includes the LTI award granted to Mr. Palmer in February 2017, prior to his promotion, plus the aggregate value of transitional SPSs that he was awarded for the 2017-2019 performance period in connection |
| | | 44 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
| with his promotion. The objective of the transitional SPS award is to align Mr. Palmer’s 2017-2019 SPS award with his new LTI target. As Mr. Palmer was not an executive officer at the time the 2017 LTI award was granted, we have not included his award as a percent of target. |
Equity awards granted in 20152017 are disclosed in terms of their grant date fair value in columns (e) and (f) of the Summary Compensation Table on page 51 and in the Grants of Plan-Based Awards Table on page 53. | | | | | | | | | Cigna 2016 Notice of Annual Meeting of Shareholders and Proxy Statement
| | | 41
| |
Table. Strategic Performance Shares Program Our SPS program is designed to incent and reward superior results achieved through sustained long-term financial discipline and strategic accomplishments that benefit Cigna and its shareholders over the long-term, but that may not be reflected in annual or short-term results.long-term. Grants At the time of grant, a total LTI dollar award and value is approved for each named executive officer. The SPS portion of the award (50% of the total LTI value) is converted into a specific number of SPSs on the grant date based on Cigna’s stock price on that date. 
Vesting SPSs vest in the first quarter of the year following the end of the three-year performance period.
Payout Determination The Committee determines a performance factor of 0% to 200% based on Company achievement ofpre-established measures during the performance period, and that factor is multiplied by each SPS award to determine the number of shares to be paid in respect of vested awards. | | | Payout Determination
The Committee determines payouts based on Company performance of pre-established measures during the
performance period.
| Measure: Relative TSR, compounded over the three-year performance period Weighting: 50% RationaleAlignment with Business Strategy: Rewards NEOs for stock performance
relative to Cigna’s applicable peer group at the time of the award ComparatorComparator:: Beginning with the 2015–2017 SPS program, the Committee adopted theThe SPS performance peer group is used to measure relative TSR. For the 2013–2015 and 2014–2016 SPS programs, relative TSR is measured against Cigna’s peer group at the time of the award
| | Measure: Adjusted income from operations Weighting: 50% RationaleAlignment with Business Strategy: Reinforces the importance of sustained profitable growth across the enterprise
Segments Included: Global Health Care, Global Supplemental Benefits and Group Disability and Life Threshold Performance: Performance that would result in funding of less than 35% of target yields no payment for this measure |
Final Payout is 0 – 200% of the SPSs Granted SPS awards are ultimately settled in Cigna stock, so the actual value of the earned awards is based on Cigna’s stock price at the time of payment. The SPS programs areprogram is designed to pay at the competitive median for competitive performance results against stretch targets. Each year, when the Committee approves the performance measures and goals for the SPS performance period, the Committee sets the goals with the expectation that performance resulting in a number of shares paid between 80% and 120% of target would be challenging and not certain, while performance resulting in a number of shares paid over 120% of target would be difficult, but not unattainable. SPS awards with a performance period that began prior to 2015 included revenue as a performance measure. For those programs, TSR was weighted 50% and adjusted
income from operations and revenue were each weighted 25%. In 2014, for SPS programs with performance periods beginning in 2015, the Committee adjusted the performance measures to focus on earnings-based and shareholder return-based metrics and exclude revenue, which is consistent with current market practices and trends. The Committee believes that these twothe SPS performance measures are more effective to evaluatein evaluating the Company’s long-term success and value tocreated for shareholders. In addition,
The SPS programs outstanding as of the removalend of revenue as a2017 include the 2015-2017 performance measure inperiod, the SPS program helps to mitigate the use of duplicate measures within Cigna’s short-term and long-term incentive plans.2016- | | | | | | | 42
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 45 | |
The following table shows the2018 performance period for our SPS programs outstanding as of the end of 2015, the potential payment date and the 2017-2019 performance measures.period. If earned, these SPSs will be paid out in 2018, 2019 and 2020, respectively. For each of these programs, the SPS performance peer group, which is used to measure relative TSR, includes Aetna, Inc., Aflac Incorporated, Anthem, Inc., The Hartford Financial Services Group, Inc., Humana, Inc., Manulife Financial Corporation,
MetLife, Inc., UnitedHealth Group Incorporated and Unum Group. Centene Corp. was added to the SPS performance peer group for the 2017-2019 performance period. In the event the number of companies in the peer group falls below ten during the three-year performance period, the Company’s TSR will be ranked against the remaining companies. | | | | | | | | | | | PERFORMANCE
PERIOD
| | GRANT DATE
| | PAYMENT
DATE
(IF EARNED)
| | PERFORMANCE MEASURES
(WEIGHTINGS IN %)
| 2013–2015 | | March 2013 | | 2016 | | Relative TSR(1)
(50%)
| | Adjusted
income from
operations
(25%)
| | Revenue
(25%)
| 2014–2016 | | February 2014 | | 2017 | | Relative TSR(1)
(50%)
| | Adjusted
income from
operations
(25%)
| | Revenue
(25%)
| 2015–2017 | | February 2015 | | 2018 | | Relative TSR(2)
(50%)
| | Adjusted income from operations
(50%)
|
(1) | The peer group used to measure relative TSR is the compensation peer group in place at the time of award and includes: ACE Limited, Aetna, Inc., Aflac Incorporated, Anthem, Inc., The Hartford Financial Services Group, Inc., Health Net Inc., Humana, Inc., Manulife Financial Corporation, MetLife, Inc. and Unum Group. Coventry Health Care, Inc. was removed from the peer group for the 2013-2015 performance period after it was acquired by Aetna, Inc. in 2013. |
(2) | The SPS performance peer group, which includes Aetna, Inc., Aflac Incorporated, Anthem, Inc., The Hartford Financial Services Group, Inc., Health Net, Inc., Humana, Inc., Manulife Financial Corporation, MetLife, Inc., UnitedHealth Group Incorporated and Unum Group, is used to measure relative TSR. |
2013–20152015-2017 SPS Program
The performance goals for the 2013–20152015-2017 SPSs are presented in the table below, along with actual results for the three-year performance period. | | | | | | | | | MEASURE | | WEIGHTING | | | WEIGHTING
| | TARGET PERFORMANCE GOALS (DOLLARS IN MILLIONS) | | ACTUAL RESULT
(DOLLARS IN MILLIONS)
| Relative TSR | | 50% | 50 | % | | 50th50th Percentile
| | 9078th Percentile
(200%183% of target) | | | | | | | | | | Adjusted income
from operations*operations(1)
| | 25% | 50 | % | | Cumulative adjusted income from operations of $6,104$7,220 to $6,714,$7,948, calculated assuming a compound annual growth rate of 5%–10%.3.5%-8.5% | | $6,6127,532 (113.3%97.1% of target) | Revenue
| | 25% | | Cumulative revenue of $96,452 to $106,030, calculated assuming a compound annual growth rate of 6%–11%.
| | $103,296
(108.6% of target)
| | |
| | *(1) | Reflects results for Cigna’s three ongoing business segments — Global Health Care, Global Supplemental Benefits and Group Disability and Life. Cigna uses adjusted income from operations as the principal financial measure for operating performance because management believes it best reflectspresents the underlying results of our business operations and permits analysis of trends in underlying revenue, expenses and profitability. Effective January 1, 2015, adjusted income from operations is defined as shareholders’ net income (loss) excluding the following after-tax adjustments: net realized investment results, net amortization of other acquired intangible assets and special items. Prior to 2015, and at the time that the Committee approved the 2013–2015 SPS program, Cigna did not exclude net amortization of other acquired intangible assets in the calculation of adjusted income from operations. For this reason, net amortization of other acquired intangible assets is not excluded from the calculation of adjusted income from operations for the 2013–2015 SPS program. For a reconciliation of adjusted income from operations for the Global Health Care, Global Supplemental Benefits and Group Disability and Life segments to shareholders’ net income for each of the three businesses, see Annex A to this Proxy Statement. As appropriate, adjustments are made for acquisitions, dispositions and the implementation of accounting changes to ensure comparability of actual results and targets. |
Over the three-year period from 20132015 to 2015,2017, three-year annual compounded TSR was 40%25.5%, which ranked at the 9078th percentile relative to the applicable peer group companies and was 200%183% of target. Based on the results in the table above, onin February 23, 2016,2018, the Committee approved a payout of the 2013–20152015-2017 SPSs at 155.5%139.8% of target. The calculations utilized to determine the payout were reviewed for accuracy by PricewaterhouseCoopers LLP. See the Outstanding Equity Awards table on page 55 for actual share amounts issued to each NEO and associated market values. | | | | | | | | | Cigna 2016 Notice of Annual Meeting of Shareholders and Proxy Statement
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2012–20142014-2016 SPS Program
The shares earned under the 2012–20142014-2016 SPS Programprogram were measured using performance through December 31, 20142016 and were delivered to each executive officer in March 2015.February 2017. The total share value realized by each NEO on the payment date is reflected in the Option Exercises and Stock Vested table on page 57.Table. The performance measures, targets, results and payout for the 2012–20142014-2016 SPS program isare discussed in greater detail in our definitive proxy statement for our 20142017 annual meeting of shareholders, filed with the SEC on March 13, 2015.17, 2017. Other Equity Awards
From time to time, the Committee makes special equity grants to executive officers in the form of restricted stock or restricted stock units (RSUs) to encourage retention of the talent necessary to manage successfully the Company’s businesses or to recognize superior performance. The Committee did not award any special equity grants to executive officers in 2015.
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Retirement and Deferred Compensation 401(k) Retirement Plan and Supplemental 401(k) Plan All U.S. full-time employees are eligible for the tax qualifiedtax-qualified 401(k) Plan, which provides for employee contributions as well as Company matching contributions of up to 4.5% of eligible pay. Certain employees, including the U.S.-based NEOs, are eligible for the Cigna Supplemental 401(k) Plan. The Supplemental 401(k) Plan is anon-qualified deferred compensation plan that provides an annual credit to employees equal to 1.5% of earnings that cannot be treated as eligible earnings under the regular 401(k) Plan due to Internal Revenue Code limits and cannot be the basis for employee or Company matching contributions under the regular 401(k) plan.Plan. Earnings eligible for the credit are salary and bonus amounts that exceed the IRS annual limit on eligible earnings ($265,000270,000 in 2015)2017) or that an employee defers under the Cigna Deferred Compensation Plan. Credits accumulate with hypothetical interest equal to the rate of return under the 401(k) Plan’s Fixed Income Fund (3.65%(3.0% as of January 1, 20152017 and 3.35% as of January 1, 2016)2018). The account will vest under the same rules that apply to the regular 401(k) Plan. The account balance will be paid after termination of employment in accordance with the plan. Nonqualified Deferred Compensation Plan Cigna provides the NEOs and certain other employees with the opportunity to defer base salary and annual | | | 46 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
incentive awards under the Cigna Deferred Compensation Plan. Cigna does not make any contributions to this plan on behalf of employees. This plan provides eligible employees an opportunity to postpone both the receipt of compensation and the income tax on that compensation — typically—typically until after termination of employment with Cigna. Participants elect when to receive payment and can choose either a single lump sum or annual installments. For amounts deferred before 2005, participants can request an accelerated payment of all or part of their account balance subject to a 10% penalty. Otherwise, early withdrawals are permitted only under financial hardship circumstances. Additional information about deferred compensation can be found in the Nonqualified Deferred Compensation Table and narrative on page 60.accompanying narrative. Defined Benefit Pension Plans The Cigna Pension Plan and the Cigna Supplemental Pension Plan were frozen on July 1, 2009. Benefits earned under these plans have been determined based on eligible earnings through July 1, 2009. The freeze did not affect benefits earned before July 1, 2009. The Company’s NEOs hired before July 1, 2009 participated in the Pension Plan and the Supplemental Pension Plan. Additional information about pension benefits can be found in the Pension Benefits Table and accompanying narrative. Retirement Plans forNon-U.S.-based Employees Mr. Sadler participates in the Mandatory Provident Fund program for Hong Kong employees. Local law requires employees to contribute 5% of their monthly salary up to a maximum amount ($1,500 KHD or approximately $200 USD per month). Employers also are required to contribute 5% of the employee’s monthly salary up to the same maximum amount. Employer contributions vest at a rate of 10% per year and are fully vested after 10 years of service. Participants may withdraw their lump sum benefit upon attaining the normal retirement age of 60. As a citizen of the United Kingdom working in Hong Kong, Mr. Sadler also participates in Cigna’s Third Country National Pension Plan. At the end of each calendar quarter, Cigna allocates a hypothetical contribution equivalent to 9% of eligible base and bonus earnings for the period. The hypothetical balance earns interest based on page 58.investment elections. Employees are vested in plan benefits after five years of service. At the time of separation of service from Cigna, Mr. Sadler will receive a lump sum payment of his vested plan benefit. Limited Perquisites and Other Benefits Cigna’s executive compensation program provides limited perquisites to executive officers, offered primarily to attract and retain key talent or provide for an executive officer’s safety and security. Perquisites generally have included an annual allowance under our executive financial services program (as described below), payments for residential security system monitoring and maintenance and relocation benefits when a move is required. Executive officers working outside of the United States also may be provided with benefits that are customary in the country in which they are based. In addition, Mr. Cordani is encouragedexpected to use the corporate aircraft for business and personal travel. This servestravel to increase his time available for business purposes and as a means to better ensure his safety and security. Mr. Cordani is fully responsible for any personal income tax liability associated with his personal use of the corporate aircraft. Cigna’s executive financial services program offers executive officers an annual allowance of up to $6,500 for the costs of financial or estate planning (including associated legal services) and tax return preparation, with the exception of Mr. Cordani who is reimbursed for all such expenses incurred for any year. In 2015, Cigna also reimbursed Mr. Cordani for legal expenses associated with his offer letter with Anthem. The perquisites provided to the NEOs in 2015 and the associated values and valuation methods are described in the notes to the Summary Compensation Table on page 51.
The NEOs also are eligible to receive all of the benefits offered to Cigna employees generally, including medical and other health and welfare benefits as well as voluntary benefits. 2016Actions Impacting 2018 Compensation Actions
TheIn July 2017, following termination of the merger agreement with Anthem, requires us to conduct our business in the ordinary course and limits the Committee’s ability to make material changeswhich restricted adjustments to executive officer compensation, orand in December 2017, as part of the annual review of target total direct compensation, plans, exceptthe Committee reviewed survey data and other public information to evaluate the competitive positioning of the NEOs’ compensation. As a result of these reviews, the Committee, and with respect to Mr. Cordani, the Board, approved the following adjustments:
MIP. The 2018 MIP targets for Mr. Cordani, Mr. Palmer and Mr. Hocevar were increased to $3,000,000, $825,000 and $575,000, respectively. LTI. The Board approved a target range of $9,000,000 to $13,000,000 for future LTI awards for Mr. Cordani, replacing the change described below. These covenants are describedLTI target of $10,000,000 that the Board approved in greater detail in our Joint Proxy Statement,July 2017. Mr. Cordani’s future LTI awards will continue to be based primarily on enterprise performance and his individual contributions, as well as an assessment of then-current market data. The LTI targets for future awards for Mr. Palmer, Ms. Jones, Mr. Hocevar and Mr. Sadler were set at $2,500,000, $1,690,000, $1,600,000 and $1,500,000, respectively. | | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 4547
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filed with the SEC on October 28, 2015. In December 2015, to ensure that his target total direct compensation remained within a competitive range of the market median, the Committee increased Mr. Manders’ 2016 LTI target to $2,600,000.
EMPLOYMENT ARRANGEMENTS AND POST-TERMINATION PAYMENTS Employment Arrangements We typically do not enter into individual employment contracts with our executive officers. Consistent with our approach of rewarding performance, employment is not guaranteed, and either Cigna or the executive officer may terminate the relationship at any time. An executive officer receives an offer letter upon his or her hire or promotion that describes initial compensation terms, such as base salary, anysign-on or other cash bonus or equity awards, any relocation assistance and target opportunities for annual cash incentive orand long-term equity incentive compensation. In connection with the acquisition of HealthSpring, Inc., we entered into a retention agreement with Mr. Fritch (which was subsequently amended in December 2011 and September 2014), pursuant to which he is not permitted to sell 81,001 shares of Cigna stock and shares underlying 273,787 options, which had an aggregate value of approximately $47 million as of December 31, 2015. In addition, the retention agreement provides for accelerated vesting of his restricted stock awards in certain circumstances, as more fully described in the Potential Payments Upon Termination or Change of Control table and related narrative on pages 61 to 65.
Severance Arrangements Other than following a change of control of Cigna, the Committee generally has discretion to determine, on acase-by-case basis, whether to make any post-termination payments to an executive officer. In the past, the Committee has approved varying amounts of severance pay for departing executive officers in exchange for certain obligations, including, for example, a general release of all claims or an extendednon-competition andnon-solicitation period. In approving a severance arrangement, the Committee exercises its business judgment based on individual circumstances, including, but not limited to, the executive officer’s term of employment, past accomplishments, reasons for termination, opportunities for future employment and total unvested annual or long-term incentive compensation. Jason Sadler As an employee based in Hong Kong, Mr. Sadler is entitled to certain protections in the event of his termination that are customary for local employees. Unless he is terminated for cause, to terminate his employment, either Cigna or Mr. Sadler must provide at least three months’ prior written notice of the termination, or payment in lieu thereof. Other Post-Termination Arrangements Under the Cigna Long-Term Incentive Plan, if, absent a change of control, an executive officer’s employment terminates prior to the vesting of a stock option, restricted stock, RSU or SPS award, the award is generally forfeited, subject to specific exceptions for disability, death or retirement (as defined in the plan). Upon an executive officer’s disability, death or retirement, stock options, restricted stock, RSUs and SPS awards may vest, depending on the nature of the award, the termination event, and the terms of the grant agreements. For a full explanation of how equity awards are treated in the event of an executive officer’s disability, death or retirement, please see “Executive Compensation Tables — Potential Payments Upon Termination or Change of Control.” In 2017, in connection with their retirements, the Committee approved the terms of an Agreement and Release for each of Mr. McCarthy and Mr. Manders as well as an Advisory Services Agreement for Mr. McCarthy. These agreements are described in “Potential Payments Upon Termination or Change of Control beginning on page 61.— Terms of Mr. McCarthy’s Retirement Arrangement” and “— Terms of Mr. Manders’ Retirement Arrangement” in the Executive Compensation Tables. Change of Control Arrangements | | | | | | | | | | | | | | | | | | | | | | Cigna does not provide
executive officers with any
single-trigger payments or golden parachute excise taxgross-ups or excise tax reimbursements
upon a change of control. | | | | | | | | | | | | | | | | | | | |
The Cigna Executive Severance Benefits Plan applies to executive officers in the event of a qualified separation of service of the executive officer. A mere change of control itself (i.e., a “single trigger”) does not trigger benefits. The intent of the plan is to encourage executives to continue to act in shareholders’ best interests in evaluating potential transactions and ensure management talent will be available to assist with the transaction and business integration. Under the Cigna Executive Severance Benefits Plan and Cigna Long-Term Incentive Plan, an executive officer will be eligible for benefits if his or her employment is terminated upon or during thetwo-year period following a change of control (i.e., a “double trigger”) if such termination is: initiated by the company other than “for cause” (i.e., a termination on account ofas defined in the executive’s felony conviction for fraud or dishonesty directed against the company);applicable plan; or initiated by the executive officer after determining, in his or her reasonable judgment, that there has been a material reduction in authority, duties or responsibilities, any reduction in compensation or any changes in the executive’s principal office location of more than 35 miles from the location on the date of a change of control. Under the Executive Severance Benefits Plan, the executive must deliver notice to the company within 30 days after such reduction or change and at least 30 days before separation, after which the company has 30 days to remedy the circumstances before a separation upon a change of control is deemed to have occurred. | | | 4648
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Benefits in a double-trigger situation include the following: A lump sum cash severance payment equal to 156 weeks (approximately three years) of base salary plus three (3) times the higher of (i) the most recent annual incentive paid or (ii) the target annual incentive. The intent of the formula for the annual incentive amount is to reward the executive officer for his or her expected performance prior to the change of control.
| • | | A lump sum cash severance payment equal to 156 weeks (approximately three years) of base salary plus three times thehigher of (i) the most recent annual incentive paid or (ii) the target annual incentive. The intent of the formula for the annual incentive amount is to reward the executive officer for his or her level of expected performance prior to the change of control. |
Full vesting of all unvested stock options, restricted stock and RSUs. As a result, if an executive is involuntarily terminated without cause or resigns for good reason after a change of control, the executive is able to realize the shareholder value to which he or she contributed while employed at the company. Full vesting of all unvested SPS awards with the calculation of such vesting made at the highest of: (1) the target vesting percentage; (2) the vesting percentage for the most recent payout of SPS awards (i.e., the prior cycle); or (3) the average of the vesting percentage established by the Committee for the most recent two SPS payouts. The intent of this formula is to provide executive officers with a reasonable estimate of the potential payouts and to avoid placing executive officers at a disadvantage as a result of a change of control. At the company’s expense, twelve months of basic life insurance plan coverage and six months of reasonable outplacement services following a change of control. If any portion of the change of control benefits paid to an executive officer would be subject to ana change in control excise tax, then either (1) the executive will receive the full amount of the benefits and will pay any resulting excise tax or (2) the change of control benefits will be reduced enough to avoid the excise tax entirely, whichever alternative provides the executive with the greater amount ofafter-tax benefits. Upon closing, the proposed merger with Anthem would constitute a change of control under the Cigna Executive Severance Benefits Plan and Cigna Long-Term Incentive Plan. For more information concerning the financial amount of these benefits, see Potential“Executive Compensation Tables —Potential Payments upon Termination or Change of Control beginning on page 61.Control.” PROCESSES AND PROCEDURES FOR DETERMINING EXECUTIVE COMPENSATION The Role of the People Resources Committee in Executive Compensation The Committee is composed entirely of independent directors. Pursuant to its charter, the Committee is charged with oversight of the Company’s compensation and benefit plans and policies that apply to executive officers. The Committee regularly reviews Cigna’s compensation programs against the Company’s strategic goals, industry practices, and emerging trends to ensure a strong linkage between executive pay and performance and alignment with shareholder interests. At each of its regularly scheduled meetings, the Committee conducts executive sessions, without Cigna management present. In addition, the Committee has engaged Pay Governance as its independent compensation consultant to assist the Committee in its responsibilities. Risk Oversight As part of its responsibilities, the Committee considers whether Cigna’s compensation programs and policies encourage unnecessary or excessive risk-taking behavior by executives or create risks that are reasonably likely to have a material adverse effect on the Company. For example, atbehavior. At the request of the Committee, on an annual basis, the Chief Risk Officer conducts a comprehensive review of executive and employee compensation programs to determine whether incentive compensation plans are likely to promote risk-taking behavior that could have a material adverse effect on the Company. The findings of this review are presented to, and discussed by, the Committee in February of each year. The review analyzes: compensation governance processes, including general design philosophy and risk considerations in structuring compensation and incentive plans; situations where compensation programs may have the potential to raise material risks to the Company; internal controls that mitigate the risk of incentive compensation having an unintended negative impact; and plan design features that further mitigate compensation risk, including clawback arrangements, holding periods, earnings thresholds, payment structures and plan caps. After conducting the review and assessing potential risks, the Committee determined that eachthe Company’s incentive program doesprograms do not create risks that are reasonably likely to have a material adverse effect on the Company. | | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 4749
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Process for Executive Compensation Decisions Chief Executive Officer Compensation The Committee, together with the independent Chairman of the Board, annually evaluates Mr. Cordani’s performance and Cigna’s established enterprise goals. The Committee then makes recommendations to the independent members of the Board of Directors about his performance and compensation. The Board considers the Committee’s recommendations as part of its review and approval of Mr. Cordani’s compensation. The Chairman of the Board reviews the results of the evaluation with Mr. Cordani.
| | | | | | | | | | | | | | The Committee and independent Chairman of the Board evaluate CEO performance and enterprise goals. | | The Committee makes recommendations to the independent members of the Board about CEO performance and compensation. | | The Board considers the Committee’s recommendations as it reviews and determines the CEO’s compensation. | | The Chairman of the Board reviews the results of the performance evaluation with the CEO. | | | | | | | |
Mr. Cordani is not present when the Committee and the Board are makingmake decisions about his compensation. At the request of the Committee, the Executive Vice President, Human Resources and Services and the independent compensation consultant may attend this Committee session. Other NEO Compensation Generally, the Executive Vice President, Human Resources and Services presents recommendations for all other NEOs’ compensation targets for the Committee’s consideration. For compensation decisions involving actual payouts for the NEOs, Mr. Cordani presents his recommendations to the Committee for its consideration. Mr. Cordani discusses Cigna’s performance and the individual officer’s performance. The Executive Vice President, Human Resources and Services is generally present for the discussion of compensation for all executive officers other than himself. Compensation Consultant Role in Executive Compensation While the Committee or Board ultimately makes all executive compensation decisions, the Committee engages the services of outside advisors for assistance. The Committee utilized Pay Governance as the Committee’s independent compensation consultant throughout 20152017 to provide independent, objective analysis, advice and information and to generally assist the Committee in the performance of its duties. The Committee will typically request information and recommendations directly from the compensation consultant as it deems appropriate to structure and evaluate Cigna’s compensation programs, practices and plans. As part of its engagement, at the direction of the Committee, the compensation consultant will work with the Committee chair, the Executive Vice President, Human Resources and Services and Cigna’s compensation department in their work on the Committee’s behalf. Since December 2014, Pay Governance has provided the following services to the Committee:
analyzed pay practices as compared to Cigna’s compensation peer group to assess whether three- and five-year realizable pay were aligned with Cigna’s performance and compensation philosophy;
reviewed incentive measures in the 2015 MIP and 2015-2017 SPS program to provide the Committee with objective reference points to consider when determining target goals;
evaluated the effect of Cigna’s equity programs on annual share use, burn rate (the number of shares awarded per year divided by the shares outstanding at the end of the year) and total overhang (the number of stock options and restricted stock outstanding, plus the number of shares available for grants under the Long-Term Incentive Plan, divided by the total number of shares of common stock outstanding), and advised the Committee in its determination of the maximum share limit for use in 2015;
provided market research on incentive plans to assist in the design of short-term and long-term incentive compensation plans for 2016;
presented a comparison of competitive market data to the current compensation of each executive officer to assist in setting compensation targets for 2016; and
reviewed this Compensation Discussion and Analysis.
| ADVICE RECEIVED BY THE COMMITTEE FROM ITS COMPENSATION CONSULTANT FOR 2017 COMPENSATION DECISIONS | • Analyzed compensation levels and pay practices as compared to Cigna’s compensation peer group to assess whether three- and five-year realizable pay were aligned with Cigna’s performance and compensation philosophy • Presented a comparison of competitive market data to the current compensation levels of each executive officer to assist in setting compensation targets • Provided market research on incentive plans to assist in the design of short-term and long-term incentive compensation plans • Reviewed incentive measures in the 2017 MIP and 2017–2019 SPS program to provide the Committee with objective reference points to consider when determining target goals • Evaluated the effect of Cigna’s equity programs on annual share use, burn rate and total overhang to provide the Committee with context for its determination of the maximum share limit for use in 2017 |
At the request of the Committee, a representative of Pay Governance regularly attended the Committee’s meetings in 2015.2017. The Committee regularly reviews and evaluates its compensation consultant engagement, and annually reviews the compensation consultant’s performance. Independence of the Compensation Consultant The Committee’s policy requires that the compensation consultant be independent of the Company. A compensation consultant is deemed independent under the policy if the compensation consultant (1) is retained by and reports solely to the Committee for all executive compensation services; (2) does not provide any services or products to the Company or management except with approval of the Committee’s Chair;chair; and (3) is otherwise free from conflicts. The Committee has assessed Pay Governance’s independence pursuant to Cigna’s policy and NYSE rules and concluded that Pay Governance wasis free from conflicts and independent. In addition, each year the Committee receives a letter from its compensation consultant providing appropriate assurances and confirmation of independence. | | | 4850
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OTHER PRACTICES | | | | | | | | | | | | | | | | | | | | | | Executive officers are subject to robust stock ownership requirements, prohibited from hedging and restricted in their ability to pledge Cigna securities. | | | | | | | | | | | | | | | | | | | |
Stock Ownership Guidelines We believe that the ownership of meaningful levels of Cigna stock by our executive officers is a critical factor in aligning the long-term interests of management and our shareholders. To promote this goal, we have adopted stock ownership guidelines that apply to all of our executive officers, including our NEOs. As of December 31, 2015,2017, all of our NEOs are in compliance with the stock ownership guidelines and each of our NEOs met or exceeded their ownership requirements, or are within the five-year share accumulation period described below. The chart below shows the stock ownership guidelines. Our stock ownership guidelines have the following rigorous features:
The CEO is required to own stock valued at least six times his base salary,requirements and other executive officers are required to own stock valued at least three times their respective base salary.
