UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
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☐ | Preliminary Proxy Statement | |
☐ | CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE14A-6(E)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to§240.14a-12 |
Humana Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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☐ | Fee computed on table below per Exchange Act Rules14a-6(i)(4) and0-11. | |||
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☐ | Fee paid previously with preliminary materials. | |||
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Humana Inc. 500 West Main Street Louisville, Kentucky 40202 |
(Top Photo: Kurt Hilzinger; Bottom Photo: Bruce Broussard)
| Dear Fellow Stockholders:
We would like to invite you to attend the Annual Meeting of Stockholders of Humana Inc., to be held on Thursday, April This proxy statement contains information about our Company and the three proposals to be voted upon by stockholders at the meeting. Please give this information your careful attention.
This year, we will once again be taking advantage of U.S. Securities and Exchange Commission (SEC) rules that allow us to furnish proxy materials to our stockholders on the Internet. These materials will be available on the Internet on or about March
We hope you can attend the meeting. However, even if you are unable to join us, we urge you to still exercise your right as a stockholder and vote by telephone, mail or using the Internet. The vote of every stockholder is important.
This proxy statement is being mailed or transmitted on or about March
COVID-19 has highlighted the importance of Humana’s clinically focused integrated model designed to deliver holistic, personalized, empathetic care to our members. In partnership with policymakers and our industry peers, we proactively took deliberate and sustained actions to remove financial barriers and ensure continuous access to care in response to the pandemic, easing some of the burden on our nation’s most vulnerable population at a time when they needed it most. Our omni-channel approach to care encouraged members to seek care and allowed us to meet members where they wanted to receive care, whether that’s in a clinic setting, in the home, or via telehealth. As a result of the pandemic, members are increasingly seeking in-home care options, and we expect the home to remain a preferred place of care for many of our members even as the pandemic subsides. We also proactively addressed social determinant of health needs that were exacerbated by the pandemic, including delivering meals to members who were food insecure, sending care kits with masks to all Humana members and associates and addressing loneliness. Driven by our dedication to holistic care, Humana continued to accelerate on all fronts in 2020 despite the pandemic, including our short-term operating and financial performance, our ability to drive and invest in our long-term strategic objectives, and in our customer centricity efforts. We credit this remarkable achievement, and our continued success, to the
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Kurt J. Hilzinger Chairman of the Board and Stockholder
March
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Bruce D. Broussard Director, President and Chief Executive Officer and Stockholder
March |
Notice of 20202021 Annual Meeting of Stockholders
Time and Date: | 9:30 a.m., Eastern Time, on Thursday, April | |
Agenda: | 1. Elect the
2. Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for
3. Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.
4. Consider any other business properly brought before the meeting. | |
Record Date: | February | |
Proxy Voting: | Your vote is important so that as many Shares as possible will be represented. Please vote by one of the following methods:
• BY INTERNET
• BY TELEPHONE
• BY RETURNING YOUR PROXY CARD (if you elected to receive printed materials)
• BY VOTING DURING THE ANNUAL MEETING See instructions on your proxy card or at the voting site |
By Order of the Board of Directors,
Joseph M. Ruschell
Associate Vice President, Assistant General Counsel & Corporate Secretary
March 4, 202010, 2021
General Information
Meeting: | Place: | |||||
Date: | Thursday, April | |||||
Time: | 9:30 a.m., Eastern Time | |||||
Record Date: | February |
How to Vote Your Shares
You may vote if you were a stockholder as of the close of business on February 22, 2021.
Online www.proxyvote.com | By Mail Complete, sign, date, and return your proxy card in the envelope provided | |||||
By Phone Call the phone number located on the top of your proxy card | During the Meeting Attend our virtual annual meeting and cast your vote using the webcast voting options |
Voting Overview
Items of Business | Items of Business | Board Recommendation | Page Reference | Items of Business | Board Recommendation | Page Reference | ||||||
1.
| Elect the twelve (12) director nominees named in the proxy statement.
| FOR
| 24
| Elect the thirteen (13) director nominees named in the proxy statement.
| FOR
| 32
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2. | Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2020.
| FOR | 71 | Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2021.
| FOR | 78 | ||||||
3. | Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.
| FOR | 72 | Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.
| FOR | 79 | ||||||
4.
| Consider any other business properly brought before the meeting.
| Consider any other business properly brought before the meeting.