Wholly owned shares, restricted stock, stock equivalents, SPSs granted prior to January 1, 2014, and shares owned through benefit plans (suchactual value of holdings as investments in the Cigna stock fund of the Cigna 401(k) Plan) are counted toward meeting the guidelines. SPSs granted on or after January 1, 2014 and stock options do not count towards meeting guidelines.
Executive officers have five years from date of hire, promotion or any other event that changes theira multiple of base salary to meet their applicable ownership guideline. Once an executive attains his or her required holding level,as of December 31, 2017 for the executive must maintainCEO and the requirement on a continuous basis, even if the requirement is met before the endaverage of the five-year period.other NEOs that are presently employed by the Company.
Executive officers are required to hold all Company stock acquired until their ownership guidelines are met.
We also have instituted other practices to encourage a long-term ownership philosophy for our executive officers, including:
| | FEATURES OF OUR STOCK OWNERSHIP GUIDELINES | • Wholly owned shares, restricted stock, stock equivalents, and shares owned through benefit plans (such as investments in the Cigna stock fund of the Cigna 401(k) Plan) are counted toward meeting the guidelines. SPSs and stock options do not count toward meeting guidelines. • Executive officers have five years from date of hire, promotion or any other event that changes their multiple of base salary to meet their applicable ownership requirement. Prior to meeting their stock ownership requirement, executives may only engage in transactions that increase their holdings. Once an executive attains his or her required holding level, the executive must maintain the requirement on a continuous basis, even if the requirement is met before the end of the five-year period. |
| | SHARE RETENTION REQUIREMENTS ENCOURAGE A LONG-TERM OWNERSHIP PHILOSOPHY | • Once ownership requirements are met, ¡ executive officers may not sell more than 50% of the shares held above their applicable guideline in any single open trading period; and ¡ executive officers must retain, for at least one year, a minimum of 50% of the shares acquired upon exercise of any stock options and 50% of the shares acquired upon vesting of restricted stock grants, net of shares withheld for taxes or payment of exercise prices, fees and expenses. |
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prohibiting the sale of more than 50% of the shares held above the applicable guideline in any single open period;
| | OTHER PRACTICES REGARDING TRANSACTIONS IN CIGNA STOCK | • Executive officers may only transact in Cigna securities during approved open trading periods after satisfying mandatory clearance requirements. • CEO approval is required for all transactions in Cigna stock by executive officers. • General Counsel approval is required for all transactions in Cigna stock by the CEO. |
once the guideline is met, an executive officer must retain, for at least one year, a minimum of 50% of the shares acquired upon exercise of any stock options and 50% of the shares acquired upon vesting of restricted stock grants;
requiring CEO approval of all transactions in Cigna stock by executive officers; and
requiring General Counsel approval of all transactions in Cigna stock by the CEO.
Hedging and Pledging Restrictions Our insider trading policy prohibits our directors, executive officers and all employees from engaging in hedging, speculative or other transactions that hedge or offset any decrease in the market value of Cigna stock. Prohibited transactions include, but are not limited to, trading in put or call options, short sales, zero cost collars and forward sale contracts. The Committee has adopted a policy that prohibits directors and Section 16 officers from pledging Cigna stock as loan collateral or holding Cigna stock in a margin account. Cigna’s Office of the Corporate Secretary, in consultation with the Chairman of the Board and the Chief Executive Officer, may grant exceptions to this prohibition only with respect to shares held above the stock ownership guidelines. Exceptions may be granted upon a determination that the pledge is reasonable in amount and scope and structured to minimize risks associated with pledging. This determination will be based on the following considerations, among others: the amount of the pledge as compared to Cigna’s total stock outstanding, market value or trading volume; the amount of the pledge as compared to the total value of Cigna stock held by the individual above the applicable stock ownership guideline; the individual’s ability to repay loans secured by Cigna stock or substitute other assets as collateral; and the terms of the pledging documentation. To our knowledge,In 2017, none of our directors, NEOs or other Section 16 officers have pledged Cigna stock, either now or at any time in the past.
| | | | | | | | | Cigna 2016 Notice of Annual Meeting of Shareholders and Proxy Statement
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DISGORGEMENT OF AWARDS (CLAWBACK) POLICYDisgorgement of Awards (Clawback) Policy
The Board of Directors has the authority to recoup compensation paid to executive officers in the event of a restatement of financial results, beyond the mandates of Sarbanes-Oxley. In addition, once final rules are released regarding clawback requirements under the Dodd-Frank Act, Cigna intends towill review its policy and, if necessary, amend it to comply with theany new mandates.clawback mandates under applicable law. Currently, the Board will, in all appropriate cases and to the full extent permitted by law, require reimbursement of any bonus or other cash incentive compensation awarded to an executive officer or cancel unvested restricted or deferred stock awards previously granted to the executive officer if: the amount of the bonus or incentive compensation was calculated based upon the achievement of certain financial results that were later the subject of a restatement; the executive engaged in intentional misconduct that caused or partially caused the need for the restatement; and the amount of the bonus or incentive compensation that would have been awarded to the executive had the financial results been properly reported would have been lower than the amount actually awarded. In addition, Cigna’s stock option, restricted stock, RSU and SPS awards include a clawback provision that applies to any Cigna employee, including any NEO, who: is terminated by Cigna due to misconduct; engages in behavior that would be considered grounds for termination due to misconduct; competes with Cigna within one year following any voluntary termination; solicits a Cigna employee or customer within one year following any termination; discloses Cigna confidential information improperly; or fails to assist Cigna in the handling of investigations, litigation or agency matters with respect to which the employee has relevant information. If an executive engages in any of the above “violation events,” any option gains realized over the two years before the event and the value of any restricted stock, RSU or SPS vesting over the year before the event are required to be paid back to Cigna. These provisions are designed to discourage executives from engaging in activities that can cause Cigna competitive harmharm. | | | 52 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
Tax and to support retention. TAX AND ACCOUNTING TREATMENTAccounting Treatment
Prior to 2013, Section 162(m)(6) of the Internal Revenue Code imposed limits onpertains to the amount that Cigna could deduct for federal income tax purposes for employee compensation. As partdeductibility of health care reform legislation enacted in 2010, Section 162(m) was revised as it pertains to compensation paid by health insurers, including Cigna. Starting in 2013, underUnder Section 162(m)(6), of the Internal Revenue Code, any per person compensation in excess of $500,000 paid to any employee or, generally, any individual service provider, will not be deductible by Cigna. The tax deduction limitation applies whether or not compensation is performance-based or is provided pursuant to a shareholder-approved plan.
The tax deduction limitation under Section 162(m)(6) has impacted, and will continue to impact, Cigna throughresults in the loss of some tax benefits related to employee compensation in excess of the $500,000 per person deduction limit. While the Committee believes it is important to considerconsiders the impact of Section 162(m)(6), it also believes that shareholder interests are best served by not restricting the Committee’s discretion and flexibility in crafting the executive compensation program, even ifnon-deductible compensation expenses could result. Separately, the Committee also considers the accounting consequences of its compensation decisions. Report of the People Resources Committee The People Resources Committee of the Board of Directors reviewed and discussed with Cigna’s management the Compensation Discussion and Analysis. Based on this review and discussion, the People Resources Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and be incorporated by reference in the Annual Report onForm 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission. The Board accepted the Committee’s recommendation. People Resources Committee: William D. Zollars, Chair Eric J. Foss John M. Partridge Eric C. Wiseman | | | | | | | 50
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Executive Compensation Tables 20152017 SUMMARY COMPENSATION TABLE
This table includes information regarding 2015, 20142017, 2016 and 20132015 compensation for each of the NEOs. Other tables in this proxy statementProxy Statement provide more detail about specific types of compensation with respect to 2015.2017. | NAME AND PRINCIPAL POSITION (a) | | YEAR (b) | | | SALARY ($) (c) | | | BONUS ($) (d) | | | STOCK AWARDS ($) (e) | | | OPTION AWARDS ($) (f) | | | NON-EQUITY INCENTIVE
PLAN COMPENSATION ($) (g) | | | CHANGE IN
PENSION VALUE AND
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS ($) (h) | | | ALL OTHER
COMPENSATION ($) (i) | | | TOTAL ($) (j) | | | YEAR (b) | | | SALARY ($) (c) | | | BONUS ($) (d) | | | STOCK AWARDS ($) (e) | | | OPTION AWARDS ($) (f) | | | NON-EQUITY INCENTIVE
PLAN COMPENSATION ($) (g) | | | CHANGE IN
PENSION VALUE AND
NONQUALIFIED
DEFERRED
COMPENSATION
EARNINGS ($) (h) | | | ALL OTHER
COMPENSATION ($) (i) | | | TOTAL ($) (j) | | David M. Cordani President and Chief Executive Officer | | | 2015 | | | | 1,189,615 | | | | — | | | | 7,105,072 | | | | 5,800,033 | | | | 2,860,000 | | | | | † | | | 352,952 | | | | 17,307,672 | | | | 2017 | | | | 1,284,615 | | | | — | | | | 6,513,698 | | | | 5,520,020 | | | | 4,000,000 | | | | 48,222 | | | | 229,237 | | | | 17,595,792 | | | | | 2014 | | | | 1,125,185 | | | | — | | | | 5,670,023 | | | | 5,400,023 | | | | 1,900,000 | | | | 125,859 | | | | 240,355 | | | | 14,461,445 | | | | 2016 | | | | 1,200,000 | | | | — | | | | 6,690,115 | | | | 6,000,012 | | | | 1,100,000 | | | | 62,000 | | | | 227,730 | | | | 15,279,857 | | | | | 2013 | | | | 1,034,615 | | | | — | | | | 6,080,687 | | | | 4,096,268 | | | | 2,160,000 | | | | — | | | | 152,509 | | | | 13,524,079 | | | | 2015 | | | | 1,189,615 | | | | — | | | | 7,105,072 | | | | 5,800,033 | | | | 2,860,000 | | | | † | | | | 352,952 | | | | 17,307,672 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas A. McCarthy Executive Vice President and Chief Financial Officer | | | 2015 | | | | 719,231 | | | | — | | | | 1,470,005 | | | | 1,200,013 | | | | 1,000,000 | | | | | † | | | 29,036 | | | | 4,418,285 | | | | | | 2014 | | | | 637,037 | | | | — | | | | 1,102,541 | | | | 1,050,006 | | | | 630,000 | | | | 205,455 | | | | 38,063 | | | | 3,663,102 | | | | | | 2013 | | | | 504,500 | | | | — | | | | 1,838,734 | | | | 224,416 | | | | 690,000 | | | | — | | | | 23,819 | | | | 3,281,469 | | | Eric P. Palmer(1) Executive Vice President and Chief Financial Officer | | | | 2017 | | | | 594,769 | | | | — | | | | 1,161,994 | | | | 281,581 | | | | 975,000 | | | | 12,950 | | | | 33,624 | | | | 3,059,918 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Herbert A. Fritch President, Cigna-HealthSpring | | | 2015 | | | | 1,000,000 | | | | — | | | | 1,041,266 | | | | 850,020 | | | | 700,000 | | | | — | | | | 36,450 | | | | 3,627,736 | | | | | | 2014 | | | | 1,000,000 | | | | — | | | | 787,576 | | | | 750,001 | | | | 900,000 | | | | — | | | | 30,563 | | | | 3,468,140 | | | | | | 2013 | | | | 1,000,000 | | | | 2,000,000 | | | | 1,233,790 | | | | 831,144 | | | | 517,500 | | | | — | | | | 44,298 | | | | 5,626,732 | | | Christopher J. Hocevar(2) President, Strategy, Segments & Solutions | | | | 2017 | | | | 534,458 | | | | — | | | | 737,529 | | | | 625,015 | | | | 775,000 | | | | 14,035 | | | | 22,506 | | | | 2,708,543 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nicole S. Jones Executive Vice President, General Counsel | | | 2015 | | | | 577,867 | | | | — | | | | 1,003,501 | | | | 819,089 | | | | 756,000 | | | | | † | | | 31,390 | | | | 3,187,847 | | | | 2017 | | | | 601,810 | | | | — | | | | 966,654 | | | | 819,103 | | | | 1,054,000 | | | | 5,777 | | | | 23,595 | | | | 3,470,939 | | | | | 2014 | | | | 562,682 | | | | — | | | | 897,453 | | | | 854,710 | | | | 501,113 | | | | 15,623 | | | | 32,013 | | | | 2,863,594 | | | | 2016 | | | | 581,137 | | | | — | | | | 953,114 | | | | 854,702 | | | | 431,200 | | | | 7,207 | | | | 35,294 | | | | 2,862,654 | | | | | 2013 | | | | 545,065 | | | | — | | | | 1,004,339 | | | | 676,556 | | | | 576,279 | | | | — | | | | 31,452 | | | | 2,833,691 | | | | 2015 | | | | 577,867 | | | | — | | | | 1,003,501 | | | | 819,089 | | | | 756,000 | | | | 0 | | | | 31,390 | | | | 3,187,847 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthew G. Manders President, U.S. Markets & Global Healthcare Operations | | | 2015 | | | | 732,692 | | | | — | | | | 1,347,529 | | | | 1,100,015 | | | | 1,080,000 | | | | | † | | | 37,253 | | | | 4,297,489 | | | | | | 2014 | | | | 585,667 | | | | — | | | | 1,276,282 | | | | 918,773 | | | | 787,500 | | | | 653,845 | | | | 35,995 | | | | 4,258,062 | | | | | | 2013 | | | | 583,404 | | | | — | | | | 1,130,968 | | | | 761,870 | | | | 859,625 | | | | — | | | | 34,873 | | | | 3,370,740 | | | Jason D. Sadler(3) President, International Markets | | | | 2017 | | | | 611,832 | | | | — | | | | 678,576 | | | | 575,032 | | | | 908,371 | | | | — | | | | 222,623 | | | | 2,996,434 | | | | | 2016 | | | | 589,463 | | | | — | | | | 641,256 | | | | 575,039 | | | | 399,796 | | | | — | | | | 239,383 | | | | 2,444,937 | | | | | 2015 | | | | 586,330 | | | | — | | | | 704,494 | | | | 575,025 | | | | 575,297 | | | | — | | | | 235,637 | | | | 2,676,783 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas A. McCarthy(4) Retired Executive Vice President and Chief Financial Officer | | | | 2017 | | | | 369,779 | | | | — | | | | 1,416,105 | | | | 1,200,000 | | | | 400,000 | | | | 307,479 | | | | 205,520 | | | | 3,898,883 | | | | | 2016 | | | | 740,000 | | | | — | | | | 1,471,894 | | | | 1,320,035 | | | | 536,000 | | | | 65,616 | | | | 34,898 | | | | 4,168,443 | | | | | 2015 | | | | 719,231 | | | | — | | | | 1,470,005 | | | | 1,200,013 | | | | 1,000,000 | | | | 0 | | | | 29,036 | | | | 4,418,285 | | | | | | | | | | | | | | | | | | | | | | | Matthew G. Manders(5) Retired President, Gov’t & Indiv. Programs and Group Insurance | | | | 2017 | | | | 634,615 | | | | — | | | | 1,534,012 | | | | 1,300,012 | | | | 900,000 | | | | 495,465 | | | | 27,744 | | | | 4,891,848 | | | | | 2016 | | | | 750,000 | | | | — | | | | 1,594,526 | | | | 1,430,035 | | | | 675,000 | | | | 289,130 | | | | 41,900 | | | | 4,780,591 | | | | | 2015 | | | | 732,692 | | | | — | | | | 1,347,529 | | | | 1,100,015 | | | | 1,080,000 | | | | 0 | | | | 37,253 | | | | 4,297,489 | | | | | | | | | | | | | | | | | | | | | | |
Bonus (Column (d))
| (1) | Mr. Palmer was appointed Executive Vice President and Chief Financial Officer effective June 16, 2017. |
Amounts in this column represent non-incentive based bonus compensation.
| (2) | Mr. Hocevar was appointed President, Strategy, Segments and Solutions effective February 23, 2017. |
| (3) | Mr. Sadler’s base salary and annual award under the Management Incentive Plan are paid in Hong Kong dollars and, throughout these Executive Compensation Tables, have been converted to U.S. dollars using an exchange rate equal to the average of the dailymid-points between the bid and the ask prices for each trading day in the month of December for the relevant year. For 2017 base salary and the 2017 MIP award, $1 Hong Kong dollar = $0.12799676 U.S. dollars. |
| (4) | Mr. McCarthy retired effective June 16, 2017. On June 16, 2017, he and the Company entered into an Agreement and Release (the “McCarthy A&R Agreement”) in connection with his retirement. The McCarthy A&R Agreement is described in “Potential Payments Upon Termination or Change of Control — Terms of Mr. McCarthy’s Retirement Arrangement” of the Executive Compensation Tables. |
| (5) | Mr. Manders retired effective November 3, 2017. On October 16, 2017, he and the Company entered into an Agreement and Release (the “Manders A&R Agreement”) in connection with his retirement. The Manders A&R Agreement is described in “Potential Payments Upon Termination or Change of Control — Terms of Mr. Manders’ Retirement Arrangement” of the Executive Compensation Tables. |
Stock Awards (Column (e)) Amounts in this column represent the grant date fair value of stock awards computed in accordance with ASC Topic 718 as described in Note 2016 to Cigna’s consolidated financial statements in the Company’s Annual Report on Form10-K for the year ended December 31, 20152017 and, for SPSs, are based upon the probable outcome of the performance conditions. Includes SPS awards granted in 2015, 2014 and 2013. All awards were made under the Cigna Long-Term Incentive Plan. No stock awards, other than SPSs, were granted to the NEOs in 2017. | | | 54 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
The SPSs are subject to performance conditions as described beginning on page 42.conditions. The grant date fair value of SPS awards granted in 20152017 reflects the probable achievement level of the TSR performance condition as of the grant date for the assumed award value of SPS awards as shown in the CD&A. TSR performance comprises fifty percent (of50% of the weighting)weighting of the SPS performance measures. This forecasted performance condition creates an accounting grant date fair value that differs from the assumed award value granted to each NEO, as reflected in the CD&A. The amount reported in column (e) is consistent with the estimate of aggregate compensation cost recognized over the service period determined as of the grant date under ASC Topic 718, excluding the effect of estimated forfeitures, as follows: | | NAME | | VALUE OF SPSs GRANTED IN 2015 | | VALUE OF SPSs GRANTED IN 2017 | | | | GRANT DATE FAIR VALUE | | AT HIGHEST PERFORMANCE ACHIEVEMENT* | | GRANT DATE
FAIR VALUE | | | AT HIGHEST
PERFORMANCE ACHIEVEMENT* | | | | ($) | | ($) | | | | | | ($) | | | ($) | | David M. Cordani | | | | 7,105,072 | | | | | 10,005,101 | | | | 6,513,698 | | | | 9,273,739 | | Thomas A. McCarthy | | | | 1,470,005 | | | | | 2,070,007 | | | Herbert A. Fritch | | | | 1,041,266 | | | | | 1,466,272 | | | Eric P. Palmer | | | | 1,161,994 | | | | 1,654,364 | | Christopher J. Hocevar | | | | 737,529 | | | | 1,050,042 | | Nicole S. Jones | | | | 1,003,501 | | | | | 1,413,093 | | | | 966,654 | | | | 1,376,254 | | Matthew G. Manders | | | | 1,347,529 | | | | | 1,897,541 | | | Jason D. Sadler | | | | 678,576 | | | | 966,108 | | Thomas A. McCarthy ** | | | | 1,416,105 | | | | 2,016,150 | | Matthew G. Manders ** | | | | 1,534,012 | | | | 2,184,016 | | | | | | |
| | * | The value at the highest performance achievement reflects adjusted income from operations at 200% of target and projected achievement of total shareholder return relative to Cigna’s SPS performance peerspeer group based on accounting assumptions. |
| ** | | | | | | | | Cigna 2016 NoticeMr. McCarthy and Mr. Manders will receive a prorated portion of Annual Meeting of Shareholders and Proxy Statement
| | | 51
| their award in accordance with their respective A&R Agreements. |
Option Awards (Column (f)) Represents the grant date fair value of option awards made under the Cigna Long-Term Incentive Plan computed in accordance with ASC Topic 718 applying the same model and assumptions as Cigna applies for financial statement reporting purposes, as described in Note 2016 to Cigna’s consolidated financial statements in the Company’s Annual Report onForm 10-K for the year ended December 31, 20152017 (disregarding any estimates for forfeitures). Non-Equity Incentive Plan Compensation (Column (g)) This column reflects performance-based compensation awarded under the MIP as described beginning on page 36.MIP. Change in Pension Value and Nonqualified Deferred Compensation Earnings (Column (h)) This column includes the aggregate change in the actuarial present value of accumulated benefits under the pension plans, which value increases and decreases from period to period and is subject to the assumptions discussed in connection with the Pension Benefits Table on page 58.Table. Information regarding accumulated benefits under the pension plans is also discussed in the narrative to the Pension Benefits Table beginningTable. In 2017, Mr. McCarthy received a full distribution of his Cigna Pension Plan (Part B) account, as reflected on page 59.the Pension Benefits Table. The amounts in this column do not include deferred compensation because we do not provide above market earnings to our executive officers. As represented by theThe “†” symbol in the table the finalrepresents a negative change in pension present value in 2015 was negative for all participating NEOs. The table below details the net change in present value of as December 31, 2015:value. | | | NAME | | NET CHANGE TO PRESENT VALUE ($) | David M. Cordani
| | (12,175)
| Thomas A. McCarthy
| | (4,898)
| Nicole S. Jones
| | (2,694)
| Matthew G. Manders
| | (5,582)
|
All Other Compensation (Column (i)) This column includes: Cigna’s matching contributions to the NEOs’ accounts under its 401(k) and supplemental 401(k) plans in the following amounts: Mr. Cordani — $54,294;$43,869; Mr. McCarthyPalmer — $28,188;$20,712; Mr. Hocevar —$22,506; Ms. Jones — $24,135;$23,595; Mr. Fritch — $36,450;McCarthy —$21,263; and Mr. Manders — $30,753.$27,744. Cigna’s contributions of $91,168 to Mr. Sadler’s Third Country National Pension Plan account and $2,304 to Mr. Sadler’s Mandatory Provident Fund account. Dividends paid in 20152017 on restricted stock awardsunits of $207$414 for Ms. Jones.Mr. Sadler. 2015Payment of $180,000 to Mr. McCarthy pursuant to his Advisory Services Agreement. For more information on the Advisory Services Agreement, see “Potential Payments Upon Termination or Change of Control — Terms of Mr. McCarthy’s Retirement Arrangement.”
| | | | | | | | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 55 | |
As permitted by SEC rules, we have included the perquisites and other personal benefits that we provided to certain named executive officers in 2017 where the aggregate amount of such compensation exceeds $10,000. 2017 perquisites valued at incremental cost (the cost incurred by Cigna due to the NEO’s personal use or benefit) as follows: | | ¡ | | Fees paidFor Mr. Cordani, perquisites included the use of the corporate aircraft for personal travel ($143,840), costs for security system monitoring and maintenance ($31,558) and fees for financial planning, tax preparation and legal services related to tax and estate planning inplanning. The incremental cost for the following amounts: Mr. Cordani — $18,418; Ms. Jones — $6,500; and Mr. Manders — $6,500; |
| ¡ | | Fees for legal expenses associated with Mr. Cordani’s offer letter with Anthem in the amountuse of $98,378; |
| ¡ | | For the corporate aircraft $170,312 of incremental cost related to Mr. Cordani’s use of the aircraft, at the Company’s encouragement, for personal travel. Incremental cost is determined by dividing the annual variable costs by the total number of flight hours and multiplying the result by the number of personal flight hours during the year. Variable costs include fuel, crew travel, trip-related maintenance, landing fees and hangar costs and other similar costs. Fixed costs that do not change based on usage are excluded from the incremental cost calculation; andcalculation. |
| | ¡ | | CostsFor Mr. Palmer, perquisites included fees paid for financial planning, tax preparation and legal services related to tax and estate planning and costs for security system monitoring and maintenancemaintenance. |
| ¡ | | For Mr. Sadler, perquisites are consistent with market practice for executives in the following amounts: Mr. Cordani — $11,550; Mr. McCarthy — $848;Hong Kong, which included a housing allowance ($107,517), club memberships, a company car and Ms. Jones — $548.a personal driver and fees paid for financial planning, tax preparation and legal services related to tax and estate planning. |
Pay Ratio The ratio of our CEO’s total annual compensation to our median employee’s total annual compensation (the “CEO Pay Ratio”) is a reasonable estimate calculated in a manner consistent with Item 402(u) of RegulationS-K. Cigna is a global health service company with employees in over 30 countries. We identified our median employee using our global employee population as of October 1, 2017, which consisted of 38,271 U.S. and 7,561non-U.S. employees as of that date. This population consisted of our full-time, part-time and temporary employees. In accordance with SEC rules, we excluded all employees in the 24 countries with our smallest employee populations, totaling in the aggregate 2,209 employees (approximately 4.8% of our total employee population at October 1, 2017). Employees from the following countries were excluded: United Arab Emirates (131), Australia (4), Bahrain (2), Canada (25), Chile (2), China (221), France (2), Germany (2), Hong Kong (315), Indonesia (327), India (30), Italy (1), Kenya (30), Kuwait (1), Lebanon (2), Malaysia (84), Netherlands (6), New Zealand (222), Norway (1), Oman (7), Saudi Arabia (5), Singapore (30), Switzerland (7) and Turkey (752). After excluding employees in these countries, our employee population as of October 1, 2017 consisted of 43,623 employees (including 38,271 employees in the U.S. and 5,352 employees outside of the U.S.). To identify our median employee, we used direct cash compensation as our consistently applied compensation measure, as permitted by SEC rules. This included cash elements such as base pay, overtime, sales commissions, variable pay, bonuses (discretionary andnon-discretionary) and beeper,on-call and night/weekend pay. This measure encompasses all of the principal methods of direct cash compensation we use for our employees around the globe and we believe reasonably reflects the annual compensation of our employees. We calculated the median employee’s total annual compensation in accordance with the requirements of the Summary Compensation Table. Based on our calculation for 2017, our CEO’s annual total compensation for 2017 was $17,595,792 and our median employee’s annual total compensation for 2017 was $63,010. Accordingly, we estimated our CEO Pay Ratio for 2017 to be 279:1. Due to the flexibility afforded by Item 402(u) in calculating the CEO Pay Ratio, the ratio may or may not be comparable to CEO pay ratios presented by other companies. | | | 5256
| | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement |
GRANTS OF PLAN-BASED AWARDS IN 20152017 This table provides information about annual incentive targets for 20152017 and grants of plan-based awards made in 20152017 to the NEOs. The disclosed dollar and share amounts do not necessarily reflect the actual amounts that will be paid or issued to the NEOs. Those amounts will be known only if and when the awards vest or become payable. | | | | | | | | | | | | | ESTIMATED POSSIBLE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS | | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS | | | | | | | | | | | | NAME (a) | | | GRANT DATE (b) | | | COMMITTEE APPROVAL DATE (c) | | | AWARD TYPE (d) | | | ESTIMATED POSSIBLE PAYOUTS UNDERNON-EQUITY INCENTIVE PLAN AWARDS | | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS | | | | | | | | | | | | | | | | | | | GRANT DATE (b) | | | COMMITTEE APPROVAL DATE (c) | | | AWARD TYPE (d) | | | THRESHOLD ($) (e) | | TARGET ($) (f) | | | MAXIMUM ($) (g) | | | THRESHOLD (#) (h) | | | TARGET (#) (i) | | | MAXIMUM (#) (j) | | | ALL
OTHER STOCK AWARDS: NUMBER
OF SHARES
OF STOCK
OR UNITS (#) (k) | | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#) (l) | | | EXERCISE OR BASE PRICE OF OPTION
AWARDS ($/Sh) (m) | | | CLOSING MARKET PRICE
ON DATE OF GRANT ($/Sh) (n) | | | GRANT DATE
FAIR MARKET VALUE
OF STOCK
AND OPTION AWARDS ($) (o) | | | | THRESHOLD ($) (e) | | | TARGET ($) (f) | | | MAXIMUM ($) (g) | | | THRESHOLD (#) (h) | | | TARGET (#) (i) | | | MAXIMUM (#) (j) | | | ALL
OTHER STOCK AWARDS: NUMBER
OF SHARES
OF STOCK
OR UNITS (#) (k) | | | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#) (l) | | | EXERCISE OR BASE PRICE OF OPTION
AWARDS ($/Sh) (m) | | | CLOSING MARKET PRICE ON DATE OF GRANT ($/Sh) (n) | | | GRANT DATE FAIR MARKET VALUE OF STOCK AND OPTION AWARDS ($) (o) | | David M. Cordani | | | — | | | | — | | |
| MIP
Target |
| | — | | | 2,200,000 | | | | 4,400,000 | | | | | | | | | | | | | | | | | | | | — | | | | — | | |
| MIP
Target |
| | | — | | | | 2,800,000 | | | | 5,600,000 | | | | | | | | | | | | | | | | | | | | | 2/25/2015 | | | | 2/25/2015 | | | | SPS | | | | | | | | | | 8,396 | | | | 47,976 | | | | 95,952 | | | | | | | | | | | | 7,105,072 | | | | 2/28/2017 | | | | 2/21/2017 | | | | SPS | | | | | | | | | | 6,477 | | | | 37,014 | | | | 74,028 | | | | | | | | | | | | 6,513,698 | | | | | 2/25/2015 | | | | 2/25/2015 | | | | Option | | | | | | | | | | | | | | | | | | 159,388 | | | | 120.895 | | | | 121.18 | | | | 5,800,033 | | | | 2/28/2017 | | | | 2/21/2017 | | | | Option | | | | | | | | | | | | | | | | | | 119,053 | | | | 149.135 | | | | 148.90 | | | | 5,520,020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas A. McCarthy | | | — | | | | — | | |
| MIP
Target |
| | — | | | 800,000 | | | | 1,600,000 | | | | | | | | | | | | | | | | | | | | | | 2/25/2015 | | | | 2/25/2015 | | | | SPS | | | | | | | | | | 1,737 | | | | 9,926 | | | | 19,852 | | | | | | | | | | | | 1,470,005 | | | | | | 2/25/2015 | | | | 2/25/2015 | | | | Option | | | | | | | | | | | | | | | | | | 32,977 | | | | 120.895 | | | | 121.18 | | | | 1,200,013 | | | Eric P. Palmer | | | | — | | | | — | | |
| MIP
Target |
| | | — | | | | 750,000 | | | | 1,500,000 | | | | | | | | | | | | | | | | | | | | | 2/28/2017 | | | | 2/21/2017 | | | | SPS | | | | | | | | | | 330 | | | | 1,888 | | | | 3,776 | | | | | | | | | | | | 332,249 | | | | | 5/8/2017 | | | | 4/25/2017 | | | | SPS | | | | | | | | | | 146 | | | | 834 | | | | 1,668 | | | | | | | | | | | | 158,559 | | | | | 6/16/2017 | | | | 4/25/2017 | | | | SPS | | | | | | | | | | 592 | | | | 3,382 | | | | 6,764 | | | | | | | | | | | | 671,186 | | | | | 2/28/2017 | | | | 2/21/2017 | | | | Option | | | | | | | | | | | | | | | | | | 6,073 | | | | 149.135 | | | | 148.90 | | | | 281,581 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Herbert A. Fritch | | | — | | | | — | | |
| MIP
Target |
| | — | | | 1,000,000 | | | | 2,000,000 | | | | | | | | | | | | | | | | | | | | | | 2/25/2015 | | | | 2/25/2015 | | | | SPS | | | | | | | | | | 1,230 | | | | 7,031 | | | | 14,062 | | | | | | | | | | | | 1,041,266 | | | | | | 2/25/2015 | | | | 2/25/2015 | | | | Option | | | | | | | | | | | | | | | | | | 23,359 | | | | 120.895 | | | | 121.18 | | | | 850,020 | | | Christopher J. Hocevar | | | | — | | | | ��� | | |
| MIP
Target |
| | | — | | | | 500,000 | | | | 1,000,000 | | | | | | | | | | | | | | | | | | | | | 2/28/2017 | | | | 2/21/2017 | | | | SPS | | | | | | | | | | 733 | | | | 4,191 | | | | 8,382 | | | | | | | | | | | | 737,529 | | | | | 2/28/2017 | | | | 2/21/2017 | | | | Option | | | | | | | | | | | | | | | | | | 13,480 | | | | 149.135 | | | | 148.90 | | | | 625,015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nicole S. Jones | | | — | | | | — | | |
| MIP
Target |
| | — | | | 560,000 | | | | 1,120,000 | | | | | | | | | | | | | | | | | | | | — | | | | — | | |
| MIP
Target |
| | | — | | | | 680,000 | | | | 1,360,000 | | | | | | | | | | | | | | | | | | | | | 2/25/2015 | | | | 2/25/2015 | | | | SPS | | | | | | | | | | 1,186 | | | | 6,776 | | | | 13,552 | | | | | | | | | | | | 1,003,501 | | | | 2/28/2017 | | | | 2/21/2017 | | | | SPS | | | | | | | | | | 961 | | | | 5,493 | | | | 10,986 | | | | | | | | | | | | 966,654 | | | | | 2/25/2015 | | | | 2/25/2015 | | | | Option | | | | | | | | | | | | | | | | | | 22,509 | | | | 120.895 | | | | 121.18 | | | | 819,089 | | | | 2/28/2017 | | | | 2/21/2017 | | | | Option | | | | | | | | | | | | | | | | | | 17,666 | | | | 149.135 | | | | 148.90 | | | | 819,103 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jason D. Sadler | | | | — | | | | — | | |
| MIP
Target |
| | | — | | | | 648,837 | | | | 1,297,674 | | | | | | | | | | | | | | | | | | | | | 2/28/2017 | | | | 2/21/2017 | | | | SPS | | | | | | | | | | 675 | | | | 3,856 | | | | 7,712 | | | | | | | | | | | | 678,576 | | | | | 2/28/2017 | | | | 2/21/2017 | | | | Option | | | | | | | | | | | | | | | | | | 12,402 | | | | 149.135 | | | | 148.90 | | | | 575,032 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas A. McCarthy | | | | — | | | | — | | |
| MIP
Target |
| | | — | | | | 400,000 | | | | 400,000 | | | | | | | | | | | | | | | | | | | | | 2/28/2017 | | | | 2/21/2017 | | | | SPS | | | | | | | | | | 1,408 | | | | 8,047 | | | | 16,094 | | | | | | | | | | | | 1,416,105 | | | | | 2/28/2017 | | | | 2/21/2017 | | | | Option | | | | | | | | | | | | | | | | | | 25,881 | | | | 149.135 | | | | 148.90 | | | | 1,200,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthew G. Manders | | | — | | | | — | | |
| MIP
Target |
| | — | | | 900,000 | | | | 1,800,000 | | | | | | | | | | | | | | | | | | | | — | | | | — | | |
| MIP
Target |
| | | — | | | | 900,000 | | | | 900,000 | | | | | | | | | | | | | | | | | | | | | 2/25/2015 | | | | 2/25/2015 | | | | SPS | | | | | | | | | | 1,592 | | | | 9,099 | | | | 18,198 | | | | | | | | | | | | 1,347,529 | | | | 2/28/2017 | | | | 2/21/2017 | | | | SPS | | | | | | | | | | 1,525 | | | | 8,717 | | | | 17,434 | | | | | | | | | | | | 1,534,012 | | | | | 2/25/2015 | | | | 2/25/2015 | | | | Option | | | | | | | | | | | | | | | | | | 30,229 | | | | 120.895 | | | | 121.18 | | | | 1,100,015 | | | | 2/28/2017 | | | | 2/21/2017 | | | | Option | | | | | | | | | | | | | | | | | | 28,038 | | | | 149.135 | | | | 148.90 | | | | 1,300,012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards (Column(Columns (f) and (g)) Amounts in column (f) represent annual incentive targets for the 20152017 performance period paid in 2016.2018. Individual award values can range from 0% to 200% of target (as reflected in column (g)). The actual amounts earned by each NEO are as follows: Mr. Cordani— $2,860,000; $4,000,000; Mr. McCarthyPalmer — $1,000,000; $975,000; Mr. FritchHocevar — $700,000; $775,000; Ms. Jones — $756,000;$1,054,000; Mr. Sadler —$908,371; Mr. McCarthy — $400,000; and Mr. Manders— $1,080,000. $900,000. Estimated Future Payouts Under Equity Incentive Plan Awards (Columns (h), (i) and (j)) Represents SPSs awarded for the 2015–20172017—2019 performance period. The People Resources Committee will determine payout amounts for the SPSs, if any, in 2018.2019. The number of shares paid can range from 0% to 200% of the number of SPSs awarded. Threshold shares represent a threshold value for the SPS awards at 17.5% of target, which represents the lowest possible level of share payout under these awards assuming achievement at threshold for adjusted income from operations. | | | | | | | | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 57 | |
All Other Option Awards (Column (l)) Represents stock option awards granted under the Cigna Long-Term Incentive Plan and approved by the People Resources Committee at its February 20152017 meeting as part of each NEO’s long-term incentive award. Stock options represented 50% of the long-term incentive awards for executive officers in 2015, as described on page 41. | | | | | | | | | Cigna 2016 Notice of Annual Meeting of Shareholders and Proxy Statement
| | | 53
| |
2017. Exercise or Base Price of Option Awards (Column (m)) Pursuant to the Cigna Long-Term Incentive Plan, the stock option exercise price is the average of the high and low trading price of Cigna common stock on the date of the award. Grant Date Fair Market Value of Stock and Options Awards (Column (o)) These amounts represent the grant date fair value of equity awards computed in accordance with ASC Topic 718, applying the same model and assumptions Cigna uses for financial statement reporting purposes. The award values represented in the table are theoretical, and may not correspond to the actual value that will be recognized by the NEO. The grant date fair value of SPS awards granted in 20152017 reflects the probable achievement level of the TSR performance condition as of the grant date for the assumed award value of SPS awards as shown in the CD&A. TSR performance comprises fifty percent (of50% of the weighting)weighting of the SPS performance measures. This forecasted performance condition creates an accounting grant date fair value that differs from the assumed award value granted to each NEO (as reflected in the CD&A). | | | 5458
| | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement |
OUTSTANDING EQUITY AWARDS ATYEAR-END 2015 2017 This table provides information about unexercised stock options and unvested stock awards (restricted stock, restricted stock units (RSUs) and SPSs) held as of December 31, 20152017 by the NEOs. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | | STOCK AWARDS | | NAME (a) | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE (b) | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE (1) (c) | | | OPTION EXERCISE PRICE ($) (d) | | | OPTION EXPIRATION DATE (e) | | | NUMBER OF SHARES OR
UNITS OF
STOCK THAT
HAVE NOT VESTED (#)(1) (f) | | | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT
VESTED ($)(2) (g) | | | EQUITY INCENTIVE PLAN AWARDS: NUMBER
OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT
HAVE NOT
VESTED (#)(1) (h) | | | EQUITY INCENTIVE PLAN AWARDS: MARKET OR
PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT
VESTED ($)(2) (i) | | David M. Cordani | | | 190,180 | | | | | | | | 34.6450 | | | | 3/3/2020 | | | | 137,020 | | | | 20,050,137 | | | | 117,176 | | | | 17,146,364 | | | | | 189,610 | | | | | | | | 42.1900 | | | | 3/1/2021 | | | | | | | | | | | | | | | | | | | | | 200,229 | | | | | | | | 44.4250 | | | | 2/28/2022 | | | | | | | | | | | | | | | | | | | | | 137,902 | | | | 68,941 | | | | 58.7300 | | | | 3/5/2023 | | | | | | | | | | | | | | | | | | | | | 76,497 | | | | 152,946 | | | | 78.0350 | | | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | | | | | 159,388 | | | | 120.8950 | | | | 2/25/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 794,418 | | | | 381,275 | | | | | | | | | | | | 137,020 | | | | 20,050,137 | | | | 117,176 | | | | 17,146,364 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas A. McCarthy | | | 4,464 | | | | | | | | 46.8833 | | | | 2/28/2017 | | | | 21,545 | | | | 3,152,680 | | | | 23,382 | | | | 3,421,488 | | | | | 5,651 | | | | | | | | 47.9250 | | | | 2/27/2018 | | | | | | | | | | | | | | | | | | | | | 21,582 | | | | | | | | 14.0250 | | | | 3/4/2019 | | | | | | | | | | | | | | | | | | | | | 8,138 | | | | | | | | 34.6450 | | | | 3/3/2020 | | | | | | | | | | | | | | | | | | | | | 8,159 | | | | | | | | 42.1900 | | | | 3/1/2021 | | | | | | | | | | | | | | | | | | | | | 10,960 | | | | | | | | 44.4250 | | | | 2/28/2022 | | | | | | | | | | | | | | | | | | | | | 7,555 | | | | 3,777 | | | | 58.7300 | | | | 3/5/2023 | | | | | | | | | | | | | | | | | | | | | 14,875 | | | | 29,739 | | | | 78.0350 | | | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | | | | | 32,977 | | | | 120.8950 | | | | 2/25/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 81,384 | | | | 66,493 | | | | | | | | | | | | 21,545 | | | | 3,152,680 | | | | 23,382 | | | | 3,421,488 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Herbert A. Fritch | | | 63,043 | (3) | | | | | | | 12.2500 | | | | 2/13/2019 | | | | 117,842 | (3) | | | 17,243,820 | | | | 16,643 | | | | 2,435,370 | | | | | 138,752 | (3) | | | | | | | 14.4000 | | | | 2/11/2020 | | | | | | | | | | | | | | | | | | | | | 71,992 | (3) | | | | | | | 30.1300 | | | | 3/7/2021 | | | | | | | | | | | | | | | | | | | | | 13,988 | | | | 13,988 | | | | 58.7300 | | | | 3/5/2023 | | | | | | | | | | | | | | | | | | | | | 10,625 | | | | 21,242 | | | | 78.0350 | | | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | | | | | 23,359 | | | | 120.8950 | | | | 2/25/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 298,400 | | | | 58,589 | | | | | | | | | | | | 117,842 | | | | 17,243,820 | | | | 16,643 | | | | 2,435,370 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nicole S. Jones | | | 22,776 | | | | 11,387 | | | | 58.7300 | | | | 3/5/2023 | | | | 23,922 | | | | 3,500,506 | | | | 17,729 | | | | 2,594,285 | | | | | 12,108 | | | | 24,208 | | | | 78.0350 | | | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | | | | | 22,509 | | | | 120.8950 | | | | 2/25/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 34,884 | | | | 58,104 | | | | | | | | | | | | 23,922 | | | | 3,500,506 | | | | 17,729 | | | | 2,594,285 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthew G. Manders | | | 29,953 | | | | | | | | 44.4250 | | | | 2/28/2022 | | | | 27,073 | | | | 3,961,592 | | | | 22,539 | | | | 3,298,132 | | | | | 25,649 | | | | 12,822 | | | | 58.7300 | | | | 3/5/2023 | | | | | | | | | | | | | | | | | | | | | 13,016 | | | | 26,022 | | | | 78.0350 | | | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | | | | | 30,229 | | | | 120.8950 | | | | 2/25/2025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | 68,618 | | | | 69,073 | | | | | | | | | | | | 27,073 | | | | 3,961,592 | | | | 22,539 | | | | 3,298,132 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPTION AWARDS | | | STOCK AWARDS | | NAME (a) | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE (b) | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#)(1) UNEXERCISABLE (c) | | | OPTION EXERCISE PRICE ($) (d) | | | OPTION EXPIRATION DATE (e) | | | NUMBER OF SHARES OR
UNITS OF
STOCK THAT
HAVE NOT VESTED (#)(1) (f) | | | MARKET
VALUE OF
SHARES OR UNITS OF
STOCK THAT
HAVE NOT
VESTED ($)(2) (g) | | | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT
VESTED (#)(1) (h) | | | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT
HAVE NOT VESTED ($)(2) (i) | | David M. Cordani | | | 189,610 | | | | | | | | 42.1900 | | | | 3/1/2021 | | | | 67,070 | | | | 13,621,246 | | | | 80,112 | | | | 16,269,946 | | | | | 200,229 | | | | | | | | 44.4250 | | | | 2/28/2022 | | | | | | | | | | | | | | | | | | | | | 206,843 | | | | | | | | 58.7300 | | | | 3/5/2023 | | | | | | | | | | | | | | | | | | | | | 229,443 | | | | | | | | 78.0350 | | | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | 106,258 | | | | 53,130 | | | | 120.8950 | | | | 2/25/2025 | | | | | | | | | | | | | | | | | | | | | 47,600 | | | | 95,201 | | | | 139.2200 | | | | 3/1/2026 | | | | | | | | | | | | | | | | | | | | | | | | | 119,053 | | | | 149.1350 | | | | 2/28/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 979,983 | | | | 267,384 | | | | | | | | | | | | 67,070 | | | | 13,621,246 | | | | 80,112 | | | | 16,269,946 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Eric P.
Palmer | | | 7,967 | | | | | | | | 78.0350 | | | | 2/26/2024 | | | | 2,701 | | | | 548,546 | | | | 8,127 | | | | 1,650,512 | | | | | 4,278 | | | | 2,139 | | | | 120.8950 | | | | 2/25/2025 | | | | | | | | | | | | | | | | | | | | | 2,233 | | | | 4,468 | | | | 139.2200 | | | | 3/1/2026 | | | | | | | | | | | | | | | | | | | | | | | | | 6,073 | | | | 149.1350 | | | | 2/28/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 14,478 | | | | 12,680 | | | | | | | | | | | | 2,701 | | | | 548,546 | | | | 8,127 | | | | 1,650,512 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Christopher J. Hocevar | | | | | | | 3,195 | | | | 120.8950 | | | | 2/25/2025 | | | | 4,033 | | | | 819,062 | | | | 6,697 | | | | 1,360,094 | | | | | 2,767 | | | | 5,534 | | | | 139.2200 | | | | 3/1/2026 | | | | | | | | | | | | | | | | | | | | | | | | | 13,480 | | | | 149.1350 | | | | 2/28/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 2,767 | | | | 22,209 | | | | | | | | | | | | 4,033 | | | | 819,062 | | | | 6,697 | | | | 1,360,094 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nicole S.