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Board Nominees
Name | Position | Age | First Elected Director | |||
Kurt J. Hilzinger | Chairman of the Board, Independent Director |
| 07/2003 | |||
Bruce D. Broussard | Director, President and Chief Executive Officer |
| 01/2013 | |||
| Independent Director |
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Frank A. D’Amelio | Independent Director |
| 09/2003 | |||
| Independent Director |
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| 02/2020 | |||
John W. Garratt | Independent Director |
| 02/2020 | |||
David A. Jones, Jr. | Independent Director |
| 05/1993 | |||
Karen W. Katz | Independent Director |
| 09/2019 | |||
Marcy S. Klevorn | Independent Director | 61 | 02/2021 | |||
William J. McDonald | Independent Director |
| 10/2007 | |||
Jorge S. Mesquita | Independent Director | 59 | 02/2021 | |||
James J. O’Brien | Independent Director |
| 04/2006 | |||
Marissa T. Peterson | Independent Director |
| 08/2008 |
Performance Highlight
Our EPS results for the year ended December 31, 2019 exceeded management’s expectations driven by continued outperformance in the Company’s Medicare Advantage business. We reported an EPS of $20.10, on a Generally Accepted Accounting Principles (GAAP) basis and an EPS of $17.87*on anon-GAAP basis (Adjusted EPS), an increase of 23% compared to Adjusted EPS of $14.55 in 2018. We paid $291 million in cash dividends to our stockholders during 2019 - having raised our quarterly dividend amount in February 2019 from $0.50 per share to $0.55 per share - resulting in an increase of $26 million over dividends paid in 2018. In addition, we returned $1.1 billion to stockholders over the course of 2019 primarily through an accelerated stock repurchase program. In a year-over-year comparison for 2019, the Company’s GAAP and Adjusted pretax income and EPS results were favorably impacted by the solid performance from both the Medicare Advantage business and the Healthcare Services segment, with further benefit from achieving significant operating cost efficiencies in 2019 as a result of previously implemented productivity initiatives. In addition to our individual MA membership growth, our Medicaid membership grew nearly 38 percent with our statewide Florida contract win for 2019, plus approximately 140,000 additional members on January 1, 2020 under our Kentucky Medicaid contract that was previously fully ceded to CareSource. We are pleased with our 2019 performance, particularly our success in balancing and executing multiple priorities as we grew membership, improved the quality and productivity of our operations, and continued to invest in the long term.
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| Proxy Summary |
Why am I receiving this Proxy Statement?
You are receiving a proxy statement because you owned Humana Inc. common stock, which we refer to as Shares, as of Monday, February 24, 2020,22, 2021, which we refer to as the Record Date, and that entitles you to vote at the Annual Meeting. Our Board of Directors has made these materials available to you on the Internet or, upon your request, has delivered printed versions of these materials to you by mail, in connection with the Board’s solicitation of proxies on behalf of the Company for use at our 20202021 Annual Meeting of Stockholders. Your proxy will authorize specified people (proxies) to vote on your behalf at the Annual Meeting. By use of a proxy, you can vote, whether or not you attend the meeting.
This proxy statement describes the matters on which the Company would like you to vote, provides information on those matters, and provides information about the Company that we must disclose when we solicit your proxy.
Why did I receive aone-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials over the Internet. We believe that Internet delivery of our proxy materials allows us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials, which we refer to as the Notice, to our stockholders and beneficial owners as of the Record Date. All stockholders will have the ability to access the proxy materials on a website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found on the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically bye-mail on an ongoing basis by calling Broadridge Financial Solutions, Inc., or Broadridge, at1-800-579-1639.
How can I get electronic access to the proxy materials?
The Notice provides you with instructions regarding how to:
View our proxy materials for the Annual Meeting on the Internet; and
Instruct us to send our future proxy materials to you electronically bye-mail.
Choosing to receive your future proxy materials bye-mail will save us the cost of printing and mailing documents to you and will reduce the impact of our Annual Meetings on the environment. If you choose to receive future proxy materials bye-mail, you will receive ane-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials bye-mail will remain in effect until you terminate it.
When and where is the Annual Meeting?
The Annual Meeting will be held on Thursday, April 23, 2020,22, 2021, at 9:30 a.m., Eastern Time, in the 25th floor Auditoriumvia live audio webcast and will be accessible at the Company’s headquarters, located at 500 West Main Street, in Louisville, Kentucky.www.virtualshareholdermeeting.com/HUM2021.
Who is entitled to vote?
Anyone who owns Shares, as of the close of business on February 24, 2020,22, 2021, the Record Date, is entitled to vote at the Annual Meeting or at any later meeting should the scheduled Annual Meeting be adjourned or postponed for any reason. As of the Record Date, 132,123,850129,010,557 Shares were outstanding and entitled to vote. Each Share is entitled to one vote on each of the matters to be considered at the Annual Meeting.
Frequently Asked Questions •
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What will I be voting on?
Election of the twelve (12)thirteen (13) director nominees named in this proxy statement to serve on the Board of Directors of the Company;
Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2020;2021; and
Anon-binding, advisory vote to approve the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement.
The Board of Directors is not aware of any other matters to be presented for action at the Annual Meeting. However, if other matters are properly presented for a vote, the proxies will be voted for these matters in accordance with the judgment of the persons acting under the proxies.
How does the Board recommend I vote on each proposal?
The Board recommends that you vote your Shares as follows:
FOR the election of each of the twelve (12)thirteen (13) director nominees named in this proxy statement;
FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2020;2021; and
FOR the approval of the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement.
All Shares that are represented at the Annual Meeting by properly executed proxies received before or at the Annual Meeting and not revoked will be voted at the Annual Meeting in accordance with the instructions indicated in the proxies.
How do I participate in the Annual Meeting?
This year’s Annual Meeting will be held in a virtual format through a live audio webcast. You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on the Record Date, or hold a valid proxy for the meeting. Stockholders who attend virtually will be afforded the same rights and opportunities to participate as they would at an in-person meeting. Accordingly, as stockholders, you will be able to listen, submit your questions and vote your shares online regardless of location. The Company will provide Rules of Conduct which can be obtained at www.proxyvote.com after logging in with your unique 16-digit control number provided on your Notice of Internet Availability of Proxy Materials, your proxy card or your voting instruction form that accompanied your proxy materials (your “Control Number”). The Rules of Conduct will be strictly adhered to during the Annual Meeting.
To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/HUM2021, you must enter your Control Number. If you are a beneficial stockholder, you may contact the bank, broker or other institution where you hold your account if you have questions about obtaining your Control Number. Non-stockholders are welcome to attend the Annual Meeting through the guest log-in at www.virtualshareholdermeeting.com/HUM2021, however guests will not be allowed to participate during the Annual Meeting except as listeners.