Jones | | | 17,163 | | | | | | | | 58.7300 | | | | 3/5/2023 | | | | 9,473 | | | | 1,923,872 | | | | 11,633 | | | | 2,362,546 | | | | | 36,316 | | | | | | | | 78.0350 | | | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | 15,006 | | | | 7,503 | | | | 120.8950 | | | | 2/25/2025 | | | | | | | | | | | | | | | | | | | | | 6,780 | | | | 13,562 | | | | 139.2200 | | | | 3/1/2026 | | | | | | | | | | | | | | | | | | | | | | | | | 17,666 | | | | 149.1350 | | | | 2/28/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 75,265 | | | | 38,731 | | | | | | | | | | | | 9,473 | | | | 1,923,872 | | | | 11,633 | | | | 2,362,546 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jason D.
Sadler | | | | | | | 5,268 | | | | 120.8950 | | | | 2/25/2025 | | | | 10,104 | | | | 2,052,021 | | | | 7,987 | | | | 1,622,080 | | | | | | | | | 9,124 | | | | 139.2200 | | | | 3/1/2026 | | | | | | | | | | | | | | | | | | | | | | | | | 12,402 | | | | 149.1350 | | | | 2/28/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 0 | | | | 26,794 | | | | | | | | | | | | 10,104 | | | | 2,052,021 | | | | 7,987 | | | | 1,622,080 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas A. McCarthy | | | 8,138 | | | | | | | | 34.6450 | | | | 3/3/2020 | | | | 13,877 | | | | 2,818,280 | | | | 9,003 | | | | 1,828,419 | | | | | 8,159 | | | | | | | | 42.1900 | | | | 3/1/2021 | | | | | | | | | | | | | | | | | | | | | 10,960 | | | | | | | | 44.4250 | | | | 2/28/2022 | | | | | | | | | | | | | | | | | | | | | 11,332 | | | | | | | | 58.7300 | | | | 3/5/2023 | | | | | | | | | | | | | | | | | | | | | 44,614 | | | | | | | | 78.0350 | | | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | 32,977 | | | | | | | | 120.8950 | | | | 2/25/2025 | | | | | | | | | | | | | | | | | | | | | 31,417 | | | | | | | | 139.2200 | | | | 3/1/2026 | | | | | | | | | | | | | | | | | | | | | 25,881 | | | | | | | | 149.1350 | | | | 2/28/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 173,478 | | | | 0 | | | | | | | | | | | | 13,877 | | | | 2,818,280 | | | | 9,003 | | | | 1,828,419 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthew G. Manders | | | 38,471 | | | | | | | | 58.7300 | | | | 3/5/2023 | | | | 12,720 | | | | 2,583,305 | | | | 9,754 | | | | 1,980,940 | | | | | 39,038 | | | | | | | | 78.0350 | | | | 2/26/2024 | | | | | | | | | | | | | | | | | | | | | 30,229 | | | | | | | | 120.8950 | | | | 2/25/2025 | | | | | | | | | | | | | | | | | | | | | 34,035 | | | | | | | | 139.2200 | | | | 3/1/2026 | | | | | | | | | | | | | | | | | | | | | 28,038 | | | | | | | | 149.1350 | | | | 2/28/2027 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 169,811 | | | | 0 | | | | | | | | | | | | 12,720 | | | | 2,583,305 | | | | 9,754 | | | | 1,980,940 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 5559
| |
| | (1) | The following table shows the vesting datedates of stock options, restricted stock, RSUs and SPSs that have not vested, held as of December 31, 20152017 by the NEOs. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NUMBER OF STOCK
OPTIONS THAT
HAVE NOT VESTED (a) | | VESTING DATE (b) | | VESTING AMOUNT (c) | | NUMBER OF SHARES OR UNITS THAT HAVE
NOT VESTED (i) (d) | | VESTING DATE (i) (e) | | VESTING AMOUNT (f) | | NUMBER OF EQUITY INCENTIVE
PLAN AWARD
SHARES OR UNITS THAT HAVE
NOT VESTED (ii) (g) | | VESTING DATE (ii) (h) | | VESTING AMOUNT (i) | David M. Cordani | | | | 68,941 | | | | | 3/5/2016 | | | | | 68,941 | | | | | 137,020 | | | | | 2/26/2016 | | | | | 137,020 | | | | | 117,176 | | | | | 2017 | | | | | 69,200 | | | | | | 152,946 | | | | | 2/26/2016 | | | | | 76,473 | | | | | | | | | | | | | | | | | | | | | | | | | 2018 | | | | | 47,976 | | | | | | | | | | | 2/26/2017 | | | | | 76,473 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 159,388 | | | | | 2/25/2016 | | | | | 53,129 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/25/2017 | | | | | 53,129 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/25/2018 | | | | | 53,130 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | | | | | | | | | | | | 381,275 | | | | | | | | | | | | | | | 137,020 | | | | | | | | | | | | | | | 117,176 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas A. McCarthy | | | | 3,777 | | | | | 3/5/2016 | | | | | 3,777 | | | | | 21,545 | | | | | 2/26/2016 | | | | | 21,545 | | | | | 23,382 | | | | | 2017 | | | | | 13,456 | | | | | | 29,739 | | | | | 2/26/2016 | | | | | 14,869 | | | | | | | | | | | | | | | | | | | | | | | | | 2018 | | | | | 9,926 | | | | | | | | | | | 2/26/2017 | | | | | 14,870 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 32,977 | | | | | 2/25/2016 | | | | | 10,992 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/25/2017 | | | | | 10,992 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/25/2018 | | | | | 10,993 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | | | | | | | | | | | | 66,493 | | | | | | | | | | | | | | | 21,545 | | | | | | | | | | | | | | | 23,382 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Herbert A. Fritch | | | | 13,988 | | | | | 3/5/2016 | | | | | 13,988 | | | | | 117,842 | | | | | 2/26/2016 | | | | | 27,802 | | | | | 16,643 | | | | | 2017 | | | | | 9,612 | | | | | | 21,242 | | | | | 2/26/2016 | | | | | 10,621 | | | | | | | | | | 1/31/2016 | | | | | 45,020 | | | | | | | | | | 2018 | | | | | 7,031 | | | | | | | | | | | 2/26/2017 | | | | | 10,621 | | | | | | | | | | 1/31/2017 | | | | | 45,020 | | | | | | | | | | | | | | | | | | | | | 23,359 | | | | | 2/25/2016 | | | | | 7,786 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/25/2017 | | | | | 7,786 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/25/2018 | | | | | 7,787 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | | | | | | | | | | | | 58,589 | | | | | | | | | | | | | | | 117,842 | | | | | | | | | | | | | | | 16,643 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nicole S. Jones | | | | 11,387 | | | | | 3/5/2016 | | | | | 11,387 | | | | | 23,922 | | | | | 2/26/2016 | | | | | 22,631 | | | | | 17,729 | | | | | 2017 | | | | | 10,953 | | | | | | 24,208 | | | | | 2/26/2016 | | | | | 12,104 | | | | | | | | | | 6/6/2016 | | | | | 1,291 | | | | | | | | | | 2018 | | | | | 6,776 | | | | | | | | | | | 2/26/2017 | | | | | 12,104 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 22,509 | | | | | 2/25/2016 | | | | | 7,503 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/25/2017 | | | | | 7,503 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/25/2018 | | | | | 7,503 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | | | | | | | | | | | | 58,104 | | | | | | | | | | | | | | | 23,922 | | | | | | | | | | | | | | | 17,729 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthew G. Manders | | | | 12,822 | | | | | 3/5/2016 | | | | | 12,822 | | | | | 27,073 | | | | | 2/26/2016 | | | | | 27,073 | | | | | 22,539 | | | | | 2017 | | | | | 13,440 | | | | | | 26,022 | | | | | 2/26/2016 | | | | | 13,011 | | | | | | | | | | | | | | | | | | | | | | | | | 2018 | | | | | 9,099 | | | | | | | | �� | | | 2/26/2017 | | | | | 13,011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,229 | | | | | 2/25/2016 | | | | | 10,076 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/25/2017 | | | | | 10,076 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/25/2018 | | | | | 10,077 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTAL | | | | | | | | | | | | | | 69,073 | | | | | | | | | | | | | | | 27,073 | | | | | | | | | | | | | | | 22,539 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NUMBER OF STOCK
OPTIONS THAT
HAVE NOT VESTED (a) | | | VESTING DATE (b) | | | VESTING AMOUNT (c) | | | NUMBER OF SHARES OR UNITS THAT HAVE
NOT VESTED (i) (d) | | | VESTING DATE (i) (e) | | | VESTING AMOUNT (f) | | | NUMBER OF EQUITY INCENTIVE
PLAN AWARD
SHARES OR UNITS THAT HAVE
NOT VESTED (ii) (g) | | | VESTING DATE (ii) (h) | | | VESTING AMOUNT (i) | | David M. Cordani | | | 53,130 | | | | 2/25/2018 | | | | 53,130 | | | | 67,070 | | | | 3/2/2018 | | | | 67,070 | | | | 80,112 | | | | 2019 | | | | 43,098 | | | | | 95,201 | | | | 3/1/2018 | | | | 47,600 | | | | | | | | | | | | | | | | | | | | 2020 | | | | 37,014 | | | | | | | | | 3/1/2019 | | | | 47,601 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 119,053 | | | | 2/28/2018 | | | | 39,684 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/28/2019 | | | | 39,684 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/28/2020 | | | | 39,685 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | 267,384 | | | | | | | | | | | | 67,070 | | | | | | | | | | | | 80,112 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Eric P. Palmer | | | 2,139 | | | | 2/25/2018 | | | | 2,139 | | | | 2,701 | | | | 3/2/2018 | | | | 2,701 | | | | 8,127 | | | | 2019 | | | | 2,023 | | | | | 4,468 | | | | 3/1/2018 | | | | 2,234 | | | | | | | | | | | | | | | | | | | | 2020 | | | | 6,104 | | | | | | | | | 3/1/2019 | | | | 2,234 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,073 | | | | 2/28/2018 | | | | 2,024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/28/2019 | | | | 2,024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/28/2020 | | | | 2,025 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | 12,680 | | | | | | | | | | | | 2,701 | | | | | | | | | | | | 8,127 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Christopher J. Hocevar | | | 3,195 | | | | 2/25/2018 | | | | 3,195 | | | | 4,033 | | | | 3/2/2018 | | | | 4,033 | | | | 6,697 | | | | 2019 | | | | 2,506 | | | | | 5,534 | | | | 3/1/2018 | | | | 2,767 | | | | | | | | | | | | | | | | | | | | 2020 | | | | 4,191 | | | | | | | | | 3/1/2019 | | | | 2,767 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 13,480 | | | | 2/28/2018 | | | | 4,493 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/28/2019 | | | | 4,493 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/28/2020 | | | | 4,494 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | 22,209 | | | | | | | | | | | | 4,033 | | | | | | | | | | | | 6,697 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nicole S. Jones | | | 7,503 | | | | 2/25/2018 | | | | 7,503 | | | | 9,473 | | | | 3/2/2018 | | | | 9,473 | | | | 11,633 | | | | 2019 | | | | 6,140 | | | | | 13,562 | | | | 3/1/2018 | | | | 6,781 | | | | | | | | | | | | | | | | | | | | 2020 | | �� | | 5,493 | | | | | | | | | 3/1/2019 | | | | 6,781 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,666 | | | | 2/28/2018 | | | | 5,888 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/28/2019 | | | | 5,889 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/28/2020 | | | | 5,889 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | 38,731 | | | | | | | | | | | | 9,473 | | | | | | | | | | | | 11,633 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jason D. Sadler | | | 5,268 | | | | 2/25/2018 | | | | 5,268 | | | | 10,104 | | | | 3/2/2018 | | | | 6,650 | | | | 7,987 | | | | 2019 | | | | 4,131 | | | | | 9,124 | | | | 3/1/2018 | | | | 4,562 | | | | | | | | 6/4/2018 | | | | 3,454 | | | | | | | | 2020 | | | | 3,856 | | | | | | | | | 3/1/2019 | | | | 4,562 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 12,402 | | | | 2/28/2018 | | | | 4,134 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/28/2019 | | | | 4,134 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/28/2020 | | | | 4,134 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | 26,794 | | | | | | | | | | | | 10,104 | | | | | | | | | | | | 7,987 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas A. McCarthy | | | | | | | | | | | | | | | 13,877 | | | | 3/2/2018 | | | | 13,877 | | | | 9,003 | | | | 2019 | | | | 6,321 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | 2,682 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | — | | | | | | | | | | | | 13,877 | | | | | | | | | | | | 9,003 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Matthew G. Manders | | | | | | | | | | | | | | | 12,720 | | | | 3/2/2018 | | | | 12,720 | | | | 9,754 | | | | 2019 | | | | 6,848 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | 2,906 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | — | | | | | | | | | | | | 12,720 | | | | | | | | | | | | 9,754 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | (i) | These columns include unvested restricted stock, RSUs, and SPSs granted for the 2013–20152015—2017 performance period. The number of SPSs reported in these columns reflects the shares vested in February 2016March 2018 for the SPS 2013–20152015—2017 performance period at their actual payout percentage. As of December 31, 2015,2017, the relevant performance conditions had been satisfied, but the awards were not fully vested until payout in February 2016. See the CD&A on pages 42March 2018. Pursuant to 43their respective A&R Agreements, Mr. McCarthy and Mr. Manders received payment for information about thetheir 2015—2017 SPS programawards as if their employment continued through December 31, 2017. |
| | | 60 | | Cigna 2018 Notice of Annual Meeting of Shareholders and the 2013–2015 SPS grants.Proxy Statement |
| | (ii) | These columns include unvested SPSs granted for the 2014–20162016—2018 and 2015–20172017—2019 performance periods. The SPS awards are not fully vested until paid in the year following the close of the three-year performance period. The People Resources Committee determines payout, if any, in the year of vesting based on achievement of three-year performance goals. It is not possible to determine whether SPS awards will vest until the end of the three-year performance period. Notwithstanding this, the SPS amounts reported in these columns assumes that each of the performance measures areis achieved at target (100%). With respect to Mr. McCarthy and Mr. Manders, pursuant to their respective A&R Agreements, each is entitled to receive payment for a prorated portion of his 2016—2018 and 2017—2019 SPS awards based on the number of months he would have been employed during the applicable performance period, if his employment continued through December 31, 2017. Such prorated portion represents the number of shares for 2016—2018 and 2017—2019 SPS awards that would vest if each of the performance measures is achieved at target (100%). Because payment will be made in Cigna common stock, the actual value will be based on Cigna’s common stock price at the time of payment. |
| | | 56
| | Cigna2016 Notice of Annual Meeting of Shareholders and Proxy Statement
|
| | (2) | Based on the closing price of the Company’s common stock on December 31, 2015 ($146.33). |
| (3) | For Mr. Fritch, 273,787 vested options represent HealthSpring awards converted into Cigna equity upon29, 2017, the consummationlast business day of the HealthSpring merger. 90,040 of the shares in column (f) represent the restricted stock granted under the terms of his retention agreement.year ($203.09). |
OPTION EXERCISES AND STOCK VESTED IN 20152017 This table provides information about the number of shares of Cigna common stock acquired, and value realized by, the NEOs upon exercise of stock options and the vesting of restricted stock and the 2012–20142014—2016 SPS awards during 2015.2017. No SPSs awarded for the 2013–2015, 2014–20162015—2017, 2016—2018 or 2015–20172017—2019 performance periods vested in 2015.2017. | | | | OPTION AWARDS | | STOCK AWARDS | | OPTION AWARDS | | | STOCK AWARDS | | NAME (a) | | NUMBER OF SHARES ACQUIRED
ON EXERCISE (#) (b) | | VALUE REALIZED UPON EXERCISE ($) (c)(1) | | NUMBER OF SHARES ACQUIRED
ON VESTING (#) (d) | | VALUE REALIZED UPON VESTING ($) (e)(1) | | Name (a) | | | NUMBER OF SHARES ACQUIRED
ON EXERCISE (#) (b) | | | VALUE REALIZED UPON EXERCISE ($) (c)(1) | | | NUMBER OF SHARES ACQUIRED
ON VESTING (#) (d) | | | VALUE REALIZED UPON VESTING ($) (e)(1) | | David M. Cordani | | | | 307,215 | | | | | 20,375,519 | | | | | 198,627 | (2) | | | | 24,230,508 | | | | 190,180 | | | | 25,772,432 | | | | 85,462 | (2) | | | 12,569,751 | | Eric P. Palmer | | | | 6,595 | | | | 569,083 | | | | 2,968 | (2) | | | 436,533 | | Christopher J. Hocevar | | | | 11,164 | | | | 1,091,898 | | | | 5,336 | (2) | | | 784,819 | | Nicole S. Jones | | | | 17,000 | | | | 1,719,532 | | | | 13,527 | (2) | | | 1,989,551 | | Jason D. Sadler | | | | 33,300 | | | | 2,630,653 | | | | 11,879 | (2)(3) | | | 1,807,228 | | Thomas A. McCarthy | | | | 5,475 | | | | | 438,972 | | | | | 19,901 | (2) | | | | 2,427,723 | | | | 31,697 | | | | 5,159,220 | | | | 16,618 | (2) | | | 2,444,175 | | Herbert A. Fritch | | | | 389,289 | | | | | 44,377,317 | | | | | 36,016 | (2) | | | | 4,393,592 | | | Nicole S. Jones | | | | 39,297 | | | | | 2,785,279 | | | | | 32,076 | (2)(3) | | | | 3,934,269 | | | Matthew G. Manders | | | | 23,986 | | | | | 1,724,055 | | | | | 30,317 | (2) | | | | 3,698,371 | | | | 29,953 | | | | 3,906,553 | | | | 16,599 | (2) | | | 2,441,381 | |
| | (1) | Value realized upon exercise of option awards is calculated by multiplying the number of shares acquired upon exercise by the difference between the market price at the time of the transaction and the option’s exercise price. For stock awards, the value realized upon vesting is calculated by multiplying the number of shares acquired upon vesting by the fair market value (FMV) per share of Cigna common stock. The Cigna Long-Term Incentive Plan defines FMV per share as the average of the high and the low trading price per share of Cigna common stock on the applicable vesting date (see notes (2) and (3) below).below. |
| | (2) | Includes the vesting on February 27, 201524, 2017 of 2012–20142014—2016 SPS awards as follows: Mr. Cordani — 198,627;85,462; Mr. Palmer — 2,968; Mr. Hocevar — 5,336; Ms. Jones — 13,527; Mr. Sadler — 8,425; Mr. McCarthy — 19,901; Mr. Fritch — 36,016; Ms. Jones — 30,784;16,618; and Mr. Manders — 30,317.16,599. The FMV on February 27, 201524, 2017 was $121.99$147.08 per share. |
| | (3) | Includes 3,454 shares acquired upon the vesting of restricted shares as follows: Ms. Jones – 1,292 shares acquiredstock units for Mr. Sadler on June 6, 20154, 2017 (FMV of $138.49$164.47 per share). |
| | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 5761
| |
PENSION BENEFITS FOR 20152017 This table shows the present value as of December 31, 20152017 of the estimated pension benefits payable upon retirement at age 65 to each of the NEOs, except for Mr. Fritch,Sadler, who was not eligible to participate in the pension benefits plans. The amounts shown are present values and not necessarily the actual amounts that will be paid to the NEOs, because those amounts will not be known until the pension benefits become payable. No pension benefits payments were made to any of the NEOs during 2015. | NAME (a) | | PLAN NAME (b) | | NUMBER OF YEARS CREDITED SERVICE #(1) (c) | | PRESENT VALUE
OF ACCUMULATED BENEFIT ($) (d)(2) | | | PLAN NAME (b) | | NUMBER OF
YEARS CREDITED
SERVICE # (c)(1) | | PRESENT VALUE
OF
ACCUMULATED BENEFIT ($) (d)(2) | | | PAYMENTS
DURING THE
LAST
FISCAL YEAR ($) (e) | | David M. Cordani | | Cigna Pension Plan (Part B) | | 18 | | | 288,888 | | | Cigna Pension Plan (Part B) | | 18 | | | 326,764 | | | | — | | | | Cigna Supplemental Pension Plan | | 18 | | | 172,336 | | | Cigna Supplemental Pension Plan | | 18 | | | 189,020 | | | | — | | | | Cigna Supplemental Pension Plan of 2005 | | 18 | | | 568,943 | | | Cigna Supplemental Pension Plan of 2005 | | 18 | | | 624,605 | | | | — | | | | | | | | | | | | | | | | | | Eric P. Palmer | | | Cigna Pension Plan (Part B) | | 11 | | | 172,199 | | | | — | | | | Cigna Supplemental Pension Plan of 2005 | | 11 | | | 13,462 | | | | — | | | | | | | | | | | | | Christopher J. Hocevar | | | Cigna Pension Plan (Part B) | | 8 | | | 150,667 | | | | — | | | | Cigna Supplemental Pension Plan of 2005 | | 8 | | | 97,485 | | | | — | | | | | | | | | | | | | Nicole S. Jones | | | Cigna Pension Plan (Part B) | | 3 | | | 56,327 | | | | — | | | | Cigna Supplemental Pension Plan of 2005 | | 3 | | | 59,361 | | | | — | | | | | | | | | | | | | Thomas A. McCarthy | | Cigna Pension Plan (Part A) | | 19.3 | | | 638,960 | | | Cigna Pension Plan (Part A) | | 19.3 | | | 903,906 | | | | 28,132 | | | | Cigna Pension Plan (Part B) | | 26 | | | 179,256 | | | Cigna Pension Plan (Part B) | | 26 | | | — | | | | 183,083 | | | | Cigna Supplemental Pension Plan | | 26 | | | 271,449 | | | Cigna Supplemental Pension Plan | | 26 | | | 361,795 | | | | — | | | | Cigna Supplemental Pension Plan of 2005 | | 26 | | | 171,280 | | | Cigna Supplemental Pension Plan of 2005 | | 26 | | | 180,696 | | | | — | | | | | | | | | | | | | | | | | | Nicole S. Jones | | Cigna Pension Plan (Part B) | | 3 | | | 49,035 | | | | | Cigna Supplemental Pension Plan of 2005 | | 3 | | | 53,669 | | | | | | | | | | | Matthew G. Manders | | Cigna Pension Plan (Part A) | | 23 | | | 827,594 | | | Cigna Pension Plan (Part B) | | 23 | | | 1,290,911 | | | | 6,098 | | | | Cigna Supplemental Pension Plan | | 23 | | | 408,165 | | | Cigna Supplemental Pension Plan | | 23 | | | 387,216 | | | | — | | | | Cigna Supplemental Pension Plan of 2005 | | 23 | | | 2,014,682 | | | Cigna Supplemental Pension Plan of 2005 | | 23 | | | 2,356,909 | | | | — | | | | | | | | | | | | | | | | | | | | |
| | (1) | No employee has received additional credited years of service since 2009. |
| | (2) | Assumptions used in the calculations of the amounts in this column are included in Note 916 to our audited financial statements for the year ended December 31, 20152017 included in our Annual Report on Form10-K filed with the SEC on February 25, 2016.28, 2018. The actuarial present values of the prior period benefits were, in part, computed as a projected lump sum payout payable at normal retirement age (age 65) which was then discounted to the present value as of December 31, 20152017 using the same assumptions as those used for financial reporting purposes. Mr. McCarthy’s and Mr. Manders’ values also include the present value of benefits that are defined as a single life annuity payable at normal retirement age. The assumptions are interest discount rates of 4.11%3.47% for the Cigna Pension Plan and 3.74%3.30% for the Cigna Supplemental Pension Plan and the Cigna Supplemental Pension Plan of 2005, and the RP 2014 mortality table (adjusted to 2006) with improvement scale MP 20152017 on a generational basis for those plans. |
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| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
Cigna Pension Plan The Cigna Pension Plan (CPP), atax-qualified plan, was frozen effective July 1, 2009, and does not cover employees hired after that date. From 2000 to July 2009, the CPP covered all U.S. based full-time employees, including the NEOs serving during that time. Cigna makes all the contributions necessary to fund CPP benefits for deposit into a trust fund, and thefund. The annual contributions are at leastmeet or exceed the amount required to meet the applicable minimum funding requirements. Benefits are payable only after the termination of an employee’s service with Cigna. The CPP consists of Parts A and B, as described below. Part A covered certain employees hired before 1989, while Part B covered all other eligible U.S. employees. The CPP’s benefit formulas applied equally to NEOs and other employees. CPP benefits are based on an employee’s years of credited service and eligible earnings. “Credited service” is generally the period of an employee’s service with a Cigna company while the individual participated in the CPP. An employee received credit for one year of credited service for any calendar year in which the employee was credited with at least 1,000 hours of service. No employee has received credit for any service after 2009. “Eligible earnings” include base salary and annual incentive pay, but not payments under any long-term incentive compensation plans. Earnings after July 1, 2009 are not eligible earnings. Part A For credited service before April 1, 2008, Part A provides an annual retirement benefit stated in terms of a single life annuity payable at age 65. That annual benefit equals: the employee’s years of credited service (up to a maximum of 30 years); multiplied by 2% of the higher of the employee’s average annual eligible earnings over (a) the final 36 months of service, or (b) the three consecutive calendar years with the highest eligible earnings; and minus an offset equal to approximately half of the employee’s annual Social Security benefits. On March 31, 2008, this formula was frozen so that credited service after March 31, 2008 and eligible earnings after July 1, 2009 are not counted. Part A benefits under the frozen formula are generally payable only in annuity form as early as age 55. An actuarial reduction applies if benefit payments begin before age 65. All Part A participants are 100% vested. Effective April 1, 2008, Cigna adopted a new cash balance formula under Part A. For credited service on or after April 1, 2008, the plan provides a retirement benefit stated as a lump sum hypothetical account balance. That account balance equals the sum of (1) the employee’s accumulated annual benefit credits and (2) quarterly interest credits. For each year that an employee earned a year of credited service, the employee’s account received annual benefit credits equal to a percentage of eligible earnings: 8% for 2008 eligible earnings after March 31, 2008; 9% for 2009 eligible earnings through July 1, 2009; and 3% once an employee has 30 years of credited service. On the last day of each calendar quarter until an employee’s benefit is paid, the employee’s account also received interest credits, which were based on an annual rate equal to the lesser of 9% or the yield on the five-year U.S. Treasury Constant Maturity Notes for the month of November of the preceding calendar year, plus 25 basis points. However, the annual rate would not be less than 4.5%. The hypothetical account balance is payable as early as an employee’s termination of employment. Payments may be made in annuity form or lump sum, at the employee’s election subject to the terms of the CPP. Part B Part B provides a retirement benefit stated as a lump sum hypothetical account balance similar to the Part A cash balance benefit described above. However: Annual Part B benefit credits range from 3% to 8.5% of eligible earnings, based on the employee’s age and accumulated years of credited service. Effective July 1, 2009, when the Plan was frozen, any Part B participant employed by Cigna on April 1, 2009 became 100% vested. | | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 5963
| |
Cigna Supplemental Pension Plan and Cigna Supplemental Pension Plan of 2005 The Cigna Supplemental Pension Plan (CSPP), an unfunded, nonqualified plan, was frozen effective December 31, 2004, and replaced with the Cigna Supplemental Pension Plan of 2005 (CSPP 2005), also an unfunded, nonqualified plan, which was frozen effective July 1, 2009. The CSPP provides an additional pension benefit to any employee whose CPP benefit is limited by one or more federal income tax laws, including limitations on compensation recognition, limitations on retirement benefits amounts and an exclusion from eligible earnings of any compensation deferred under a nonqualified deferred compensation arrangement. The additional benefit equals the amount by which those limits reduce the pension benefit an employee would otherwise receive under the CPP. The same plan provisions, including the definitions of service and earnings, apply equally to all employees with compensation above the qualified plan limits, including the NEOs. In calculating CSPP benefits, the above limits are ignored; otherwise, the regular CSPP formulas and other terms and conditions apply. CSPP benefits are paid in the year after an employee reaches age 55 or separates from service with Cigna, whichever is later.Pre-2005 benefits are ordinarily paid in a lump sum, based on the rules of the CSPP, but an employee who makes a timely election in compliance with applicable tax law may have all or part of the benefit that was earned and vested before 2005 paid in equivalent monthly installments. Any lump sum more than $100,000 is payable in two installments, with the second installment paid one year after the first. Supplemental pension plan benefits earned after 2004 are covered under the CSPP 2005, which provides only for payments in a lump sum in the year after an employee separates from service or reaches age 55, whichever is later. | | | 64 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
NONQUALIFIED DEFERRED COMPENSATION FOR 20152017 This table provides information about the contributions, earnings and balances of Mr.for Messrs. Cordani, Palmer, Hocevar, and Sadler under the deferred compensation planplans as of and for the year ended December 31, 2015. None of the2017. The other NEOs did not have deferred compensation. | NAME (a) | | PLAN NAME (b) | | EXECUTIVE CONTRIBUTIONS IN LAST FY ($) (c) | | | REGISTRANT CONTRIBUTIONS IN LAST FY ($) (d) | | | AGGREGATE EARNINGS IN LAST FY ($) (e) | | | AGGREGATE WITHDRAWAL/ DISTRIBUTIONS ($) (f) | | | AGGREGATE BALANCE AT LAST FYE ($) (g)(1) | | | PLAN NAME (b) | | EXECUTIVE CONTRIBUTIONS IN LAST FY ($) (c) | | | REGISTRANT CONTRIBUTIONS IN LAST FY ($) (d) | | | AGGREGATE EARNINGS
IN LAST FY ($) (e) | | | AGGREGATE WITHDRAWAL/ DISTRIBUTIONS ($) (f) | | | AGGREGATE BALANCE AT LAST FYE ($) (g) | | David M.
Cordani | | Cigna Deferred
Compensation Plan | | | — | | | | — | | | | 135,486 | | | | — | | | | 456,279 | | | Cigna Deferred
Compensation Plan | | | — | | | | — | | | | 217,567 | | | | — | | | | 633,623 | (1) | | | | | | | | | | | | | | | | Eric P. Palmer | | | Cigna Deferred
Compensation Plan | | | — | | | | — | | | | 4,479 | | | | | | 154,136 | | | | | | | | | | | | | | | | | Christopher J. Hocevar | | | Cigna Deferred
Compensation Plan | | | | | | | 68,569 | | | | 100,634 | | | | 369,414 | | | | | | | | | | | | | | | | | Jason D. Sadler | | | Mandatory Provident
Fund(2) | | | 2,304 | | | | 2,304 | | | | 11,587 | | | | — | | | | 41,993 | | | | Third Country
National Pension
Plan(3) | | | — | | | | 91,168 | | | | 125,106 | | | | — | | | | 956,432 | | | | | | | | | | | | | | | | |
| | (1) | This column includesIncludes compensation earned in prior years and reported in the Summary Compensation Tables of Cigna’s previous proxy statements (beginning with the 2007 proxy statement) in the aggregate amount of $95,200 for Mr. Cordani. |
| (2) | Cigna’s contributions are included in the Summary Compensation Table. |
| (3) | Cigna’s contributions are included in the Summary Compensation Table. |
Cigna Deferred Compensation Plan Cigna credits deferred compensation with hypothetical investment earnings during the deferral period as follows: Deferred cash compensation is credited with amounts that equal the gains (or losses) on the actual investment options available under the Cigna 401(k) Plan. The 401(k) investment options include a default fixed income fund with an annual interest rate applicable for 20152017 of 3.65%3.0%, which is not considered an “above market” interest rate as that term is defined by the SEC. The fixed income fund is the only hypothetical investment option available tonon-executive employees. Deferred shares of Cigna common stock are credited with amounts equal to any dividends that are paid on actual shares of Cigna common stock. These hypothetical dividends are treated as deferred cash compensation. Subject to limitations under Section 16 of the Securities Exchange Act of 1934 and under Cigna’s Securities Transactions and Insider Trading Policy, which prohibits trading by Cigna’s NEOs during blackout periods, executive officers who participate in the Deferred Compensation Plan can defer up to 100% of their base salary and annual incentive award and change their hypothetical investment allocations on deferrals once per quarter. Generally, payments of deferrals after 2004 will be made or will begin during one of the following periods: July of the year following the year of an executive’s separation from service; the 90 day period beginning January 1 of the year following the year of an executive’s death; or a date specified by the officer or by Cigna. Deferred compensation balances represent a general unsecured and unfunded obligation of Cigna. | | | | | | | 60
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL The Contingent Payments Table on page 62 reflects the estimated amount of incremental compensation that would become payable to each of the NEOs, except Mr. McCarthy and Mr. Manders, under existing plans and arrangements if the NEO’s employment had terminated in certain scenarios on December 31, 2015,2017, given the NEO’s compensation and service levels as of such date and, if applicable, based on our closing stock price on that dateDecember 29, 2017, the last business day of the year ($146.33203.09 per share). Mr. McCarthy retired on June 16, 2017 and Mr. Manders retired on November 3, 2017. The terms of their retirement arrangements are described below. All change of control benefits are “double-trigger,” which means that they are payable only upon a change of control followed by termination of employment. Additionally, in connection with any actual termination of employment or change of control transaction, we may decide to enter into an agreement or to establish an arrangement providing additional benefits or amounts, or altering the terms of the benefits described below, as the People Resources Committee determines appropriate. The actual incremental amounts that would be paid upon ana NEO’s termination of employment or in connection with a change of control can be determined only at the time of any such event. The calculation of the hypothetical amounts paid to each of the NEOs in the circumstances described below relies on assumptions used in making the calculations. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be higher or lower than those reported below. Factors that could affect these amounts include the timing during the year of any such event, our stock price and specific plan terms that govern administration of payments. See also the Employment“Employment Arrangements and Post-Termination Payments section ofPayments” in the CD&A on page 46 for a description of Cigna’s policies on severance pay and information on the retention agreement with Mr. Fritch.pay. In calculating the hypothetical payment amounts, we have assumed that: (1) change of control and termination occur as of December 31, 2015;2017; (2) payments of benefits are made in a lump sum on December 31, 2015;2017; and (3) the value of options would be equal to the value realized upon exercise of those options that accelerate as a result of the applicable event and that werein-the-money as of December 31, 2015.2017. However, the actual exercise date of options is not known and payment dates would vary because of Internal Revenue Code rules relating to deferred compensation. The table shown below does not include certainnon-forfeitable payments or benefits, such as 401(k), supplemental 401(k), deferred compensation, pension plans and the value of previously vestedin-the-money options, assuming exercise; in each case, the NEO would, subject to certain limitations, receive these payments or benefits upon termination, including voluntary termination or termination for cause. See Terms of Mr. McCarthy’s Retirement Arrangement Mr. McCarthy retired effective June 16, 2017. In June 2017, he and the Pension BenefitsCompany entered into the McCarthy A&R Agreement in connection with his retirement. The McCarthy A&R Agreement provided for 2015benefits consisting of: (1) the payment of Mr. McCarthy’s annual cash incentive for his service in 2017 at 50% of his annual target, subject to the Company’s attainment ofpre-established performance goals; and Nonqualified Deferred Compensation(2) payout of previously awarded SPSs for 2015 tablesthe 2015–2017, 2016–2018 and 2017–2019 performance periods, prorated based on pages 58the number of months that Mr. McCarthy would have been employed during each36-month performance period if his employment continued through December 31, 2017. The agreement confirmed that, pursuant to the LTIP and 60, respectively.the terms of the original grants, Mr. McCarthy’s stock options vested upon his retirement to the extent unvested. The aggregate value of these benefits was approximately $5.3 million, based on a stock price of $169.08 per share, the closing price of Cigna’s common stock on June 16, 2017. The percentage of actual shares earned and timing of the payment of the SPS awards will be determined by the People Resources Committee in accordance with the terms of the LTIP. Stock options awarded under the LTIP will expire at their original term. Mr. McCarthy and the Company also entered into an Advisory Services Agreement, pursuant to which Mr. McCarthy provided advice and counsel to senior management on business planning and strategy. Mr. McCarthy was paid $30,000 per month during the term of the agreement, plus $6,000 per day for each additional day Mr. McCarthy performed services in excess of five days in a given month. The Advisory Services Agreement expired on December 19, 2017. Terms of Mr. Manders’ Retirement Arrangement Mr. Manders retired effective November 3, 2017. In October 2017, he and the Company entered into the Manders A&R Agreement in connection with his retirement. The Manders A&R Agreement provided for benefits consisting of: (1) the | | | 66 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
payment of Mr. Manders’ annual cash incentive for his service in 2017 at 100% of his annual target, subject to the Company’s attainment ofpre-established performance goals; and (2) payout of previously awarded SPSs for the 2015–2017, 2016–2018 and 2017–2019 performance periods, prorated based on the number of months that Mr. Manders would have been employed during each36-month performance period if his employment continued through December 31, 2017. The agreement confirmed that, pursuant to the LTIP and the terms of the original grants, Mr. Manders’ stock options vested upon his retirement to the extent unvested. The aggregate value of these benefits was approximately $8.4 million, based on a stock price of $201.90 per share, the closing price of Cigna’s common stock on November 3, 2017. The percentage of actual shares earned and timing of the payment of the SPS awards will be determined by the People Resources Committee in accordance with the terms of the LTIP. Stock options awarded under the LTIP will expire at their original term. Contingent Payment Descriptions The aggregate amounts in the Contingent Payments Table appear under the following headings: | | • | | Severance, which refers to salary continuation upon involuntary termination, or salary continuation upon involuntary termination and change of control for the NEOs. |
| | • | | Annual Incentive, which refers to annual cash incentive awards payable to the NEOs. |
| | • | | Vesting of Previously Awarded Long-Term Incentives, which refers to accelerated vesting ofin-the-money options and/or restricted stock and SPSs. |
| | • | | Outplacement Services and Other Benefits, which includes the cost to the Company for outplacement services and/or Company-paid basic life insurance. |
| | • | | Change of ControlCut-Back,which refers to the application of the reduction of the total payment upon change of control, by which either: (1) an executive will receive the full amount of change of control benefits and also pay any resulting excise tax; or (2) an executive’s change of control benefits will be reduced enough to avoid the excise tax entirely – whichever alternative provides the executive with the greater amount ofafter-tax benefits. |
Hypothetical payment amounts represent an approximation of the potential payment. | | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 6167
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| | | | | | | | | | | | | | | | | CONTINGENT PAYMENTS All Actions Assume a December 31, 2015 Termination Date | | | | | INVOLUNTARY TERMINATION
NOT FOR CAUSE ($) (a) | | | TERMINATION UPON A CHANGE OF CONTROL ($) (b) | | | EARLY
RETIREMENT
OR
RETIREMENT ($) (c) | | | TERMINATION UPON DEATH OR DISABILITY ($) (d) | | David M. Cordani | | | | | | | | | | | | | | | | | Severance | | | 1,200,000 | | | | 10,200,000 | | | | — | | | | — | | Annual Incentive | | | 2,200,000 | | | | — | | | | — | | | | — | | Vesting of Previously Awarded Long-Term
Incentives | | | 21,984,766 | | | | 71,757,578 | | | | — | | | | 50,579,091 | | Outplacement Services and Other Benefits | | | 29,310 | | | | 19,310 | | | | — | | | | — | | Change of Control Cut-Back | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | TOTAL | | | 25,414,076 | | | | 81,976,888 | | | | — | | | | 50,579,091 | | | | | | | | | | | | | | | | | | | | | | | Thomas A. McCarthy | | | | | | | | | | | | | | | | | Severance | | | 740,000 | | | | 4,620,000 | | | | — | | | | — | | Annual Incentive | | | 800,000 | | | | — | | | | 800,000 | | | | — | | Vesting of Previously Awarded Long-Term
Incentives | | | 3,824,335 | | | | 12,491,006 | | | | 7,024,995 | | | | 8,649,550 | | Outplacement Services and Other Benefits | | | 26,202 | | | | 16,202 | | | | — | | | | — | | Change of Control Cut-Back | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | TOTAL | | | 5,390,537 | | | | 17,127,208 | | | | 7,824,995 | | | | 8,649,550 | | | | | | | | | | | | | | | | | | | | | | | Herbert A. Fritch | | | | | | | | | | | | | | | | | Severance | | | 1,000,000 | | | | 6,000,000 | | | | — | | | | — | | Annual Incentive | | | 1,000,000 | | | | — | | | | 1,000,000 | | | | — | | Vesting of Previously Awarded Long-Term
Incentives | | | 17,072,467 | | | | 25,058,744 | | | | 20,342,675 | | | | 21,497,365 | | Outplacement Services and Other Benefits | | | 27,037 | | | | 17,037 | | | | — | | | | — | | Change of Control Cut-Back | | | — | | | | (2,090,268 | ) | | | — | | | | — | | | | | | | | | | | | | | | | | | | | TOTAL | | | 19,099,504 | | | | 28,985,513 | | | | 21,342,675 | | | | 21,497,365 | | | | | | | | | | | | | | | | | | | | | | | Nicole S. Jones | | | | | | | | | | | | | | | | | Severance | | | 581,138 | | | | 3,423,413 | | | | — | | | | — | | Annual Incentive | | | 560,000 | | | | — | | | | — | | | | — | | Vesting of Previously Awarded Long-Term
Incentives | | | 3,717,660 | | | | 11,466,657 | | | | — | | | | 8,136,186 | | Outplacement Services and Other Benefits | | | 26,327 | | | | 16,327 | | | | — | | | | — | | Change of Control Cut-Back | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | TOTAL | | | 4,885,125 | | | | 14,906,397 | | | | — | | | | 8,136,186 | | | | | | | | | | | | | | | | | | | | | | | Matthew G. Manders | | | | | | | | | | | | | | | | | Severance | | | 750,000 | | | | 4,950,000 | | | | — | | | | — | | Annual Incentive | | | 900,000 | | | | — | | | | — | | | | — | | Vesting of Previously Awarded Long-Term
Incentives | | | 4,302,541 | | | | 13,636,376 | | | | — | | | | 9,514,991 | | Outplacement Services and Other Benefits | | | 26,584 | | | | 16,584 | | | | — | | | | — | | Change of Control Cut-Back | | | — | | | | (3,921,422 | ) | | | — | | | | — | | | | | | | | | | | | | | | | | | | | TOTAL | | | 5,979,125 | | | | 14,681,538 | | | | — | | | | 9,514,991 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | CONTINGENT PAYMENTS All Actions Assume a December 31, 2017 Termination Date | | | | | INVOLUNTARY TERMINATION
NOT FOR CAUSE ($) (a) | | | TERMINATION UPON A CHANGE OF CONTROL ($) (b) | | | EARLY
RETIREMENT
OR
RETIREMENT ($) (c) | | | TERMINATION UPON DEATH OR DISABILITY ($) (d) | | David M. Cordani | | | | | | | | | | | | | | | | | Severance | | | 1,400,000 | | | | 12,600,000 | | | | — | | | | — | | Annual Incentive | | | 2,800,000 | | | | — | | | | — | | | | — | | Vesting of Previously Awarded Long-Term Incentives | | | 18,084,352 | | | | 53,159,946 | | | | — | | | | 42,884,405 | | Outplacement Services and Other Benefits | | | 29,306 | | | | 19,306 | | | | — | | | | — | | Change of ControlCut-Back | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | TOTAL | | | 22,313,658 | | | | 65,779,252 | | | | — | | | | 42,884,405 | | | | | | | | | | | | | | | | | | | | | | | Eric P. Palmer | | | | | | | | | | | | | | | | | Severance | | | 675,000 | | | | 4,275,000 | | | | — | | | | — | | Annual Incentive | | | 750,000 | | | | — | | | | — | | | | — | | Vesting of Previously Awarded Long-Term Incentives | | | 1,079,423 | | | | 3,638,614 | | | | — | | | | 2,831,737 | | Outplacement Services and Other Benefits | | | 25,812 | | | | 15,812 | | | | — | | | | — | | Change of ControlCut-Back | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | TOTAL | | | 2,530,235 | | | | 7,929,426 | | | | — | | | | 2,831,737 | | | | | | | | | | | | | | | | | | | | | | | Nicole S. Jones | | | | | | | | | | | | | | | | | Severance | | | 630,000 | | | | 3,930,000 | | | | — | | | | — | | Annual Incentive | | | 680,000 | | | | — | | | | — | | | | — | | Vesting of Previously Awarded Long-Term Incentives | | | 2,579,243 | | | | 7,651,637 | | | | — | | | | 6,174,767 | | Outplacement Services and Other Benefits | | | 26,426 | | | | 16,426 | | | | — | | | | — | | Change of ControlCut-Back | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | TOTAL | | | 3,915,669 | | | | 11,598,063 | | | | — | | | | 6,174,767 | | | | | | | | | | | | | | | | | | | | | | | Christopher J. Hocevar | | | | | | | | | | | | | | | | | Severance | | | 550,000 | | | | 3,150,000 | | | | — | | | | — | | Annual Incentive | | | 500,000 | | | | — | | | | — | | | | — | | Vesting of Previously Awarded Long-Term Incentives | | | 1,208,995 | | | | 4,058,087 | | | | — | | | | 3,289,391 | | Outplacement Services and Other Benefits | | | 26,009 | | | | 16,009 | | | | — | | | | — | | Change of ControlCut-Back | | | — | | | | (730 | ) | | | — | | | | — | | | | | | | | | | | | | | | | | | | | TOTAL | | | 2,285,004 | | | | 7,223,366 | | | | — | | | | 3,289,391 | | | | | | | | | | | | | | | | | | | | | | | Jason D. Sadler | | | | | | | | | | | | | | | | | Severance | | | 648,837 | | | | 3,893,020 | | | | — | | | | — | | Annual Incentive | | | 648,837 | | | | — | | | | — | | | | — | | Vesting of Previously Awarded Long-Term Incentives | | | 2,487,853 | | | | 5,996,910 | | | | — | | | | 4,974,555 | | Outplacement Services and Other Benefits | | | 25,000 | | | | 15,000 | | | | — | | | | — | | Change of ControlCut-Back | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | TOTAL | | | 3,810,527 | | | | 9,904,930 | | | | — | | | | 4,974,555 | | | | | | | | | | | | | | | | | | | |
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| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
Involuntary Termination not for Cause (Column (a)) Payments and benefits may be provided to NEOs whose employment is terminated because of job elimination or any othernon-cause reason. If a NEO is terminated not for cause, there is no plan or formula that prescribes benefits that would be provided. Some of the benefits, such as severance payments or payments in the amount of the value of unvested restricted stock awards, would be subject to the discretion of the People Resources Committee. In exercising such discretion, the Committee typically considers length of service, target total compensation, and career plans following termination of employment. From the range of possible decisions the People Resources Committee may make about payments and benefits, we have assumed for purposes of this estimate that a NEO would receive: An amount equal to one year of base salary. A prorated portion of that individual’s annual incentive target for the year in which termination occurs. The total amount of the annual incentive payout for 20152017 was included in the estimate because it assumes termination atyear-end. Payout of a prorated portion of previously awarded SPSs based on 100% of the 2013–20152015–2017 SPS award, 67% of the 2014–20162016–2018 SPS award and 33% of the 2015–20172017–2019 SPS award. The value shown for such NEO represents the number of SPSs multiplied by $146.33,$203.09, the December 31, 201529, 2017 closing price of Cigna common stock. A lump sum payment equal to the value of unvested restricted stock, calculated by multiplying the number of shares of restricted stock forfeited upon termination, by the closing price on the assumed termination date, which was $146.33$203.09 on December 31, 2015. For Mr. Fritch, the restricted stock granted as part of his retention agreement would immediately vest and be delivered as shares in lieu of receiving a lump sum cash payout.29, 2017. Outplacement services and Company-paid basic life insurance, each for a period of one year. For purposes of this estimate, a cost of $25,000 for outplacement services was used. Previous separation agreements with executive officers required the officer to make certain promises, covenants and waivers, includingnon-competition andnon-solicitation obligations and a general release, in exchange for the benefits and payments provided by Cigna. Pursuant to his retention agreement, upon a resignation for good reason, the vesting of Mr. Fritch’s restricted stock awards would accelerate. Had Mr. Fritch resigned for good reason on December 31, 2015, the value of this unvested restricted stock would have been $13,175,553.
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Termination upon a Change of Control (Column (b)) The payments and benefits discussed are entirely hypothetical and contingent in nature. However, if a change of control were to occur, executive officers who are terminated (other than as the result of conviction of a felony involving fraud or dishonesty directed against Cigna) within two years after a change of control would be entitled to the following payments and benefits: 156 weeks of pay, at the base salary rate in effect at termination. Three-times the greater of the executive’s last annual incentive payout or the amount of the executive’s annual incentive target immediately before the change of control. The number of outstanding SPSs multiplied by the greatest of: 100%; the vesting percentage from the preceding performance period; or the average vesting percentage for the last two performance periods. For purposes of this estimate, a vesting percentage of 170.5%139.5% of target was used. The value shown for each NEO represents the number of SPSs estimated to vest multiplied by $146.33,$203.09, the closing price of Cigna common stock on December 31, 2015.29, 2017. Unvested stock options and restricted stock awards would vest. Options would expire on the earlier of the original expiration date or three months after the termination date. Six months of outplacement services and life insurance for one year paid by the Company. For purposes of this estimate, a cost of $15,000 for outplacement services was used. If, within two years after a change of control, any of the following changes affect an executive officer, and he or she then resigns following written notification to Cigna, the resignation will be treated as a termination upon a change of control: 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. | | | | | | | 64
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 69 | |
Early Retirement or Retirement (Column (c)) Upon early retirement (on or after age 55 and at least five years of service) or retirement (on or after age 65 and at least five years of service), the amount of any benefits or payments to ana NEO is subject to the discretion of the People Resources Committee and/or the terms of any agreement executed by the Company and the retiring NEO that has been approved by the Committee. From the range of possible decisions the People Resources Committee may make about payments and benefits, we have assumed for purposes of this estimate a NEO would receive: A prorated portion of that individual’s annual incentive target. The calculation includes the total annual incentive target for 20152017 because the estimate assumes termination atyear-end. Payout of a prorated portion of previously awarded SPSs based on 100% of the 2013–20152015–2017 SPS award, 67% of the 2014–20162016–2018 SPS award and 33% of the 2015–20172017–2019 SPS award. The value shown for such NEO represents the number of SPSs held by the NEO multiplied by the closing price of Cigna common stock on December 31, 201529, 2017 ($146.33)203.09). Vesting of any unvested options would be accelerated and the options would become exercisable at retirement and expire on the original expiration date. The calculation includes the gain onin-the-money exercisable options, assuming option exercises on December 31, 2017. | | in-the-money exercisable options, assuming option exercises on December 31, 2015.