A question and answer session will be available to stockholders during the Annual Meeting and will include questions submitted in advance of, and questions submitted live during, the Annual Meeting. You may submit a question in advance of the meeting at www.proxyvote.com after logging in with your Control Number. Questions may be submitted during the Annual Meeting through www.virtualshareholdermeeting.com/HUM2021. The Company’s Corporate Secretary will review all questions to ensure that those presented for response are in accordance with the Rules of Conduct.
We encourage you to access the Annual Meeting before it begins. Online check-in will begin approximately thirty minutes before the Annual Meeting. Technicians will be available to assist you during that time if you have difficulty accessing the Annual Meeting.
How do I vote?
There are four ways that you can vote your Shares. Voting by any of these methods will supersede any prior vote you made regardless of how that vote was made. PLEASE CHOOSE ONLY ONE OF THE FOLLOWING:
1) | By Internet. The website for voting is www.proxyvote.com. In order to vote on the Internet, you need the Control Number on your proxy card. Each stockholder has a unique control number so we can ensure all voting instructions are genuine and prevent duplicate voting. The Internet voting system is available 24 hours a day, seven days a week, until 11:59 p.m., Eastern Time, on |
2 | Humana | 2021 Proxy Statement •Frequently Asked Questions |
Wednesday, April 21, 2021, the day before the Annual Meeting. Once you are logged on the Internet voting system, you can record and confirm (or change) your voting instructions. If you use the Internet voting system, you do not need to return your proxy card. |
2) | By Telephone. If you are a registered holder in the United States or Canada, you may call 1-800-690-6903. The telephone voting system is available 24 hours a day, seven days a week, until 11:59 p.m., Eastern Time, on Wednesday, April 21, 2021, the day before the Annual Meeting. In order to vote by telephone, you need the Control Number on your proxy card. Each stockholder has a unique Control Number so we can ensure all voting instructions are genuine and prevent duplicate voting. Once you are logged on the telephone voting system, a series of prompts will tell you how to record and confirm (or change) your voting instructions. If you use the telephone voting system, you do not need to return your proxy card. |
3) | By Mail. Mark your voting instructions, sign and date the proxy card and then return it in the postage-paid envelope provided. If you mail your proxy card, we must receive it before 12:00 p.m., Eastern Time, on Friday, April 16, 2021. If you are returning your proxy card to Broadridge, they must receive it before 10:00 a.m., Eastern Time, on Wednesday, April 21, 2021, the day before the Annual Meeting. |
4) | By Virtual Webcast. Attend the virtual Annual Meeting at www.virtualshareholdermeeting.com/HUM2021 and cast your vote using the webcast voting options. Be aware that you can vote by methods 1, 2 or 3 above prior to the meeting and still attend the Annual Meeting. In all cases, a vote at the Annual Meeting will revoke any prior votes. Please note that if your Shares are held through a bank, broker or other nominee, you will need to obtain your Control Number in order to vote. |
How will my Shares be voted if I do not specify how they should be voted?
If you sign and return your proxy card without indicating how you want your Shares to be voted, the persons acting under the proxies will vote your Shares as follows:
FOR the election of each of the twelve (12)thirteen (13) director nominees named in this proxy statement;
FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2020;2021; and
FOR the approval of the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement.
What if my Shares are not registered in my name?
If you own your Shares in “street name,” meaning that your bank, broker or other nominee is actually the record owner, you should receive the Notice and voting instruction card from your bank, broker or other nominee. In addition, stockholders may request, by calling Broadridge at1-800-579-1639, to receive proxy materials in printed form, by mail or electronically bye-mail, on an ongoing basis. When you own your Shares in street name, you are deemed a beneficial owner or holder for voting purposes.purposes and you may not vote your Shares at the Annual Meeting unless you receive a valid proxy from your brokerage, firm, bank, broker-dealer or other nominee holder.
If you hold Shares through an account with a bank, broker or other nominee and you do not provide voting instructions on your instruction form, your Shares may not be voted by the nominee with respect to certain proposals, including:
the election of directors;
the approval of the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement; and
the frequency with which futurenon-binding advisory stockholder votes on the compensation of the Company’s Named Executive Officers will be held.
Banks, brokers and other nominees have the authority under the regulations of the New York Stock Exchange, or the NYSE, to vote Shares for which their customers do not provide voting instructions only on certain “routine” matters, including the ratification of the appointment of the Company’s independent registered public accounting firm. However, the proposals listed above are not considered “routine” matters for this purpose, and therefore your Shares will not be voted with respect to such proposals if you do not provide voting instructions on your instruction form.
Frequently Asked Questions• 2021 Proxy Statement | Humana | 3 |
How many votes are required to approve each proposal, what are the effects of abstentions and unmarked proxy cards, and is broker discretionary voting allowed?
Proposal
| Vote Required for Approval
| Effect of Abstentions
| Broker Discretionary Voting
| Unmarked/Signed Proxy Cards
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Election of directors |
The number of votes exceeds the number
| No effect | No | Voted “For” All Directors | ||||
Ratification of the independent registered public accounting firm
| Majority of shares present and entitled to vote | Counted as “Against” | Yes | Voted “For” | ||||
Non-binding advisory vote to approve executive compensation |
Majority of shares present and entitled to vote
| Counted as “Against” | No | Voted “For” |
(1) | Under the Company’s Majority Vote Policy, following election to our Board of Directors, a director is required to submit his or her irrevocable resignation to our Board of Directors conditioned upon (a) the director not achieving the requisite stockholder vote at any future meeting at which he or she facesre-election, and (b) acceptance of the resignation by the Board of Directors following that election. The Board of Directors has 90 days after a director fails to achieve the requisite stockholder votes to determine whether or not to accept the director’s resignation and to report this information to our stockholders. |
(2) | If you are a beneficial owner whose Shares are held of record by a broker or other NYSE member organization, you must instruct the broker how to vote your Shares. If you do not provide voting instructions, your Shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. This is called a “brokernon-vote.” A brokernon-vote will not affect the outcome of the vote for the matters being presented for action at the Annual Meeting, because they are not considered to be votes cast. |
What is a “brokernon-vote”?
A brokernon-vote occurs when a broker or other NYSE member organization holding Shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner, but does have discretionary voting power over other items and submits votes for those matters. As discussed above, if you hold Shares through a broker or other NYSE member organization and do not provide voting instructions to your broker or other NYSE member organization, your Shares may not be voted with respect to certain proposals, including the proposals listed above that are not considered routine.
What is a “quorum”?
A “quorum” is the presence at the Annual Meeting, virtually or by proxy, of a majority of the issued and outstanding Shares.Shares entitled to vote at the Annual Meeting. Shares may be voted at the Annual Meeting by a signed proxy card, by telephone instruction, or electronically on the Internet. There must be a quorum for the Annual Meeting to be held. Abstentions and brokernon-votes are counted as present and entitled to vote for purposes of determining whether a quorum exists.
How do I vote?
There are four ways that you can vote your Shares. Voting by any of these methods will supersede any prior vote you made regardless of how that vote was made.PLEASE CHOOSE ONLY ONE OF THE FOLLOWING:
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4 | Humana | 2021 Proxy Statement •Frequently Asked Questions |
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How do I vote the share equivalent units held in the Humana Common Stock Fund of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan?
If you have an interest in the Humana Common Stock Fund of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan on the Record Date, you may vote. Under the Humana Retirement Savings Plan and the Humana Puerto Rico Retirement Savings Plan, your voting rights are based on your interest, or the amount of money you and the Company have invested in your Humana Common Stock Fund.
You may exercise these voting rights in almost the same way that stockholders may vote their Shares, but you have an earlier deadline, and you should provide your voting instructions to Broadridge. Broadridge will aggregate the votes of all participants and provide voting information to the Trustee for the applicable plan. If your voting instructions are received by 11:59 p.m., Eastern Time, on Wednesday, April 15, 2020,14, 2021, the Trustee will submit a proxy that reflects your instructions. If you do not give voting instructions (or give them later than that time), the Trustee will vote your interest in the Humana Common Stock Fund in the same proportion as the Shares attributed to the Humana Retirement Savings Plan, or the Humana Puerto Rico Retirement Savings Plan, as applicable, are actually voted by the other participants in the applicable plan.
You must provide your instructions to Broadridge by using the Internet, registered holder telephone number(1-800-690-6903) or mail methods described above.Please note that you cannot vote in person atduring the Annual Meeting. Your voting instructions will be kept confidential under the terms of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan, as applicable.
Who will count the votes?
Broadridge will tabulate the votes cast by proxy, whether by proxy card, Internet or telephone. Additionally, the Company’s Inspectors of Election will tabulate the votes cast at the Annual Meeting together with the votes cast by proxy.
How do I change my vote or revoke my proxy?
You have the right to revoke your proxy at any time before the Annual Meeting.
Your method of doing so will depend upon how you originally voted (a later vote will supersede any prior vote you made regardless of how that vote was made):
1) | By Internet — simply log in and resubmit your vote — Broadridge will only count the last instructions; |
2) | By Telephone — simply sign in and resubmit your vote — Broadridge will only count the last instructions; |
3) | By Mail — you must give written notice of revocation to Broadridge, 51 Mercedes Way, Edgewood, NY 11717 or by fax at1-515-254-7733, submit another properly signed proxy with a more recent |
4) | Virtually — you may attend the virtual webcast of the Annual Meeting and submit your vote. |
What is the due date for stockholder proposals, including stockholder nominees for director, for inclusion in the Company’s proxy materials for the 20212022 Annual Meeting?
Stockholder proposals, or stockholder nominees for director at the 20212022 Annual Meeting, as permitted by SEC regulations for inclusion in our proxy materials relating to the 20212022 Annual Meeting, must be submitted to the Corporate Secretary in writing no later than November 4, 2020.10, 2021. Proposals should be submitted to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202.
Frequently Asked Questions• 2021 Proxy Statement | Humana | 5 |
May a stockholder present a proposal not included in our Proxy Statement at the April 23, 2020,22, 2021, Annual Meeting?
A stockholder can present a proposal at the Annual Meeting (aso-called “floor resolution”) only if certain notice requirements are met. The SEC does not directly regulate meeting conduct. State law imposes only limited requirements, so meetings are governed by procedures set forth in our Amended and Restated Bylaws (the “Bylaws”). Humana’s Bylaws require that a stockholder provide written notice of intent to bring a proposal no less than 60 days or more than 90 days prior to the scheduled date of the Annual Meeting of stockholders. If less than 70 days’ notice of the Annual Meeting is given, written notice by a stockholder would be deemed timely if made no later than the 10th day following such notice of the Annual Meeting. A proposal must also meet other requirements as to form and content set forth in our Bylaws. Stockholder proposals should be sent to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202. A copy of our Bylaws is available on our website. From thewww.humana.comwebsite, click on “Investor Relations,” and then click on “Corporate Governance,” and then click on the link entitled, “Bylaws.”