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Vesting of any unvested Cigna restricted stock awards upon retirement, subject to the People Resources Committee’s approval. At December 31, 2015, only Mr. McCarthy and Mr. Fritch2017, none of the NEOs serving as executive officers were eligible for early retirement. Death or Disability (Column (d)) If a NEO dies while still an active employee, certain benefits are available to that individual’s estate or surviving spouse. Restrictions on restricted stock awards would lapse upon death or disability. In addition, vesting of any unvested options would be accelerated and the options would become exercisable and expire on the original expiration date. Upon death, the NEO’s estate or the surviving spouse would also receive an immediate payout of 100% of the outstanding SPS awards for the 2014–20162015–2017, 2016–2018 and 2015–20172017–2019 performance periods. Upon disability, the NEO’s 2014–20162015–2017, 2016–2018 and 2015–20172017–2019 SPS awards would fully vest, but would not be paid out until the end of the performance period. Payment of outstanding SPS awards upon death or disability for the 2013–2015 performance period is subject to the discretion of the People Resources Committee. In accordance with past practice, the estimates assume that the NEO’s estate or the surviving spouse would receive payment of 100% of the 2013–20152015–2017 SPS award. | | | | | | | | | Cigna 2016 Notice of Annual Meeting of Shareholders and Proxy Statement
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REPORT OF THE PEOPLE RESOURCES COMMITTEE
The People Resources Committee of the Board of Directors reviewed and discussed with Cigna’s management the Compensation Discussion and Analysis. Based on this review and discussion, the People Resources Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and be incorporated by reference in the Annual Report on Form 10-K for the year ended December 31, 2015 filed with the Securities and Exchange Commission. The Board accepted the Committee’s recommendation.
People Resources Committee:
William D. Zollars, Chair
Eric J. Foss
Jane E. Henney, M.D.
John M. Partridge
Eric C. Wiseman
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| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
Ratification of Appointment of Independent Registered
Public Accounting Firm (Proposal 3) The Board’s Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. The Audit Committee approved the appointment of PricewaterhouseCoopers LLP as Cigna’s independent registered public accounting firm for 2016.2018. PricewaterhouseCoopers LLP has served as Cigna’s independent registered public accounting firm since Cigna’s formation in 1983. In order to assure continuingensure continued auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm. Further, in conjunction with the mandated rotation of the audit firm’s lead engagement partner, the Chair of the Audit Committee and the Chairman of the Board are involved in the selection of PricewaterhouseCoopers LLP’s lead engagement partner. The Audit Committee and the Board believe that the continued retention of PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm is in the best interests of the Company and its shareholders. As a matter of good corporate governance, the Board is seeking shareholder ratification of the appointment even though ratification is not legally required. If shareholders do not ratify this appointment, the Audit Committee will reconsider PricewaterhouseCoopers’ appointment. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time of the year if it determines that such a change would be in the best interests of the Company and its shareholders. A representative from PricewaterhouseCoopers LLP is expected to attend the Annual Meeting, may make a statement, and will be available to respond to appropriate questions. | | | | | | | | | | | | | | | | | | | | | | The Board of Directors unanimously recommends that shareholders vote FOR FOR the ratification of the the appointment of PricewaterhouseCoopers LLP as Cigna’s independent registered public
accounting firm. | | | | | | | | | | | | | | | | | | | |
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Policy for thePre-Approval of Audit and PermissibleNon-Audit Services The Audit Committeepre-approves all audit and permissiblenon-audit services provided by the Company’s independent registered public accounting firm. Specifically: The full Audit Committeepre-approves all audit, review and attest services and their related fees. The Audit Committee has oversight of fee negotiations with the independent registered public accounting firm. The General Auditor and Chief Risk Officer (CRO)(a role held by one individual and referred to as the CRO) for the Company presents to the full Audit Committee a schedule, accompanied by detailed documentation, listing all audit and permissiblenon-audit services expected to be performed by the Company’s independent registered public accounting firm during the calendar year. In the case of any additional permissiblenon-audit services concerning internal control over financial reporting and any tax service,services, the independent registered public accounting firm includes a written description of the scope of service and other information about the proposed service. The Audit Committee reviews the schedule and documentation, andpre-approves the audit and permissiblenon-audit services it deems appropriate. For additional audit and permissiblenon-audit services that arise during the calendar year, the CRO presents an updated schedule reflecting the | | | additional services for review and consideration forpre-approval by the Audit Committee. After the CRO’s presentation of the schedules as described above and, if applicable, a discussion with the Company’s independent registered public accounting firm regarding the potential effects of any permissiblenon-audit services related to internal control over financial reporting or permissible tax services on the independence of the Company’s independent registered public accounting firm, the Audit Committee will approve those audit and permissiblenon-audit services it deems appropriate and necessary. |
The policy allows thepre-approval of additional audit and permissiblenon-audit services to be delegated to one or more Audit Committee members so long as the proposed services do not exceed $250,000 individually. Any services approved in this manner must be reported to the full Audit Committee at its next regularly scheduled meeting. The CRO reports to the Audit Committee at each meeting on anynon-audit services performed by the independent registered public accounting firm and on fees incurred for any services performed by the independent registered public accounting firm. At eachin-person meeting, the CRO reports to the Audit Committee the projected ratio between audit andnon-audit fees of the independent registered public accounting firm. | | | 6872
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
Fees to Independent Registered Public Accounting Firm Aggregate fees billed forThe Audit Committee reviewed and approved the professional services rendered to Cigna by PricewaterhouseCoopers LLP forconsisting of the audit of financial statements for the fiscal years ended December 31, 2015 and December 31, 2014, and fees billed for other services rendered by PricewaterhouseCoopers LLP during those periods were as follows:following:
| | | | 2015 | | | 2014 | | | 2017 | | | 2016 | | Audit Fees | | $ | 11,396,000 | | | $ | 10,817,000 | | | $ | 12,388,000 | | | $ | 11,809,000 | | Audit-Related Fees | | | 2,482,000 | | | | 1,399,000 | | | | 2,036,000 | | | | 2,146,000 | | Tax Fees | | | 347,000 | | | | 508,000 | | | | 697,000 | | | | 379,000 | | All Other Fees | | | 579,000 | | | | 367,000 | | | | 605,000 | | | | 276,000 | | TOTAL | | $ | 14,804,000 | | | $ | 13,091,000 | | | $ | 15,726,000 | | | $ | 14,610,000 | | | | | | | | |
Audit fees include the audit of annual financial statements; the review of quarterly financial statements; the performance of statutory audits; quarterly comfort letter work; and the evaluation of the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Audit-related fees include assurance and related services that were reasonably related to the audit of annual financial statements and reviews of quarterly financial statements, but not reported under Audit Fees. Audit-related fees include: employee benefit plan audits; internal control reviews (e.g., Statement of Standards for Attestation Engagements No. 16 reports); consultation concerning financial accounting and reporting standards; agreed upon procedures; due diligence purchase accounting; and regulatory examinations. Tax fees include tax recovery services, tax consulting and tax compliance services. All other feesinclude professional services rendered by PricewaterhouseCoopers LLP not reported in any other category and includepre-approved business process advisory and other services that, for 2015,2017, relate primarily to an information technology assessment, a market demographics assessment, regulatory trainingbenchmarking exercise, a data analysis project and an assessment related to the transition to the new financial reporting standard applicable in the U.K.a quality assessment. | | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 6973
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REPORT OF THE AUDIT COMMITTEEReport of the Audit Committee
Cigna maintains an independent Audit Committee that operates under a written charter adopted by the Board of Directors. All of the members of the Audit Committee are independent (as defined in the listing standards of the New York Stock Exchange, SEC regulations and Cigna’s independence standards). Cigna’s management has primary responsibility for preparing Cigna’s financial statements and establishing and maintaining financial reporting systems and internal controls. Management also is responsible for reporting on the effectiveness of Cigna’s internal control over financial reporting. The independent registered public accounting firm is responsible for performing an independent audit of Cigna’s consolidated financial statements and issuing a report on these financial statements. The independent registered public accounting firm also is responsible for, among other things, issuing an attestation report on the effectiveness of Cigna’s internal control over financial reporting based on its audit. As provided in the Audit Committee’s charter, the Audit Committee’s responsibilities include oversight of these processes. As part of its oversight responsibilities, the Audit Committee meets periodically with Cigna’s CRO,Chief Financial Officer, General Auditor and Chief Risk Officer, Chief Accounting Officer, General Counsel, Global Chief FinancialCompliance Officer, Medicare/Medicaid Chief Compliance Officer, Global Chief Information Officer and independent registered public accounting firm, with and without management present, to discuss the adequacy and effectiveness of Cigna’s internal controls and the quality of the financial reporting process. In this context, before Cigna filed its Annual Report onForm 10-K for the year ended December 31, 2015 (Form2017(Form 10-K) with the Securities and Exchange Commission, the Audit Committee: Reviewed and discussed with Cigna’s management the audited consolidated financial statements included in theForm 10-K and considered management’s view that the financial statements present fairly, in all material respects, the financial condition and results of operations of Cigna. Reviewed and discussed with Cigna’s management and with the independent registered public accounting firm, PricewaterhouseCoopers LLP, the effectiveness of Cigna’s internal control over financial reporting as well as management’s report and PricewaterhouseCoopers LLP’s attestation on the subject. Discussed with PricewaterhouseCoopers LLP matters related to the conduct of its audit that are required to be communicated by auditors to audit committees and matters related to the fair presentation of Cigna’s financial condition and results of operations, including critical accounting estimates and judgments. Received the required written communications from PricewaterhouseCoopers LLP that disclose all relationships that may reasonably be thought to bear on its independence and to confirm its independence. Based on these communications, the Audit Committee discussed with PricewaterhouseCoopers LLP its independence from Cigna. Discussed with each of Cigna’s Chief Executive Officer and Chief Financial Officer their required certifications contained in Cigna’sForm 10-K. Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that such audited consolidated financial statements be included in Cigna’s Annual Report onForm 10-K for the year ended December 31, 20152017 for filing with the Securities and Exchange Commission. Audit Committee: Roman Martinez IV, Chair Michelle D. GassJane E. Henney, M.D.
James E. Rogers Donna F. Zarcone | | | 7074
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
| PROPOSAL TO AMEND RESTATED CERTIFICATE OF INCORPORATION |
Proposal to Amend Restated Certificate of Incorporation to Eliminate the Supermajority Voting Requirement (Proposal 4) Article Fifth of the Company’s Restated Certificate of Incorporation provides that Section 2 of Article III of the Company’sBy-Laws, which relates to the number, qualifications, election and term of office of the Board of Directors, may be amended by the Board or by shareholders, upon the affirmative vote of the holders of at least 80% of the voting power of all of the capital stock of the Company outstanding and entitled to vote. Article VIII of the Company’sBy-Laws contains a similar supermajority vote requirement to amend Section 2 of Article III of theBy-Laws. The Board, as part of its ongoing review of the Company’s corporate governance practices and in light of the declassification of the Board, recognized that the elimination of this supermajority vote requirement would align with best practices in corporate governance. Therefore, on February 28, 2018, the Board approved an amendment to Article Fifth of the Company’s Restated Certificate of Incorporation, subject to approval of shareholders at the Annual Meeting, to eliminate the supermajority voting requirement necessary to amend Section 2 of Article III of the Company’sBy-Laws and replace it with a majority vote requirement. The complete text of the proposed amendment to Article Fifth, marked to show the proposed deletion, is set forth below: Fifth: TheBy-Laws of the Corporation may be adopted, amended or repealed by the affirmative vote of the holders of a majority of the voting power of the capital stock of the Corporation outstanding and entitled to vote thereon; provided, however, that Section 2 of Article III of theBy-Laws may not be amended or repealed, nor may any provision be adopted that is inconsistent with such section, in any case by action of the stockholders, unless such amendment, repeal or adoption is approved by the affirmative vote of the holders of at least 80% of the voting power of the capital stock of the Corporation outstanding and entitled to vote thereon. The Board of Directors shall also have the power to adopt, amend or repeal any provision of theBy-Laws of the Corporation without any vote of the stockholders of the Corporation. Following shareholder approval of this amendment to Article Fifth of the Restated Certificate of Incorporation, the Board will amend theBy-Laws to eliminate the similar supermajority voting requirement contained in Article VIII of theBy-Laws. This action would be taken at the Board’s next meeting after the 2018 Annual Meeting of Shareholders. Thereafter, all supermajority voting provisions will have been removed and shareholders may amend all provisions of the Restated Certificate of Incorporation andBy-Laws by the affirmative vote of a majority of the Company’s outstanding common stock. To be adopted, this Proposal 4 must be approved by the affirmative vote of a majority of the Company’s outstanding common stock. If this Proposal 4 is approved by shareholders, the Company’s Restated Certificate of Incorporation will be amended and restated as set forth in Appendix A and we will file the Restated Certificate of Incorporation with the Secretary of State of the State of Delaware as soon as practicable after the Annual Meeting. | | | | | | | | | | | | | | | | | | | | The Board of Directors unanimously recommends that shareholders vote FOR the amendment to the Company’s Restated Certificate of Incorporation to eliminate the supermajority voting requirement. | | | | | | | | | | | | | | | | | | | |
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| OWNERSHIP OF CIGNA COMMON STOCK |
Stock Held by Directors, Nominees and Executive Officers The following table provides information as of February 1, 2016January 31, 2018 about the amount of Cigna common stock beneficially owned by each director, nominee and executive officer named in the Summary Compensation Table (named executive officers) and the amount of Cigna common stock beneficially owned by the directors, nominees and executive officers as a group. In general, “beneficial ownership” includes those shares a director, nominee or executive officer has the power to vote or transfer (even if another person is the record owner), and stock options that are exercisable as of February 1, 2016January 31, 2018 or that may become exercisable within 60 days. | NAME | | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1) | | | PERCENT
OF CLASS | | | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1) | | | PERCENT
OF CLASS | | Directors and Nominees | | | | | | | | | Eric J. Foss | | | 11,017 | | | | * | | | | 13,413 | | | | * | | Michelle D. Gass | | | 2,753 | | | | * | | | Isaiah Harris, Jr.(2) | | | 13,500 | | | | * | | | | 15,437 | | | | * | | Jane E. Henney, M.D.(2) | | | 15,340 | | | | * | | | | 14,936 | | | | * | | Roman Martinez IV(2) | | | 22,996 | | | | * | | | | 22,996 | | | | * | | John M. Partridge | | | 30,871 | | | | * | | | | 33,267 | | | | * | | James E. Rogers(2) | | | — | | | | * | | | | — | | | | * | | Eric C. Wiseman(2) | | | 4,200 | | | | * | | | | 4,200 | | | | * | | Donna F. Zarcone(2) | | | 19,471 | | | | * | | | | 13,500 | | | | * | | William D. Zollars(2) | | | 14,471 | | | | * | | | | 13,500 | | | | * | | Named Executive Officers | | | | | | | | | David M. Cordani | | | 1,411,614 | | | | * | | | | 1,494,113 | | | | * | | Eric P. Palmer | | | | 28,847 | | | | * | | Christopher J. Hocevar | | | | 26,937 | | | | * | | Nicole S. Jones | | | | 133,408 | | | | * | | Jason D. Sadler | | | | 47,208 | | | | * | | Thomas A. McCarthy | | | 232,789 | | | | * | | | | 221,238 | | | | * | | Herbert A. Fritch | | | 641,250 | | | | * | | | Nicole S. Jones | | | 103,481 | | | | * | | | Matthew G. Manders | | | 179,399 | | | | * | | | | 221,926 | | | | * | | All Directors, Nominees and Executive Officers as a group including those named above (19 Persons) | | | 3,045,593 | | | | 1.2 | % | | All Directors, Nominees and Executive Officers as a group including those named above (22 Persons) | | | | 2,692,880 | | | | 1.1 | % |
| | * | Less than 1% of the outstanding common stock. |
None of the shares reported are pledged as security. | | (1) | Includes, in addition to wholly owned shares owned on February 1, 2016: |
| • | | shares of restricted common stock in the amount of 45,020 for Mr. Fritch and 1,291 for Ms. Jones;January 31, 2018: |
| | • | | 13,500 vested restricted stock units that settle in common stock upon separation of service held by each of Dr. Henney, Ms. Zarcone and Messrs. Harris, Martinez and Zollars, Dr. Henney and Ms. Zarcone;Zollars; |
| | • | | shares acquirable within 60 days of February 1, 2016January 31, 2018 by exercising stock options in the amount of 992,9611,120,397 for Mr. Cordani; 147,87720,875 for Mr. Palmer; 13,222 for Mr. Hocevar; 95,437 for Ms. Jones; 13,964 for Mr. Sadler; 165,340 for Mr. McCarthy; 356,989 for Mr. Fritch; 65,878 for Ms. Jones; 104,527169,811 for Mr. Manders; and an aggregate of 178,387216,938 for other executive officers; |
| | • | | holdings in the Cigna stock fund of Cigna’s 401(k) Plan in the amount of 1,6391,640 for Mr. Cordani; 1,168271 for Mr. McCarthy,Palmer; 931 for Mr. Hocevar; 1,313 for Ms. Jones; 1,169 for Mr. McCarthy; and an aggregate of 3,78213,223 for other executive officers; and |
| | • | | shares paid upon the vesting of the 2013–20152015–2017 SPS program in the amount of 137,02067,070 for Mr. Cordani; 21,5452,701 for Mr. Palmer; 4,033 for Mr. Hocevar; 9,473 for Ms. Jones; 6,650 for Mr. Sadler; 13,877 for Mr. McCarthy; 27,802 for Mr. Fritch; 22,631 for Ms. Jones; 27,07312,720 for Mr. Manders; and an aggregate of 45,56226,234 for other executive officers. |
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| OWNERSHIP OF CIGNA COMMON STOCK |
| | (2) | The table below details as of February 1, 2016January 31, 2018 certain other securities, the value of which is directly tied to the value of Cigna stock as described on page 26 of this Proxy Statement.in“Non-Employee Director Compensation — Director Ownership.” Under SEC rules, deferred common stock and hypothetical shares of common stock are not considered beneficially owned and are therefore not included on the table above.table. |
| NAME | | DEFERRED COMMON STOCK | | HYPOTHETICAL SHARES OF COMMON STOCK | | DEFERRED COMMON STOCK | | | HYPOTHETICAL SHARES OF COMMON STOCK | | Isaiah Harris, Jr. | | | | — | | | | | 23,242 | | | | — | | | | 23,255 | | Jane E. Henney, M.D. | | | | — | | | | | 19,024 | | | | — | | | | 19,024 | | Roman Martinez IV | | | | 20,384 | | | | | 15,414 | | | | 22,780 | | | | 15,423 | | James E. Rogers | | | | 35,124 | | | | | 9,913 | | | | 37,520 | | | | 11,299 | | Eric C. Wiseman | | | | 9,721 | | | | | 2,121 | | | | 12,117 | | | | 3,652 | | Donna F. Zarcone | | | | 5,834 | | | | | 2,795 | | | | 8,230 | | | | 2,797 | | William D. Zollars | | | | — | | | | | 9,779 | | | | — | | | | 9,784 | | | | | | | | |
Additional Information about Stock Held by Directors, Director Nominees and Executive Officers Directors, director nominees and executive officers as a group beneficially own approximately 1.2%1.1% of the outstanding common stock. These beneficial ownership percentages do not include any common stock equivalents and are based on 255,766,905242,875,357 shares of common stock outstanding on February 1, 2016.January 31, 2018. On February 1, 2016,January 31, 2018, the Cigna stock fund of Cigna’s 401(k) plan held a total of 5,541,6644,883,664 shares, or approximately 2.2%2.0% of the outstanding common stock on that date. A Cigna management advisory committee determines how the shares held in the Cigna stock fund will be voted only to the extent the plans’ individual participants do not give voting instructions. The directors, director nominees and executive officers control the voting and investment of all shares of common stock they own beneficially. The address for each individual in the table above is c/o Cigna Corporation, 900 Cottage Grove Road, Bloomfield, Connecticut 06002. | | | | | | | 72
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| OWNERSHIP OF CIGNA COMMON STOCK |
Stock Held by Certain Beneficial Owners The following table and notes provide information about beneficial owners of more than five percent of Cigna’s common stock. The percent of class reported in the table below is based on 255,766,905242,875,357 shares of Cigna common stock outstanding as of February 1, 2016.January 31, 2018. | | | | | | | | | NAME AND ADDRESS OF BENEFICIAL OWNER | | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP | | | PERCENT OF CLASS | | T. Rowe Price Associates, Inc. 100 E. Pratt Street Baltimore, MD 21202 | | | 17,756,569 | (1) | | | 7.3 | % | The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | | | 17,289,066 | (2) | | | 7.1 | % | BlackRock, Inc. 55 East 52nd Street New York, NY 10022 10055 | | 17,728,719(1) | 17,155,180 | (3) | | 6.9% | 7.1 | % | The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
| | 14,775,756(2) | | 5.8% | Dodge & Cox
555 California Street 40th Floor
San Francisco, CA 94104
| | 13,515,865(3) | | 5.3% |
| | (1) | Based on information as of December 31, 20152017 contained in an amended Schedule 13G filed with the SEC on February 10, 201614, 2018 by BlackRock,T. Rowe Price Associates, Inc. The amended Schedule 13G indicates that BlackRock,T. Rowe Price Associates, Inc. has sole voting power with respect to 15,445,029 shares; shared voting power with respect to 1,800 shares;6,047,631 shares and sole dispositive power with respect to 17,726,919 shares; and shared dispositive power with respect to 1,80017,756,569 shares. |
| | (2) | Based on information as of December 31, 20152017 contained in an amended Schedule 13G filed with the SEC on February 11, 20168, 2018 by The Vanguard Group. The amended Schedule 13G indicates that The Vanguard Group has sole voting power with respect to 482,015353,707 shares; shared voting power with respect to 25,80062,005 shares; sole dispositive power with respect to 14,266,04916,884,131 shares; and shared dispositive power with respect to 509,707404,935 shares. According to the amended Schedule 13G, Vanguard Fiduciary Trust Company, a wholly owned subsidiary of The Vanguard Group, Inc., beneficially owns 403,554273,111 of these shares and Vanguard Investments Australia, Ltd., a wholly owned subsidiary of The Vanguard Group, Inc., beneficially owns 184,614210,687 of these shares. |
| | (3) | Based on information as of December 31, 20152017 contained in aan amended Schedule 13G filed with the SEC on February 12, 2016January 29, 2018 by Dodge & Cox.BlackRock, Inc. The amended Schedule 13G indicates that Dodge & CoxBlackRock, Inc. has sole voting power with respect to 12,778,065 shares14,851,415 shares; and sole dispositive power with respect to all of the17,155,180 shares. |
Section 16(a) Beneficial Ownership Reporting Compliance Cigna directors, and executive officers and beneficial owners of more than 10% of our common stock are required to file reports of their holdings and transactions in Cigna securities with the Securities and Exchange Commission. Based on thesea review of the copies of reports furnished to the Company and written representations from our directors and executive officers, the Company believes that all reports due in 20152017 were timely filed. | | | | | | | 78 | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 73
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Questions and Answers About the Proxy Materials Why did I receive proxy materials? What is included in the proxy materials? OurCigna’s Board of Directors is soliciting your proxy to vote at the 20162018 Annual Meeting of Shareholders. You received proxy materials because you owned shares of Cigna common stock at the close of business on February 29, 2016,26, 2018, the record date, and that entitles you to vote at the Annual Meeting.
Proxy materials include the notice of annual meeting of shareholders, the proxy statementthis Proxy Statement and our annual report onForm 10-K for the year ended December 31, 2015.2017. If you received paper copies, the proxy materials also include a proxy card or voting instruction form. The proxy statementProxy Statement describes the matters on which the Board of Directors would like you to vote, and provides information about Cigna that we must disclose under Securities and Exchange Commission regulations when we solicit your proxy. Your proxy will authorize specified persons, each of whom also are referred to as a proxy, to vote on your behalf at the Annual Meeting. By use of a proxy, you can vote whether or not you attend the meeting in person. The written document by which you authorize a proxy to vote on your behalf is referred to as a proxy card. Why did I receive a “Notice of Internet Availability of Proxy Materials” instead of printed copies of the proxy statement and annual report? Cigna has elected to take advantage of the SEC’s rule that allows us to furnish proxy materials to you online. On March 18, 2016,16, 2018, we mailed to shareholders a notice of the Internet availability of proxy materials containing instructions on how to access our proxy materials online. We believe electronic delivery will lower costs and reduce the environmental impact of our Annual Meeting because we will print and mail fewer full sets of materials. You may request to receive printed proxy materials by following the instructions contained in the notice of Internet availability. You also may contact Cigna Shareholder Services. Written requests should be directed to Shareholder Services, Cigna Corporation, Two Liberty Place, 5th Floor, 1601 Chestnut Street, Philadelphia, PA 19192-1550. You may also contact Shareholder Services at the address listed on page 78.(215) 761-3516 or shareholderservices@cigna.com. How can I get electronic access to the proxy materials? The proxy materials are available for viewing atwww.envisionreports.com/ci.ci. The notice of Internet availability of proxy materials also provides instructions on how to: view our proxy materials on the Internet; vote your shares after you have viewed the proxy materials; and select a future delivery preference of paper or electronic copies of the proxy materials. For shareholders who received a printed copy of our materials, you still may choose to receive proxy materials electronically in the future. If you choose to do so, you will receive an email with instructions containing electronic links to the proxy materials for next year’s annual meeting and the proxy voting site. If you hold your shares through a bank, broker or other custodian, you also may have the opportunity to receive the proxy materials electronically. Please check the information contained in the documents provided to you by your bank, broker or other custodian. We encourage you to take advantage of the availability of the proxy materials electronically to help reduce the environmental impact of the Annual Meeting. | | | | | | | 74
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 79 | |
| ANNUAL MEETING INFORMATION |
Questions and Answers About Voting What am I voting on at the Annual Meeting? | | | | | | | | PROPOSAL | | ITEM | | BOARD
RECOMMENDATION | | PAGE | | 1 | | Election of the four director nominees named in this proxy statement for terms expiring in April 2017 | | VoteFOR each of the nominees | | 7 | | 2 | | Advisory approval of executive compensation | | VoteFOR | | 27 | | 3 | | Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2016 | | VoteFOR | | 68 |
| | | | | | PROPOSALS | | ITEM | | BOARD
VOTE RECOMMENDATION | | 1 | | Election of the nine director nominees named in this Proxy Statement | | Vote FOR each of the nominees | | 2 | | Advisory approval of executive compensation | | VoteFOR | | 3 | | Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2018 | | VoteFOR | | 4 | | Approval of an amendment to the Company’s Restated Certificate of Incorporation to eliminate the supermajority voting requirement | | VoteFOR |
Could other matters be decided at the Annual Meeting? We are not aware of any other matters that will be presented and voted upon at the Annual Meeting. The proxies will have discretionary authority, to the extent permitted by law, to decide how to vote on other matters that may come before the Annual Meeting. How many votes can be cast by all shareholders? Each share of Cigna common stock is entitled to one vote on each of the fournine directors named in this Proxy Statement to be elected and one vote on each of the other matters properly presented at the Annual Meeting. We had 256,253,389242,843,575 shares of common stock outstanding and entitled to vote on February 29, 2016.26, 2018. How many votes must be present to hold the Annual Meeting? At leasttwo-fifths of the issued and outstanding shares entitled to vote, or 102,501,35697,137,430 shares, present in person or by proxy, are needed for a quorum to hold the Annual Meeting. Abstentions and brokernon-votes (discussed below) are included in determining whether a quorum is present. We urge you to vote by proxy even if you plan to attend the Annual Meeting. This will help us know that enough votes will be present to hold the meeting. How many votes are needed to approve each proposal? How do abstentions or brokernon-votes affect the voting results? The following table summarizes the vote threshold required for approval of each proposal and the effect on the outcome of the vote of abstentions and uninstructed shares held by brokers (referred to as brokernon-votes). When a beneficial owner does not provide voting instructions to the institution that holds the shares in street name, brokers may not vote those shares in matters deemednon-routine. Proposals 1 and 2 below are non-routine matters. Only Proposal 3 is a routine matter. | | | | | | | | | PROPOSAL
NUMBER | | ITEM | | VOTE REQUIRED
FOR APPROVAL | | EFFECT OF
ABSTENTIONS | | EFFECT OF BROKER
NON-VOTES | | 1 | | Election of directors the nine director nominees named in this Proxy Statement | | Majority of votes cast | | No effect | | Not voted/No effect | | 2 | | Advisory approval of executive compensation | | Majority of shares present
and entitled to vote
| | Counted
“against”
| | Not voted/No effect
| 3 | | Ratification of the
appointment of
independent auditor
| | Majority of shares present and entitled to vote on the subject matter | | Counted
“against” “against” | | Not voted/No effect | | 3 | | Ratification of the appointment of independent auditor | | Majority of shares present and entitled to vote on the subject matter | | Counted “against” | | No brokernon-votes; shares are voted by brokers in their discretion | | 4 | | Approval of an amendment to the Company’s Restated Certificate of Incorporation to eliminate the supermajority voting requirement | | Majority of shares outstanding | | Counted “against” | | Counted “against” |
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| ANNUAL MEETING INFORMATION |
Signed but unmarked proxy cards will be voted “for” proposalsProposals 1, 2, 3 and 3.4. Shares held by the Cigna stock fund of the Cigna 401(k) Plan that are not voted timely or properly will be voted by the plan trustees as instructed by Cigna’s Retirement Plan Committee. | | | | | | | | | Cigna 2016 Notice of Annual Meeting of Shareholders and Proxy Statement
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How do I vote if I own shares as a record holder? If your name is registered on Cigna’s shareholder records as the owner of shares, you are the “record holder.” This may include shares held at Computershare from restricted stock that has vested, shares acquired through an option exercise and shares issued in settlement of SPS awards. If you hold shares as a record holder, there are four ways that you can vote your shares. Over the Internet. Vote atwww.envisionreports.com/ci.ci. The Internet voting system is available 24 hours a day until 11:59 p.m. Eastern Time on Tuesday, April 26, 2016.24, 2018. Once you enter the Internet voting system, you can record and confirm (or change) your voting instructions. By telephone. Use the telephone number shown on your proxy card. The telephone voting system is available 24 hours a day in the United States until 11:59 p.m. Eastern Time on Tuesday, April 26, 2016.24, 2018. Once you enter the telephone voting system, a series of prompts will tell you how to record and confirm (or change) your voting instructions. By mail. If you received a proxy card, mark your voting instructions on the card and sign, date and return it in the postage-paid envelope provided. If you received only a notice of Internet availability but want to vote by mail, the notice includes instructions on how to request a paper proxy card. For your mailed proxy card to be counted, we must receive it before 8:00 a.m. Eastern Time on Wednesday, April 27, 2016.25, 2018. In person. Attend the Annual Meeting, or send a personal representative with a valid legal proxy. Please note that you cannot vote using the notice of Internet availability of proxy materials. The notice identifies the items of business and describes how to vote, but you cannot vote by marking the notice and returning it. How do I vote if my Cigna shares are held by a bank, broker or custodian?custodian (including a Fidelity brokerage account)? If your shares are held by a bank, broker or other custodian (commonly referred to as shares held “in street name”), the holder of your shares will provide you with a copy of this proxy statement,Proxy Statement, a voting instruction form and directions on how to provide voting instructions. These directions may allow you to vote over the Internet or by telephone. Unless you provide voting instructions, your shares will not be voted on any matter except for ratifying the appointment of our independent auditors. To ensure that your shares are counted in each of the election of directors and the advisory approval of executive compensation,other matters, we encourage you to provide instructions on how to vote your shares. If you hold shares in street name and want to vote in person at the Annual Meeting, you will need to ask your bank, broker or custodian to provide you with a valid legal proxy. You will need to bring the proxy with you to the Annual Meeting in order to vote. Please note that if you request a legal proxy from your bank, broker or custodian, any previously executed proxy will be revoked and your vote will not be counted unless you vote in person at the Annual Meeting or appoint another valid legal proxy to vote on your behalf. How do I vote if my Cigna shares are held by Fidelity in an employee stock account? Employee stock accounts maintained by Fidelity include unvested restricted stock that is votable if held on the record date. You should follow the rules above for voting shares held as a record holder. How do I vote shares held in the Cigna stock fund of the Cigna 401(k) Plan? If you have money invested in the Cigna stock fund of the Cigna 401(k) Plan, you may provide voting instructions as to the number of shares allocated to your account on the record date. However, you have an earlier deadline for submitting voting instructions. Your voting instructions must be received by 11:59 p.m. Eastern Time on Thursday, April 21, 2016.19, 2018. You may vote over the Internet, by telephone or by mail (as described above), but you maynot vote shares allocated to your 401(k) accounts in person at the Annual Meeting. The plan trustees will vote such shares in accordance with your voting instructions if they are received timely. If you do not send instructions by the April 21, 201619, 2018 deadline, you do not vote or you return your proxy card with unclear voting instructions or no voting instructions, the plan trustees will vote the number of shares allocated to your 401(k) account as instructed by Cigna’s Retirement Plan Committee. Your voting instructions will be kept confidential under the terms of the plan. Shares allocated to your 401(k) account, shares held in an employee stock account with Fidelity or shares held at Computershare may be aggregated on one proxy card. Please note that if voting instructions are submitted after 11:59 p.m. Eastern Time on Thursday, April 21, 2016,19, 2018, your vote will be counted for any shares held in your employee stock accounts at Fidelity or Computershare, but not with respect to shares allocated to your 401(k) account. | | | | | | | 76
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| ANNUAL MEETING INFORMATION |
What should I do if I receive more than one set of proxy materials? You may receive more than one set of proxy materials if your shares are registered differently or are in more than one account. Please provide voting instructions for all of the Notices and proxy and voting instruction cards you receive. Can I change my vote? Yes. If you are a record holder, you may: Enter new instructions by telephone or Internet voting before 11:59 p.m. Eastern Time on Tuesday, April 26, 2016;24, 2018; Send a new proxy card with a later date than the card submitted earlier. We must receive your new proxy card before 8:00 a.m. Eastern Time on Wednesday, April 27, 2016;25, 2018; Write to the Corporate Secretary at the address listed below. Your letter should contain the name in which your shares are registered, the date of the proxy you wish to revoke or change, your new voting instructions, if applicable, and your signature. Your letter must be received by the Corporate Secretary before 8:00 a.m. Eastern Time on Wednesday, April 27, 2016;25, 2018; or Vote in person (or send a personal representative with a valid proxy) at the Annual Meeting, which will automatically cancel any proxy previously given. If you hold your shares in street name, you may: Submit new voting instructions in the manner provided by your bank, broker or other custodian; or Contact your bank, broker or other custodian to request a proxy to vote in person at the Annual Meeting. Written notices of revocation and other communications about revoking Cigna proxies should be addressed to Corporate Secretary, Cigna Corporation, Two Liberty Place, 7th Floor, 1601 Chestnut Street, Philadelphia, Pennsylvania 19192-1550. Who will count the votes? Is my vote confidential? Computershare has been appointed Inspector of Election for the Annual Meeting. The Inspector of Election will determine the number of shares outstanding, the shares represented at the Annual Meeting, the existence of a quorum, and the validity of proxies and ballots, and will count all votes and ballots. All votes are confidential. Your voting records will not be disclosed to us, except as required by law, in contested Board elections or certain other limited circumstances. Who pays for the proxy solicitation and how will Cigna solicit votes? Cigna pays the cost of preparing our proxy materials and soliciting your vote. Proxies may be solicited on our behalf by our directors, officers, employees and agents by telephone, electronic or facsimile transmission or in person. We will enlist the help of banks and brokerage houses in soliciting proxies from their customers and reimburse them for their relatedout-of-pocket expenses. In addition, we have engaged Georgeson, Inc. to assist in soliciting proxies. Cigna will pay Georgeson a fee of approximately $15,000 plus reasonableout-of-pocket expenses. Where can I find the voting results of the Annual Meeting? We will publish the voting results of the Annual Meeting on a Current Report onForm 8-K filed with the SEC. The Form 8-K will be available online atwww.cigna.com/aboutus/sec-filingsSEC within four business days following the end of our Annual Meeting. How can I communicate with the Board of Directors? Shareholders and interested parties may contact the Board of Directors, the Chairman, the independent directors, or specific individual directors by submitting ane-mail to DirectorAccessMailbox@cigna.com. Shareholders and interested parties also may send written correspondence to Director Access, Attention: Office of the Corporate Secretary, Cigna Corporation, Two Liberty Place, 7th Floor, 1601 Chestnut Street, Philadelphia, PA 19192-1550. The Corporate Secretary will compile all communications other than routine commercial solicitations and opinion surveys sent to Board members and periodically submit them to the Board. Communications addressed to individual directors at the director address will be submitted to such individual directors. The Corporate Secretary also will promptly advise the appropriate member of management of any concerns, relating to Cigna’s products or services, and the Corporate Secretary will notify the Board of the resolution of those concerns. How does a shareholder submit a proposal or nomination of a director candidate for the 20172019 annual meeting? The following summarizes the requirements for shareholder proposals.Proposals
If you intend to submit a proposal to be included in next year’s proxy statement pursuant to SECRule 14a-8, the Corporate Secretary must receive your proposal on or before November 18, 2016.16, 2018. Submitting a shareholder proposal does not guarantee that Cigna will include the proposal in the proxy statement if the proposal does not satisfy the SEC’s rules. If you want to present your proposal at the 20172019 annual meeting but are not proposing it pursuant to SECRule 14a-8, the Corporate Secretary must receive your proposal byno earlier than December 26, 2018 and no later | | | 82 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
| ANNUAL MEETING INFORMATION |
than the close of business on January 27, 201725, 2019, and it must satisfy the requirements set forth in Article II, Section 12 of Cigna’sBy-Laws. | | | | | | | | | Cigna 2016 Notice of Annual Meeting of Shareholders and Proxy Statement
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If, however, the 2019 annual meeting is not within 30 days before or 60 days after the anniversary of this Annual Meeting, we must receive such notice no earlier than the 120th day prior to such meeting and no later than the close of business on the later of the 90th day prior to such meeting or the 10th day following the public announcement of the meeting date.Director Nominations The Board has implemented a proxy access provision in ourBy-Laws, which allows a shareholder or group of up to 20 shareholders owning in aggregate three percent or more of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials director nominees constituting up to 20% of the number of directors in office or two nominees, whichever is greater, provided the shareholder(s) and nominee(s) satisfy the requirements in ourBy-Laws. If a shareholder or group of shareholders wishes to nominate one or more director candidates to be included in the Company’s proxy statement for the 2019 annual meeting of shareholders pursuant to the proxy access provisions in Article II, Section 13 of ourBy-Laws, we must receive proper written notice of any such nomination no earlier than October 17, 2018 and no later than the close of business on November 16, 2018, and the nomination must otherwise comply with ourBy-Laws. If, however, the 2019 annual meeting is not within 30 days before or 60 days after the anniversary of this Annual Meeting, we must receive such notice no earlier than the close of business on the 120th day prior to such meeting and no later than the close of business on the later of the 90th day prior to such meeting or the 10th day following the public announcement of the meeting date. If you would like to otherwise nominate a candidate for director at the 20172019 annual meeting, you must notify the Corporate Secretary bymust receive your notice no earlier than the close of business on December 26, 2018 and no later than the close of business on January 27, 2017. The25, 2019, and it must satisfy the requirements set forth in Article II, Section 11 of Cigna’sBy-Laws. If, however, the 2019 annual meeting is not within 30 days before or 60 days after the anniversary of this Annual Meeting, we must receive such notice must include certain information, specified in Cigna’s By-Laws, about youno earlier than the close of business on the 120th day prior to such meeting and your nominee.no later than the close of business on the later of the 90th day prior to such meeting or the 10th day following the public announcement of the meeting date. Correspondence to the Corporate Secretary may be addressed to: Corporate Secretary, Cigna Corporation, Two Liberty Place, 7th Floor, 1601 Chestnut Street, Philadelphia, PA 19192-1550. How do I obtain copies of Cigna’s corporate governance and other company documents? The Guidelines, committee charters and Cigna’s Code of Ethics and the Director Code of Business Conduct and Ethics are posted atwww.cigna.com/about-us/corporate-governance/. In addition, these documents are available in print to any shareholder who submits a written request to the Corporate Secretary at the address listed above. The Company’s filings with the SEC, including its annual report onForm 10-K, are available throughwww.cigna.com/about-us/investorsinvestors/. If you are a shareholder and did not receive an individual copy of this year’s proxy statement,Proxy Statement, annual report or notice of Internet availability of proxy materials, we will send a copy to you if you address a written request to Shareholder Services, Cigna Corporation, Two Liberty Place, 5th Floor, 1601 Chestnut Street, Philadelphia, PA 19192-1550. You may also contact Shareholder Services at(215) 761-3516 or shareholderservices@cigna.com. What is householding and how does it affect me? If you and other residents at your mailing address own shares of Cigna stock in “street name,” your broker or bank should have notified you that your household will receive only one proxy statement and annual report or notice of Internet availability of proxy materials, but each shareholder who resides at your address will receive a separate proxy card or voting instruction form. 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. Householding benefits both you and Cigna because it reduces the volume of duplicate information received at your household and helps Cigna reduce expenses and conserve natural resources. If you would like to receive your own set of Cigna’s proxy statement and annual report or your own notice of Internet availability of proxy materials in the future, 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’s proxy materials, please contact Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717 or(800) 542-1061. The request must be made by each person in the household. 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. | | | | | | | | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | 83 | |
| ANNUAL MEETING INFORMATION |
IMPORTANT INFORMATION IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON You must have an admission ticket, as well as a valid form of government-issued photo identification, in order to be admitted to the Annual Meeting. If you are a Cigna shareholder of record and received a printed copy of Cigna’s proxy materials, you must bring the admission ticket portion of your proxy card to be admitted to the Annual Meeting. If you are a beneficial owner and your shares are held in the name of a broker, bank or other nominee, you must request an admission ticket in advance by mailing a request, along with proof of your ownership of Cigna common stock as of the close of business on the Cigna record date of February 29, 2016,26, 2018, to the Corporate Secretary, Cigna Corporation, Two Liberty Place, 7th7th Floor, 1601 Chestnut Street, Philadelphia, Pennsylvania19192-1550. Proof of ownership would be a bank or brokerage account statement in your name showing the number of shares of Cigna common stock held by you on the Cigna record date or a letter from your broker, bank or other nominee certifying the amount of your beneficial ownership interest as of the close of business on the Cigna record date. If you wish to appoint a representative to attend the Annual Meeting in your place, you must provide to the Corporate Secretary, Cigna Corporation, Two Liberty Place, 7th7th Floor, 1601 Chestnut Street, Philadelphia, Pennsylvania 19192-1550, the name of your representative, in addition to the admission ticket portion of your proxy card if you are a Cigna shareholder of record, or your proof of ownership if you are a beneficial owner, and the address where the admission ticket should be sent. A Cigna shareholder may only appoint one representative. Requests from Cigna shareholders that are legal entities must be signed by an authorized officer or other person legally authorized to act on behalf of the legal entity. Requests received after April 20, 2016,9, 2018, may not be able to be processed in time to allow you to receive your admission ticket before the date of the Annual Meeting, so you should mail your request early. For directions to the Annual Meeting, please contact Shareholder Services at 215-761-3516 or shareholderservices@cigna.com. Please note that cameras, recording equipment, electronic devices, large bags, briefcasebriefcases or packages are not permitted in the meeting. Recording of the meeting is expressly prohibited. | | | 7884
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
| ANNEX A — –NON-GAAP MEASURES |
| | | | | | | | | | | | | | | | | | | | | CONSOLIDATED ADJUSTED INCOME FROM OPERATIONS RECONCILIATION (dollars in millions) | | | Year Ended December 31, | | 2017 | | | 2016 | | | 2015 | | | 2014 | | | 2013 | | Shareholders’ net income (loss) | | $ | 2,237 | | | $ | 1,867 | | | $ | 2,094 | | | $ | 2,102 | | | $ | 1,476 | | After-tax adjustments to reconcile to adjusted income from operations: | | | | | | | | | | | | | | | | | | | | | Realized investment (gains) losses | | | (156 | ) | | | (109 | ) | | | (40 | ) | | | (106 | ) | | | (141 | ) | Amortization of other acquired intangible assets, net | | | 66 | | | | 94 | | | | 80 | | | | 119 | | | | 144 | | Results of guaranteed minimum income benefits business | | | — | | | | — | | | | — | | | | — | | | | (25 | ) | Special Items: | | | | | | | | | | | | | | | | | | | | | U.S. tax reform | | | 196 | | | | — | | | | — | | | | — | | | | — | | Debt extinguishment costs | | | 209 | | | | — | | | | 65 | | | | — | | | | — | | Long-term guaranty fund assessment | | | 83 | | | | — | | | | — | | | | — | | | | — | | Transaction-related costs | | | 33 | | | | 147 | | | | 57 | | | | — | | | | — | | Risk corridor allowance | | | — | | | | 80 | | | | — | | | | — | | | | — | | Charges associated with litigation matters | | | — | | | | 25 | | | | — | | | | — | | | | — | | Transaction costs associated with PBM services agreement | | | — | | | | — | | | | — | | | | — | | | | 24 | | Charge related to reinsurance transaction | | | — | | | | — | | | | — | | | | — | | | | 507 | | Charge for disability claims regulatory matter | | | — | | | | — | | | | — | | | | — | | | | 51 | | Charge for organizational efficiency plan | | | — | | | | — | | | | — | | | | — | | | | 40 | | | | | Adjusted income (loss) from operations | | $ | 2,668 | | | $ | 2,104 | | | $ | 2,256 | | | $ | 2,115 | | | $ | 2,076 | | | | | | | | | | | Special Items,pre-tax: | | | | | | | | | | | | | | | | | | | | | U.S. tax reform | | $ | (56 | ) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Debt extinguishment costs | | | 321 | | | | — | | | | 100 | | | | — | | | | — | | Long-term guaranty fund assessment | | | 129 | | | | — | | | | — | | | | — | | | | — | | Transaction-related costs | | | 126 | | | | 166 | | | | 66 | | | | — | | | | — | | Risk corridor allowance | | | — | | | | 124 | | | | — | | | | — | | | | — | | Charges associated with litigation matters | | | — | | | | 40 | | | | — | | | | — | | | | — | | Transaction costs associated with PBM services agreement | | | — | | | | — | | | | — | | | | — | | | | 37 | | Charge related to reinsurance transaction | | | — | | | | — | | | | — | | | | — | | | | 781 | | Charge for disability claims regulatory matter | | | — | | | | — | | | | — | | | | — | | | | 77 | | Charge for organizational efficiency plan | | | — | | | | — | | | | — | | | | — | | | | 60 | | | | | Total | | $ | 520 | | | $ | 330 | | | $ | 166 | | | $ | — | | | $ | 955 | | | | |
| | | | | | | | | | | | | | | | | | | | | CONSOLIDATED ADJUSTED INCOME FROM OPERATIONS RECONCILIATION (dollars in millions) | | Year Ended December 31, | | 2015 | | | 2014 | | | 2013 | | | 2012 | | | 2011 | | Adjusted income from operations | | $ | 2,256 | | | $ | 2,115 | | | $ | 2,076 | | | $ | 1,878 | | | $ | 1,402 | | After-tax adjustments to reconcile to shareholders’ net income: | | | | | | | | | | | | | | | | | | | | | Realized investment gains | | | 40 | | | | 106 | | | | 141 | | | | 31 | | | | 41 | | Amortization of other acquired intangible assets, net | | | (80 | ) | | | (119 | ) | | | (144 | ) | | | (144 | ) | | | (41 | ) | Results of guaranteed minimum income benefits business | | | — | | | | — | | | | 25 | | | | 29 | | | | (135 | ) | Special Items: | | | | | | | | | | | | | | | | | | | | | Debt extinguishment costs | | | (65 | ) | | | — | | | | — | | | | — | | | | — | | Merger-related transaction costs | | | (57 | ) | | | — | | | | — | | | | — | | | | — | | Transaction costs associated with PBM services agreement | | | — | | | | — | | | | (24 | ) | | | — | | | | — | | Charge related to reinsurance transaction | | | — | | | | — | | | | (507 | ) | | | — | | | | — | | Charge for disability claims regulatory matter | | | — | | | | — | | | | (51 | ) | | | — | | | | — | | Charge for organizational efficiency plan | | | — | | | | — | | | | (40 | ) | | | (50 | ) | | | — | | Costs associated with acquisitions | | | — | | | | — | | | | — | | | | (40 | ) | | | (31 | ) | Litigation matters | | | — | | | | — | | | | — | | | | (81 | ) | | | — | | Completion of IRS examination | | | — | | | | — | | | | — | | | | — | | | | 24 | | Shareholders’ net income | | $ | 2,094 | | | $ | 2,102 | | | $ | 1,476 | | | $ | 1,623 | | | $ | 1,260 | | | | | | | | | | | | | | | | | | | | | | | Special Items, pre-tax: | | | | | | | | | | | | | | | | | | | | | Debt extinguishment costs | | $ | (100 | ) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Merger-related transaction costs | | | (66 | ) | | | — | | | | — | | | | — | | | | — | | Transaction costs associated with PBM services agreement | | | — | | | | — | | | | (37 | ) | | | — | | | | — | | Charge related to reinsurance transaction | | | — | | | | — | | | | (781 | ) | | | — | | | | — | | Charge for disability claims regulatory matter | | | — | | | | — | | | | (77 | ) | | | — | | | | — | | Charge for organizational efficiency plan | | | — | | | | — | | | | (60 | ) | | | (77 | ) | | | — | | Costs associated with acquisitions | | | — | | | | — | | | | — | | | | (53 | ) | | | (39 | ) | Litigation matters | | | — | | | | — | | | | — | | | | (124 | ) | | | — | | Completion of IRS examination | | | — | | | | — | | | | — | | | | — | | | | 38 | | Total | | $ | (166 | ) | | $ | — | | | $ | (955 | ) | | $ | (254 | ) | | $ | (1 | ) |
| | | Annex A-1 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
| ANNEX A –NON-GAAP MEASURES |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPERATING BUSINESSES ADJUSTED INCOME FROM OPERATIONS RECONCILIATION (dollars in millions) | | | | | Global Health Care | | | Global Supplemental
Benefits | | | Group Disability and Life | | | Year Ended December 31, | | 2017 | | | 2016 | | | 2015 | | | 2017 | | | 2016 | | | 2015 | | | 2017 | | | 2016 | | | 2015 | | Shareholders’ net income (loss) | | $ | 2,282 | | | $ | 1,751 | | | $ | 1,794 | | | $ | 302 | | | $ | 268 | | | $ | 267 | | | $ | 358 | | | $ | 164 | | | $ | 328 | | After-tax adjustments to reconcile to adjusted income from operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Realized investment (gains) losses | | | (88 | ) | | | (78 | ) | | | (30 | ) | | | (24 | ) | | | 6 | | | | (1 | ) | | | (49 | ) | | | (39 | ) | | | (4 | ) | Amortization of other acquired intangible assets, net | | | 48 | | | | 74 | | | | 84 | | | | 18 | | | | 20 | | | | (4 | ) | | | — | | | | — | | | | — | | Special Items: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | U.S tax reform | | | (137 | ) | | | — | | | | — | | | | 73 | | | | — | | | | — | | | | (39 | ) | | | — | | | | — | | Long-term guaranty fund assessment | | | 68 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15 | | | | — | | | | — | | Risk corridor allowance | | | — | | | | 80 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Charges associated with litigation matters | | | — | | | | 25 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | Adjusted income (loss) from operations | | $ | 2,173 | | | $ | 1,852 | | | $ | 1,848 | | | $ | 369 | | | $ | 294 | | | $ | 262 | | | $ | 285 | | | $ | 125 | | | $ | 324 | | | | | | | | | | | | | | | Special Items,pre-tax: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Long-term guaranty fund assessment | | $ | 106 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 23 | | | $ | — | | | $ | — | | Risk corridor allowance | | | — | | | | 124 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Charges associated with litigation matters | | | — | | | | 40 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | Total | | $ | 106 | | | $ | 164 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 23 | | | $ | — | | | $ | — | | | | |
| | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | A-1Annex A-2
| |
| ANNEX A — NON-GAAP MEASURESB – SURVEY DATA FOR PRESIDENT – INTERNATIONAL MARKETS |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | OPERATING BUSINESSES ADJUSTED INCOME FROM OPERATIONS RECONCILIATION (dollars in millions) | | | | | Global
Health Care | | | Global
Supplemental
Benefits | | | Group Disability
and Life | | | | | 2015 | | | 2014 | | | 2013 | | | 2015 | | | 2014 | | | 2013 | | | 2015 | | | 2014 | | | 2013 | | Adjusted income from operations | | $ | 1,848 | | | $ | 1,752 | | | $ | 1,699 | | | $ | 262 | | | $ | 243 | | | $ | 200 | | | $ | 324 | | | $ | 317 | | | $ | 311 | | After-tax adjustments to reconcile to shareholders’ net income: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Realized investment gains | | | 30 | | | | 54 | | | | 73 | | | | 1 | | | | 3 | | | | 5 | | | | 4 | | | | 14 | | | | 40 | | Amortization of other acquired intangible assets, net | | | (84 | ) | | | (106 | ) | | | (127 | ) | | | 4 | | | | (13 | ) | | | (17 | ) | | | — | | | | — | | | | — | | Special Items: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transaction costs associated with PBM services agreement | | | — | | | | — | | | | (24 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Charge for disability claims regulatory matter | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (51 | ) | Charge for organizational efficiency plan | | | — | | | | — | | | | (31 | ) | | | — | | | | — | | | | (8 | ) | | | — | | | | — | | | | (1 | ) | Shareholders’ net income, by segment | | $ | 1,794 | | | $ | 1,700 | | | $ | 1,590 | | | $ | 267 | | | $ | 233 | | | $ | 180 | | | $ | 328 | | | $ | 331 | | | $ | 299 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Special Items, pre-tax: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Transaction costs associated with PBM services agreement | | $ | — | | | $ | — | | | $ | (37 | ) | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Charge for disability claims regulatory matter | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (77 | ) | Charge for organizational efficiency plan | | | — | | | | — | | | | (47 | ) | | | — | | | | — | | | | (11 | ) | | | — | | | | — | | | | (2 | ) | Total | | $ | — | | | $ | — | | | $ | (84 | ) | | $ | — | | | $ | — | | | $ | (11 | ) | | $ | — | | | $ | — | | | $ | (79 | ) |
| | | | | | Anthem, Inc. | | MetLife, Inc. | AFLAC Inc. | | Principal Financial Group, Inc. | Allianz SE | | Protective Life Corporation | Assurant, Inc. | | Prudential Financial, Inc. | AXA Group | | Sun Life Financial, Inc. | Centene Corp | | The Allstate Corporation | Chubb Limited | | The Hartford Financial Services Group, Inc. | Genworth Financial, Inc. | | The Phoenix Companies, Inc. | Humana, Inc. | | Transamerica Corp. | Lincoln Financial Corporation | | UnitedHealth Group, Incorporated | Manulife Financial Corporation | | Unum Group | Marsh & McLennan Companies | | Voya Financial | |
| | | A-2Annex B-1
| | Cigna2016 2018 Notice of Annual Meeting of Shareholders and Proxy Statement |
| ANNEX B — 2015C – GENERAL INDUSTRY PEER GROUP |
| | | 2015 General Industry Peer Group
| | | Abbott Laboratories | | Lowe’s Corporation
HCA Holdings, Inc. | AbbVie Inc. | | Humana Inc. | Accenture plc | | Medtronic, Inc.