How will Humana solicit votes and who pays for the solicitation?
We have engaged D. F. King & Co., Inc. to assist in the distribution of proxy materials and solicitation of votes for approximately $12,000 plus expenses. We have also engaged Broadridge to assist in the distribution of proxy materials and the accumulation of votes through the Internet, telephone and coordination of mail votes for approximately $291,000$275,600 plus expenses. We will reimburse banks, brokers and other nominees for their reasonableout-of-pocket expenses for forwarding proxy and solicitation material to our stockholders.
How can I obtain additional information about the Company?
Included with this proxy statement (either in printed form or on the Internet) is a copy of our Annual Report on Form10-K for the year ended December 31, 2019,2020, which also contains the information required in our Annual Report to Stockholders. Our Annual Report onForm 10-K and all our other filings with the SEC also may be accessed via the Investor Relations section on our website atwww.humana.com. We encourage you to visit our website. From thewww.humana.comwebsite, click on “Investor Relations,” and then click on the report you wish to review under the “SEC Filings and Financial Reports” subcategory.
Where can I find voting results for this Annual Meeting?
The voting results will be published in a current report on Form8-K which will be filed with the SEC no later than four business days after the Annual Meeting. The Form8-K will also be available on our website atwebsite. From the www.humana.com. website, click on “Investor Relations,” and then click on “SEC Filings and Financial Reports.”
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What is “householding”?
“Householding” occurs when a single copy of our Annual Report, proxy statement and Notice is sent to any household at which two or more stockholders reside if they appear to be members of the same family. Although we do not “household” for registered stockholders, a number of brokerage firms have instituted householding for Shares held in street name. This procedure reduces our printing and mailing costs and fees. Stockholders who participate in householding will continue to receive separate proxy cards, and householding will not affect the mailing of account statements or special notices in any way. If you wish to receive separate copies of our Annual Report, proxy statement or Notice in the future, please contact the bank, broker or other nominee through which you hold your Shares.
6 | Humana | |
Headquartered in Louisville, Kentucky, Humana Inc. is a leading (2019(2020 Fortune #56#52 ranking) health and well-being company focused on making it easy for people to achieve their best health with clinical excellence through coordinated care. Our strategy integrates care delivery, the member experience, and clinical and consumer insights to encourage engagement, behavior change, proactive clinical outreach and wellness for the millions of people we serve across the country. As of December 31, 2019,2020, we had approximately 16.716.8 million members in our medical benefit plans, as well as approximately 5.45.3 million members in our specialty products.
Our Strategy
We are committed to helpingaddressing the most important health needs of our millions of medical and specialty insurance members achieve their best health. Our successful history in care delivery and health plan administration is helping us create a new kind of integrated care with the powerservices customers to improvesimplify achieving better health and well-being and lower costs. Our efforts are leading to a better quality of life for people with Medicare, families, individuals, military service personnel, and communities at large. To accomplish that, we support physicians and other health care professionals as they work to deliver the right care in the right place for their patients,give our members. Our range of clinical capabilities, resources and tools — such asin-home care, behavioral health, pharmacy services, data analytics and wellness solutions — combine to produce a simplified experience that makes health care easier to navigate and more effective.
Humana’s innovative strategy continues to capitalize on industry changes which continue to progress toward our goals of making benefits more affordable while improving the overall cost of care and consumer experience — through our integrated care delivery model. We understand that healthcare is complicated, and dealing with multiple physicians and other healthcare professionals can be a confusing and daunting task. That is one of the principal reasons why Humana continues to enhance its integrated care delivery strategy in key areas to enable a better and more seamless locally delivered health care experience for our members.
One of the areas in which we strive to improve is the health of seniors living with chronic conditions. Our integrated care delivery model brings simplicity and connectivity to the healthcare experience of our senior members. We thrive in this area by (i) partnering with providers to evolve incentives from treating health episodically to managing health holistically; (ii) integrating clinical programs that intersect healthcare and lifestyle- helping people at key moments of need; and (iii) by simplifying processes through leveraging technology, consumer segmentation and analytics.
customers back healthy days. We offer insurance andnon-insurance products to consumers through our various subsidiaries. Our medical and specialty insurance products allow members to access health care services primarily through our networks of health care providers with whom we have contracted. In addition, we offer services to our health plan members as well as to third parties, including pharmacy solutions, provider services, and clinical programs, such as home health and other services and capabilities to promote wellness and advance population health. At the core
Our successful history in care delivery and health plan administration is helping us create a new kind of our strategy is our integrated care delivery model, which unitessystem with the power to address our customers’ most significant needs that stand in the way of simpler health care and better health by (i) making care more predictable, understandable, and affordable, (ii) addressing medical, behavioral, and social needs, and (iii) delivering care whenever and wherever our customers need it. Our efforts are leading to a better quality of life for people with Medicare, families, individuals, military service personnel, and communities at large. Humana’s innovative strategy continues to capitalize on industry changes by positioning ourselves as a partner in health and aging to our consumers. We understand that health care high member engagement,is complicated, and sophisticated data analytics. Three core elementsdealing with multiple physicians and other health care professionals can be a confusing and daunting task. That is one of the modelprincipal reasons why Humana continues to enhance its integrated care delivery strategy in key areas to enable a better and more seamless locally delivered health care experience for our members.