Kimberly-Clark Corporation | Aetna Inc. | | Merck & Co.Medtronic, Inc.
| AFLAC Inc. | | MetLife,Merck & Co. Inc.
| American Express Company | | Morgan Stanley
MetLife, Inc. | American International Group, Inc. | | Oracle Corporation
Progressive Corp. | Amgen Inc. | | PfizerPrudential Financial, Inc.
| Anthem, Inc. | | Progressive Corp.
| Baxter International Inc.
| | Prudential Financial, Inc.
Sprint Corporation | Bristol-Myers Squibb Company | | Sprint Nextel
T-Mobile US, Inc. | Capital One Financial Corporation | | The Allstate Corporation | Centene Corp. | | T-Mobile US, Inc.
| Catamaran Corporation
| | The Allstate Corporation
| CenturyLink, Inc.
| | The Bank of New York Mellon Corporation | CitigroupCenturyLink, Inc.
| | The Chubb Corporation
| Colgate-Palmolive Co.
| | The Goldman Sachs Group, Inc.
| Community Health Systems, Inc.
| | The Hartford Financial Services Group, Inc. | Computer Sciences Corporation
Chubb Limited | | The PNC Financial Services Group, Inc. | eBayCitigroup Inc.
| | The Travelers Companies, Inc. | Colgate-Palmolive Co. | | Thermo Fisher Scientific, Inc. | Eli Lilly and Company | | U.S. Bancorp | Gilead Sciences Inc. | | Thermo Fisher Scientific, Inc.
| HCA Holdings, Inc.
| | U.S. Bancorp
| Humana Inc.
| | Xerox Corporation
| Kimberly-Clark Corporation
| | |
| | | | | | | | | Cigna 20162018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | B-1Annex C-1
| |
| APPENDIX A – RESTATED CERTIFICATE OF INCORPORATION |
DRIVING DIRECTIONSRESTATED CERTIFICATE OF INCORPORATION OF CIGNA CORPORATION
(Originally incorporated on November 3, 1981 under the name North American General Corporation) First: The name of the Corporation is Cigna Corporation. Second: The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company. Third: The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. Fourth: The total number of shares of all classes of capital stock which the Corporation shall have the authority to issue is 625,000,000 shares divided into two classes as follows: 600,000,000 shares of Common Stock of the par value of $.25 per share and 25,000,000 shares of Preferred Stock of the par value of $1.00 per share. FOR THE 2016 ANNUAL MEETINGA. PREFERRED STOCK
Windsor Marriott HotelThe Board of Directors is expressly authorized to provide for the issue of all or any shares of the Preferred Stock, in one or more series, and to fix for each such series such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series and as may be permitted by the General Corporation Law of the State of Delaware, including, without limitation, the authority to provide that any such series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative ornon-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions.
Ballroom 4
28 Day Hill Road
Windsor, CT 06095
From Bradley International Airport:B. COMMON STOCK
| 1. | Depart Terminal Road toward Short DriveVoting Rights. Except as provided by law or this Certificate of Incorporation, each holder of Common Stock shall have one vote in respect of each share of stock held by him of record on the books of the Corporation for the election of directors and on all matters submitted to a vote of stockholders of the Corporation. |
| 2. | Keep right onto Bradley Field Connector (Road name changesDividends. Subject to CT-20 E)the preferential rights of the Preferred Stock, the holders of shares of Common Stock shall be entitled to receive, when and if declared by the Board of Directors, out of the assets of the Corporation which are by law available therefor, dividends payable either in cash, in property, or in shares of capital stock. |
| 3. | Take ramp rightDissolution, Liquidation or Winding Up. In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of Preferred Stock, holders of Common Stock shall be entitled to receive all of the remaining assets of the Corporation of whatever kind available for I-91 South toward Hartford |
| 4. | At Exit 38B, take ramp rightdistribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively. The Board of Directors may distribute in kind to the holders of Common Stock such remaining assets of the Corporation or may sell, transfer or otherwise dispose of all or any part of such remaining assets to any other corporation, trust or other entity and receive payment therefor in cash, stock or obligations of such other corporation, trust or entity, or any combination thereof, and may sell all or any part of the consideration so received and distribute any balance thereof in kind to holders of Common Stock. Neither the merger or consolidation of the Corporation into or with any other corporation, nor the merger of any other corporation into it, nor any purchase or redemption of shares of stock of the Corporation of any class, shall be deemed to be a dissolution, liquidation or winding up of the Corporation for Day Hill Road toward Poquonock / Windsor |
| 5. | Hotel is on the right.purpose of this paragraph. |
FromFifth: TheBy-Laws of the SouthCorporation may be adopted, amended or repealed by the affirmative vote of the holders of a majority of the voting power of the capital stock of the Corporation outstanding and Downtown:entitled to vote thereon. The Board of Directors shall also have the power to adopt, amend or repeal any provision of theBy-Laws of the Corporation without any vote of the stockholders of the Corporation.
| 1. | Take I-91 North toward Springfield |
| 2. | At Exit 38, take ramp right for CT-75 North toward Day Hill Rd / Summerwind / Poquonock |
| 3. | Turn right onto CT-75 N / Poquonock Avenue |
| 4. | Take ramp right and follow signs for Day Hill Road |
| | | | | | |  Appendix-1 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | | Admission Ticket |
| APPENDIX A – RESTATED CERTIFICATE OF INCORPORATION |
Sixth: Elections of directors need not be by written ballot unless theBy-Laws of the Corporation shall otherwise provide. Seventh: Notwithstanding any provision of the General Corporation Law of the State of Delaware, no action may be taken by stockholders without a meeting, without prior notice and without a vote, unless a consent in writing setting forth the action so taken shall be signed by the holders of all the outstanding stock who would be entitled to vote thereon. Eighth: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all of the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. Ninth: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. Tenth: | 1. | Vote for Certain Business Combinations. In addition to any affirmative vote of holders of a class or series of capital stock of the Corporation required by law or this Certificate, a Business Combination (as hereinafter defined) with or upon a proposal by a Related Person (as hereinafter defined) shall require the affirmative vote of the holders of at least a majorityof the voting power of all outstanding Voting Stock (as hereinafter defined) of the Corporation, voting together as a single class. Such affirmative votes shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or the Board. |
| 2. | When Vote Is Not Required. The provisions of this Article shall not be applicable to a particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law and any other provision of this Certificate or theBy-Laws of the Corporation, if all of the conditions specified in any one of the following Paragraphs (A), (B) or (C) are met: |
| A. | Approval by Directors. The Business Combination has been approved by a vote of a majority of all the Continuing Directors (as hereinafter defined); or |
| B. | Combination with Subsidiary. The Business Combination is solely between the Corporation and a subsidiary of the Corporation and such Business Combination does not have the direct or indirect effect set forth in Paragraph 3(B)(v) of this Article Tenth; or |
| C. | Price and Procedural Conditions. The proposed Business Combination will be consummated within three years after the date the Related Person became a Related Person (the “Determination Date”) and all of the following conditions have been met: |
| (i) | The aggregate amount of (x) cash and (y) fair market value (as of the date of the consummation of the Business Combination) of consideration other than cash, to be received per share of Common or Preferred Stock of the Corporation in such Business Combination by holders thereof shall be at least equal to the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers’ fees) paid by the Related Person for any shares of such class or series of stock acquired by it; provided, that if either (a) the highest preferential amount per share of a series of Preferred Stock to which the holders thereof would be entitled in the event of any voluntary or involuntary liquidation, dissolution orwinding-up of the affairs of the Corporation (regardless of whether the Business Combination to be consummated constitutes such an event) or (b) the highest reported sales price per share for any shares of such series of Preferred Stock on any national securities exchange on which such series is traded and if not traded on any |
| | | | | | |
| | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | Appendix-2 | |
| APPENDIX A – RESTATED CERTIFICATE OF INCORPORATION |
| such exchange, the highest reported closing bid quotation per share with respect to shares of such series on the National Association of Securities Dealers, Inc. Automated Quotation System or on any system then in use, at any time after the Related Person became a holder of any shares of Common Stock, is greater than such aggregate amount, holders of such series of Preferred Stock shall receive an amount for each such share at least equal to the greater of (a) or (b). |
| (ii) | The consideration to be received by holders of a particular class or series of outstanding Common or Preferred Stock shall be in cash or in the same form as the Related Person has previously paid for shares of such class or series of stock. If the Related Person has paid for shares of any class or series of stock with varying forms of consideration, the form of consideration given for such class or series of stock in the Business Combination shall be either cash or the form used to acquire the largest number of shares of such class or series of stock previously acquired by it. |
| (iii) | No Extraordinary Event (as hereinafter defined) occurs after the Determination Date and prior to the consummation of the Business Combination. |
| (iv) | A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) is mailed to public stockholders of the Corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required pursuant to such Act or subsequent provisions). |
| 3. | Certain Definitions. For purposes of this Article Tenth: |
| A. | A “person” shall mean any individual, firm, corporation or other entity, or a group of “persons” acting or agreeing to act together in the manner set forth in Rule13d-5 under the Securities Exchange Act of 1934, as in effect on April 24, 1985. |
| B. | The term “Business Combination” shall mean any of the following transactions, when entered into by the Corporation or a subsidiary of the Corporation with, or upon a proposal by, a Related Person: |
| (i) | the merger or consolidation of the Corporation or any subsidiary of the Corporation; or |
| (ii) | the sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one or a series of transactions) of any assets of the Corporation or any subsidiary of the Corporation having an aggregate fair market value of $100 million or more; or |
| (iii) | the issuance or transfer by the Corporation or any subsidiary of the Corporation (in one or a series of transactions) of securities of the Corporation or any subsidiary having an aggregate fair market value of $50 million or more; or |
| (iv) | the adoption of a plan or proposal for the liquidation or dissolution of the Corporation; or |
| (v) | the reclassification of securities (including a reverse stock split), recapitalization, consolidation or any other transaction (whether or not involving a Related Person) which has the direct or indirect effect of increasing the voting power, whether or not then exercisable, of a Related Person in any class or series of capital stock of the Corporation or any subsidiary of the Corporation; or |
| (vi) | any agreement, contract or other arrangement providing directly or indirectly for any of the foregoing. |
| C. | The term “Related Person” shall mean any person (other than the Corporation, a subsidiary of the Corporation or any profit sharing, employee stock ownership or other employee benefit plan of the Corporation or of a subsidiary of the Corporation or any trustee of or fiduciary with respect to any such plan acting in such capacity) that is the direct or indirect beneficial owner (as defined in Rule13d-3 and Rule13d-5 under the Securities Exchange Act of 1934) of more than ten percent (10%) of the outstanding Voting Stock of the Corporation, and any Affiliate or Associate of any such person. |
| D. | The term “Continuing Director” shall mean any member of the Board of Directors who is not affiliated with a Related Person and who was a member of the Board of Directors immediately prior to the time that the Related Person became a Related Person, and any successor to a Continuing Director who is not affiliated with the Related Person and is recommended to succeed a Continuing Director by a majority of Continuing Directors who are then members of the Board of Directors. |
| | | | | Appendix-3 | | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | |
| APPENDIX A – RESTATED CERTIFICATE OF INCORPORATION |
| E. | “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule12b-2 under the Securities Exchange Act of 1934. |
| F. | The term “Extraordinary Event” shall mean, as to any Business Combination and Related Person, any of the following events that is not approved by a majority of all Continuing Directors: |
| (i) | any failure to declare and pay at the regular date therefor any full quarterly dividend (whether or not cumulative) on outstanding Preferred Stock; or |
| (ii) | any reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock); or |
| (iii) | any failure to increase the annual rate of dividends paid on the Common Stock as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction that has the effect of reducing the number of outstanding shares of the Common Stock; or |
| (iv) | the receipt by the Related Person, after the Determination Date, of a direct or indirect benefit (except proportionately as a stockholder) from any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation or any subsidiary of the Corporation, whether in anticipation of or in connection with the Business Combination or otherwise. |
| G. | A majority of all Continuing Directors shall have the power to make all determinations with respect to this Article Tenth, including, without limitation, the transactions that are Business Combinations, the persons who are Related Persons, the time at which a Related Person became a Related Person, and the fair market value of any assets, securities or other property, and any such determinations of such directors shall be conclusive and binding. |
| H. | The term “Voting Stock” shall mean all outstanding shares of the Common or Preferred Stock of the Corporation entitled to vote generally and each reference to a proportion of Voting Stock shall refer to shares having such proportion of the number of shares entitled to be cast. |
| 4. | No Effect on Fiduciary Obligations of Related Persons. Nothing contained in this Article Tenth shall be construed to relieve any Related Person from any fiduciary obligation imposed by law. |
Eleventh: To the fullest extent permitted by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of the preceding sentence shall not adversely affect any right or protection of a director existing at the time of such repeal or modification. | | | | | | | | | | |
| | Cigna 2018 Notice of Annual Meeting of Shareholders and Proxy Statement | | | Appendix-4 | |
Together, all the way.913017_Proxy_Statement_cover_v7-Single pgs.indd 4 2/28/18 10:38 AM
| | | Using a black inkpen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. | | ☒ |
| | | | Admission Ticket Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 11:59 p.m., Eastern Time, on April 26, 2016.24, 2018. | | | | | | | Vote by Internet | | | | | | • Go to www.envisionreports.com/www.envisionreports.com/ci • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website | | | | | | | | Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message | | | | |
| | | Using a black inkpen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. | | x
|
| | | Annual Meeting Proxy Card | |  |
|  IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
|
| | | | A | | Proposals — The Board recommends a voteFOR alleach of the nominees named in Proposal 1 andFOR Proposals 2, 3 and 3.4. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1. Election of Directors for terms expiring in 2017:Directors: | | | | | | | |  | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | | | | | | | | | | | | | | | | | | 01 - David M. Cordani | | ¨☐ | | ¨☐ | | ¨☐ | | | | 02 - Isaiah Harris, Jr.Eric J. Foss | | ¨☐ | | ¨☐ | | ¨☐ | | | | 03 - Jane E. Henney, M.D.Isaiah Harris, Jr. | | ¨☐ | | ¨☐ | | ¨☐ | | | | | | | | | | | | | | | | | | 04 - Donna F. ZarconeRoman Martinez IV | | ¨☐ | | ¨☐ | | ¨☐ | | | | 05 - John M. Partridge | | ☐ | | ☐ | | ☐ | | | | 06 - James E. Rogers | | ☐ | | ☐ | | | | | | ☐ | | |
| | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | For | | Against | | Abstain | | 2. | | Advisory approval of Cigna’s executive compensation. | | ¨ | | ¨ | | ¨ | | 3. | | Ratification of appointment of PricewaterhouseCoopers LLP as Cigna’s independent registered public accounting firm for 2016. | | ¨ | | ¨ | | ¨ |
Note: Such other business as may properly come before the meeting or any postponements or adjournments thereof.
| | | | | | | | | | | Change of Address— Please print your new address below.
07 - Eric C. Wiseman | | ☐ | | ☐ | | ☐ | | | | Comments— Please print your comments below.
08 - Donna F. Zarcone | | ☐ | | ☐ | | ☐ | | | | Meeting Attendance
09 - William D. Zollars | | | | ☐ | | ☐ | | | | | | Mark the box to the right if you plan to attend the Annual Meeting.
| | ¨ | | | | | | | | | | | | | | | | | | | ☐ | | |
| | | | | | | | | | | | | | | | | | | | | | | | | For | | Against | | Abstain | | | | | | | | For | | Against | | Abstain | | | | | | | | | | | | | 2. | | Advisory approval of Cigna’s executive compensation. | | ☐ | | ☐ | | ☐ | | 3. | | Ratification of appointment of PricewaterhouseCoopers LLP as Cigna’s independent registered public accounting firm for 2018. | | | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | 4. | | Approval of an amendment to the Company’s Restated Certificate of Incorporation to eliminate the supermajority voting requirement. | | ☐ | | ☐ | | ☐ | | | | | | | | | | | Note: Such other business as may properly come before the meeting or any postponements or adjournments thereof. |
| | | C B | | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below |
The shares represented by this proxy will be voted as directed by the undersigned. Where no direction is given when a duly executed proxy is returned, such shares will be voted “For” alleach of the nominees named in Proposal 1 and “For” Proposals 2, 3 and 34; and will grant authority to the proxy holder to vote upon such other business as may properly come before the meeting or any postponements or adjournments thereof. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING, PROXY STATEMENT AND ANNUAL REPORT OF CIGNA CORPORATION. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. | | | | | | | | | Date (mm/dd/yyyy) — Please print date below. | | Signature 1 —Please— Please keep signature within the box. | | Signature 2 —Please— Please keep signature within the box. | | // | | | | | | | | | | | |  | |  | | |
029IJB02RGWD
Admission Ticket Cigna Corporation 20162018 Annual Meeting of Shareholders Wednesday, April 27, 201625, 2018 8:00 a.m. Windsor MarriottDelamar Hotel
Ballroom 4
28 Day Hill1 Memorial Road
Windsor,West Hartford, Connecticut 0609506107
Please bring a valid government issued photo ID to be admitted to the meeting. In addition, if you own shares in street name, bring your most recent brokerage statement or a letter from your broker or other nominee with you to the meeting so that we can verify your ownership of common stock. Please note: no cameras, recording equipment, electronic devices, large bags, briefcases, signs or packages will be permitted. Mobile phones will be permitted in the meeting venue but may not be used for any purpose at any time while in the meeting venue. Violation of this rule can result in removal from the meeting venue. Please note that due to security reasons, all bags may be subject to search. Cigna will be unable to admit anyone who does not comply with these security procedures. No one will be admitted to the Cigna annual meeting once the meeting has commenced. IF YOU HAVE NOT VOTED VIA THE INTERNETOR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 
Proxy/Voting Instruction Card
| | | | Proxy/Voting Instruction Card | | |
Cigna Corporation Annual Meeting of Shareholders April 27, 2016,25, 2018, 8:00 a.m. This proxy/voting instruction card is solicited by the Board of Directors The undersigned hereby constitutes and appoints Neil Boyden Tanner and Marguerite C. Geiger, or either of them, as proxies with full power of substitution. 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 29, 201626, 2018 at the Annual Meeting of Shareholders, to be held at the Windsor MarriottDelamar Hotel, Ballroom 4, 28 Day Hill1 Memorial Road, Windsor,West Hartford, Connecticut 06095,06107, on Wednesday, April 27, 201625, 2018 at 8:00 a.m., or at any postponements or adjournments thereof, on theall matters set forth on the reverse side and in the Proxy Statement dated March 18, 2016.discretion of the proxies upon such other matters as may properly come before the Annual Meeting. If the undersigned has voting rights with respect to shares of the Corporation’s common stock under the Cigna 401(k) Plan, the undersigned hereby directs the trustee of the Cigna 401(k) Plan to vote shares equal to the number of shares allocated to the undersigned’s accounts under the plan in accordance with the instructions given herein. If the trustee does not receive instructions by 11:59 p.m. Eastern time on Thursday, April 21, 2016,19, 2018, the trustee will vote such shares in the manner instructed by the Corporation’s Retirement Plan Committee. This proxy/voting instruction card is solicited on behalf of the Board of Directors of Cigna Corporation pursuant to a separate Notice of Annual Meeting and Proxy Statement dated March 18, 2016, receipt of which is hereby acknowledged.
You are encouraged to specify your choices by marking the appropriate selections (either on this card or electronically), but you need not specify any choices 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 for your vote to be counted. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” ALLEACH OF THE NOMINEES NAMED IN PROPOSAL 1 AND “FOR” PROPOSALS 2, 3 AND 3.4. | | | | | | | | | | | Change of Address— Please print your new address below. | | | | Comments— Please print your comments below. | | | | Meeting Attendance | | | | | | | | | | | Mark the box to the right if you plan to attend the Annual Meeting. | | ☐ | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | IF VOTING BY MAIL, YOUMUST COMPLETE SECTIONS A - C ON BOTH SIDES OF THIS CARD. | | |
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