We are focusing on the unmet needs that matter the most to our customers, aligning our actions and behaviors to go above and beyond to solve those needs and deliver on a “more human” experience, so people get more than they expect, ultimately helping members achieve their best health. We call this delivering “human care.” Human care separates Humana from other traditional insurance companies, demonstrating that our approach is more caring, personalized, and easier. We do this by (i) listening to our customers, (ii) establishing strong partnerships with trusted individuals who are involved in their care, such as providers and caregivers, (iii) developing technologies and other solutions that offer convenient and easy ways for them to engage with their health, and (iv) leveraging data analytics to improve the consumer experience by simplifying the interactionhow they engage and interact with us engagingby personalizing the experience for how they want to interact with Humana.
Our ecosystem of value-based care delivery capabilities engages our customers clinically by focusing on the physical, mental, and preventative aspects of their health, and delivering better health outcomes. We activate a network of proprietary and partnered solutions, focusing specifically on the highest influence touchpoints of the health care delivery system, including primary care, home health, pharmacy, behavioral health, and social determinants of health. We support the integration of these touchpoints through robust data, analytics, and digital health capabilities that help us engage our customers in their health and get them the right care, in the right place, at the right time. This approach allows us to deliver better quality and health outcomes while making the health care experience simpler for our members and patients.
Our COVID-19 Response
Defined by the COVID-19 pandemic, 2020 was a unique and challenging year that highlighted the strengths of the Medicare Advantage (MA) program and the value that this enduring public-private partnership brings to our nation’s seniors, the disabled and the healthcare system as a whole. From the outset of the pandemic, Humana has taken decisive action to support our members, provider partners, associates, and the communities we serve to ease some of the difficulties presented by the pandemic.
We quickly implemented changes for our members to (i) remove financial barriers to care, (ii) improve access to care and pivot to telephonic and in-home care, (iii) provide resources to help them safely access in-person care, (iv) address social determinants of health needs that were exacerbated by the pandemic, and (v) leverage our data and analytics capabilities to establish a clinical outreach team to proactively engage with our most vulnerable members. In response to the unprecedented strain faced by our provider partners early in clinical programs,the pandemic, we took actions intended to provide financial and offering assistanceadministrative relief to providers in transitioning fromease liquidity concerns and enable them to devote as much time and resources as possible to unencumbered frontline patient care.
Company Overview • 2021 Proxy Statement | Humana | 7 |
Our response to the pandemic and performance throughout 2020 would not have been possible without the extraordinary, resilient efforts of our associates — who went above and beyond to continually meet the needs of our stakeholders while facing their own daily challenges as a result of fee-for-serviceCOVID-19. To support them, we quickly transitioned nearly all of our workforce to a value-basedremote work environment. We also made certain that our frontline care arrangement. Our approachproviders, clinicians, and pharmacists – who continued to primary, physician-directed care for our members aimsand patients in our clinics and in the home – had the proper protective equipment and space to provide quality care that is consistent, integrated, cost-effective,safely do so. At our physical locations we implemented wellness checks, social distancing practices and member-focused. The model is designedenhanced cleaning protocols, among other things, to improve health outcomes and affordability for individuals and forsupport the health system asand safety of our associates whose roles are not conducive to a whole, while offeringremote work environment. We also expanded our benefits to assist our associates who faced financial hardship and to address the difficulties that the pandemic presented to daily life.
Our COVID-19 response initiatives include:
Associates |
✓ | Transitioned approximately 94% of workforce to work-at-home and equipped them with the necessary technology and resources for a successful remote work environment |
✓ | Created a special COVID-19 paid leave program to support associates who are sick or quarantining |
✓ | Provided $13.10 million in funding for emergency relief for caregiving (back-up childcare and/or eldercare needs) |
✓ | Provided $7.56 million in funding relief for financial hardship (food insecurity, household essentials and family job loss) |
✓ | Adjusted pay and leave policies to provide 40 hours of supplemental PTO to manage personal challenges as a result of COVID-19 (school closings, child care, etc.); Our associates accessed 413,762 hours of the supplemental PTO |
✓ | Partnered with Care.com to provide free premium membership ($150 value) to assist associates in finding caregivers for family members |
✓ | Contributed $1.5 million to the United Way and Louisville Fund for the Arts in lieu of annual associate giving campaigns |
✓ | Expanded volunteer time off & virtual volunteer opportunities to help communities recover from both the pandemic and efforts related to social injustice |
✓ | Maintained Company culture through weekly communications from our CEO |
Members |
✓ | Removed financial barriers for access to care by waiving COVID-19 related costs for health plan members, including by: |
✓ | Established a clinical outreach team to proactively engage with our most vulnerable members |
✓ | Allowed early prescription refills so members could prepare for extended supply needs |
✓ | Partnered with the federal government to expand access to telehealth |
✓ | Created a testing concierge service to facilitate and guarantee testing for members through partnerships with Walmart and LabCorp |
✓ | Delivered over 20 million Humana masks to members and associates to facilitate access to care and support visits to providers safely |
✓ | Mailed in-home preventive screening and diabetes testing kits to encourage members to seek preventive care that may have been delayed during the pandemic |
✓ | Created an online tool and stood up an innovative home based COVID-19 test option for our members |
✓ | Supported our most vulnerable members in obtaining food access, delivering over 1 million meals |
✓ | Provided a concierge line dedicated to COVID-19 related inquiries |
✓ | Developed a pilot with virtual devices to help members not forego care |
✓ | Provided COVID-19 vaccine educational material to members |
Providers & Clinicians |
✓ | Implemented simplified and expedited claims processing in order to get reimbursements to providers as quickly as possible to ease financial concerns |
✓ | Released ~$1 billion in advanced funding to providers to ease administrative burdens so they could focus on delivering care to patients and prioritize better health outcomes |
✓ | Suspended prior authorization and referral requirements, amid other provider support initiatives |
Communities We Serve |
✓ | Contributed $200 million to The Humana Foundation, the Company’s philanthropic arm: |
✓ | Expanded our associate Matching Gift Program to offer an additional match of eligible contributions to certain charities for the provision of COVID-19 related support |
✓ | Invested millions of dollars in Louisville, KY, our hometown community, to support COVID-19 relief efforts and to advance societal initiatives directed toward healing, equity and unity, including the following contributions: |
✓ | Partnered with JCPS to open the JCPS 360° Student & Family Support Center at Humana, to provide Non-Traditional Instruction (NTI) 2.0 platform services and log-in help, special education assessments/screenings, school choice assistance, translation assistance, physicals and social support from the Louisville Metro Office of Resilience and Community Services |
✓ | The Humana Foundation committed over $50 million to address underserved communities to help them navigate COVID-19 through short and long-term programs and partnerships with local and national agencies, including: |
Visit www.humanafoundation.org to learn more about The Humana Foundation’s programs and initiatives.
8 | Humana | 2021 Proxy Statement •Company Overview |
Our Performance
With significant progress made on our strategic initiatives, 2019 was an extremely successfulOur 2020 full year during which we returnedfinancial results reflect continued strong financialcore performance balanced against investing in transformative capabilities foracross the long-term sustainabilityCompany, combined with the impact of the Company:ongoing COVID-19 pandemic, including the Company’s relentless efforts to ease the burdens for all of its stakeholders by proactively addressing the physical, mental and financial well-being of our members, communities including the underserved, providers, and employer groups:
We reported EPS of $20.10 and Adjusted EPS of $17.87*, exceeding both our initial GAAP EPS guidance of approximately $16.60 to $17.10 and Adjusted EPS guidance of approximately $17.00 to $17.50, as we increased our public Adjusted earnings estimate three times over the course of the year as a result of strong operating performance.
Our 2019 earnings outperformance was fueled by continued strong Medicare Advantage results.
• | We reported EPS of $25.31 on a Generally Accepted Accounting Principles (GAAP) basis and Adjusted EPS of $18.75*, in-line with the Company’s initial FY 2020 Adjusted EPS guidance as communicated throughout the year. |
We returned over $1.3approximately $2.1 billion to our stockholders, in the formincluding $1.75 billion of share repurchases and $323 million in dividends, and also increased our quarterly dividend to $0.55 per share from $0.50 per share in February 2019 (with a further increase to $0.625 per share in February 2020).dividends.
* | Please refer to section entitled “Organization & Compensation Committee Report” in this proxy statement for a reconciliation ofnon-GAAP to GAAP financial measures. We encourage each stockholder to read the full financial analysis for year ended December 31, |
Company Overview •
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Humana | |
BOARD OF DIRECTORS
Oversees Management of Major Risks | ||||||||||||||||
• Legal/Regulatory • Financial | • Succession Planning • Strategic | • Legal/Policy • Reputation
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Audit Committee | Organization & Compensation Committee | Nominating, Governance & | Technology Committee | Investment Committee | ||||||||||||
• Financial Statement integrity and reporting • Legal, regulatory and compliance • Internal controls • Cyber security risk oversight
| • Executive compensation policies and practices • Non-executive compensation policies and practices • Succession planning • Human Capital Management
| • Governance structure and processes • Legal and policy matters • Stockholder concerns • Board refreshment • Environmental, Social and related-Governance (ESG) oversight | • Information security, technology and privacy & data protection • Company IT strategy and consumer facing technology | • Investment objectives and policies • Investment results and performance evaluation | ||||||||||||
Management Business
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The goal of these processes is to achieve serious and thoughtful board-level attention to the Company’s risk management process and system, the nature of the material risks faced by the Company, and the adequacy of the Company’s risk management process and system designed to respond to and mitigate these risks.
Board Leadership
Leadership of the Board is essential to facilitate the Board acting effectively as a working group to the benefit of the Company and its performance. As Chairman of the Board and our lead independent director, Mr. Kurt J. Hilzinger assumes key duties to ensure effectiveness and collaboration in all aspects of the Board’s role.
Duties of Our Chairman | ||
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Corporate Governance •
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The Board believes that the advisability of having separate or combined chairman and chief executive officer positions is dependent upon the strengths of the individual or individuals that hold these positions and the most effective means of leveraging these strengths, in light of the challenges and circumstances facing the Company, which may change over time. At this time, given the composition of the Company’s Board, the effective interaction between Mr. Hilzinger, as Chairman, and Mr. Broussard, as Chief Executive Officer, Mr. Hilzinger’s status as an independent director and previous service as our Lead Director, and the current challenges faced by the Company, the Board believes that separating the chief executive officer and board chairman positions provides the Company with the right foundation to pursue the Company’s strategic and operational objectives, while maintaining effective independent oversight and objective evaluation of the performance of the Company.
Board Engagement and Undertakings
The Board holds itself to a high standard of engagement, with ahands-on approach that leads to critical insights regarding our customers, operations and business and enhances their level of governance and oversight. An essential component to the Board’s engagement is communicating with the Company’s internal and external stakeholders. To accomplish this, meetings of the Board may be held in key Company markets where, together with management, the Board will personally meet with associates, customers, providers and other stakeholders to gain direct feedback into the Company’s operations, experiences and overall effectiveness. Despite COVID-19 restrictions and the Company’s workforce having primarily transitioned to work-from-home, the Board maintained its commitment to engagement and continued to meet with stakeholders virtually, by videoconference and teleconference.
Certain other engagement practices of our Board are described below.
Follows an annual topical calendar used to balance strategic, operational, compliance, and cultural matters, among others, and receives detailed reports on those topics, in addition to ad hoc subjects, throughout the year.
Utilizes clear and proactive Board meeting agendas to achieve high productivity at each meeting.
Holds executive sessions during every meeting, with the CEO present and then with only the independent directors. Relevant feedback is then reported to the CEO and the management team, creating a feedback loop from the Board to the management team.
Maintains regular communication with the CEO and management team, apart from formal Board meetings, to ensure consistent and continuous progress toward established goals.
Employs Board technology tools to review Board materials and to remain informed of ongoing Company endeavors, to efficiently communicate with the management team and to take formal action when necessary.
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Performs in-depth organizational structure reviews, through the Organization & Compensation Committee, of line and functional teams within the Company to assess leadership bench strength, culture, succession planning, diversity and related matters. In addition, the Organization & Compensation Committee regularly reviews associate engagement scores, which maintained momentum during 2020. Commitment to our associates only strengthened during the pandemic, with 90% of our associates saying that Humana is committed to their health and well-being.
Hosts an annual succession dinner with rising leaders in the Company, whose leadership position is below management team level, to personally engage with them and allow an opportunity for those leaders to offer feedback directly to the Board.
Receives continued education from external consultants on a wide range of industry topics to keep them apprised of the latest trends and anticipated future trajectories. In addition to our director’s individual pursuits, Board education opportunities during 2019,2020, included, (i) a formal education session with external consultants; (ii) guest speaker attendance during select meetings; and (iii) routine briefings on regulatory developments.
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• • Reconstituted Board Committees • Approved COVID-19 Relief Funds
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Videoconference / Teleconference Meetings
In-person Meetings 1 Annual Stockholder Meeting (Virtual)
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96%
(Based on aggregated Board and Committee meeting attendance; includes all directors having served during
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Humana | |
Our associates are essential to our Company’s success in delivering on our core strategy, creating positive healthcare experiences and providing human care for our members. We are committed to recruiting, developing, and retaining strong, diverse teams, activelypromoting a culture of inclusion and diversity to foster a workplace where all associates feel they can be authentic and bring their whole selves to work every day – cultivating uniqueness and thriving together.
These efforts are overseen by our Board Commitmentof Directors – which has designated to our Organization & Compensation Committee the responsibility for Board-level oversight of the Company’s human capital management and inclusion and diversity policies and practices – and implemented under the direction of our Chief Administrative Officer. As of December 31, 2020, we had approximately 48,700 associates and approximately 900 additional medical professionals working under management agreements primarily between us and affiliated physician-owned associations.
Our Culture and Approach to Work We believe that our members’ experience is linked to our associates’ experience—engaged, productive associates are the key to building a healthy company, a caring environment where our associates go above and beyond for our members, driving innovation, and allowing for fulfilling experiences that incentivizes them to stay with us over the long-term. Each year, we measure our success and opportunities to advance through our annual, third-party administered Associate Experience Survey – results of the 2020 survey showed that 93% of associates are highly engaged, which is world-class level. We provide the survey results to our entire associate population and encourage leaders to use the information to create open, honest action plans with their teams to build upon and further deepen our collective engagement. | 7.3 Years Average Associate Tenure | |||
87% Of associates have a strong sense that they belong at Humana |
Inclusion and Diversity
We understand that inclusion enables a meaningful work environment where everyone feels welcome and performs their best. Our associates’ vast experiences and perceptions—their unique characteristics, backgrounds and beliefs—drive the groundbreaking, strategic thinking that gives our Company its competitive edge in a diverse marketplace. Our approach fosters innovative thinking and creativity, expands insights and generates better business outcomes. Celebrating diverse backgrounds and creating an environment of inclusion is at the heart of what we do. Our commitment is to ensure we foster a work environment in which every associate can bring their whole self to do their best work.
We are committed to having balanced diversity at all levels of the Company and have developed a pathway for top, diverse talent within our recruiting initiatives. To achieve our recruiting and hiring goals we proudly partner with local and national advocacy groups to provide information about open roles, assistance with resume preparation and application submission. We’re proud to be recognized as a Military Friendly employer. Under our Veterans Hiring Initiative we partner with dozens of organizations for veteran recruitment, including the Wounded Warrior Project, United States Army Reserve, and Paralyzed Veterans of America, and have hired thousands of veterans and military spouses. We have also designed and implemented programs that enhance our hiring initiatives aimed toward women in technology, retiree/mature worker populations, and closing the hiring gap of persons with disabilities versus those without disabilities.
We’ve also incorporated balanced interview panels into our interview process, through which we strategically engage a broad spectrum of interviewers that bring greater diversity and perspective. This proven best practice strengthens the candidate experience and hiring of diverse talent, ensuring we get the right talent for any given role, and minimizes the potential for personal blind spots when evaluating candidates. Balanced interview panels enhance the experience of interviewees and demonstrate our Values in action.
2017 Signed the CEO Action The largest CEO-driven | 2019 Joined Catalyst CEO Champions A transformational diversity and inclusion initiative launched by Catalyst—a global thought leader and partner in accelerating the progress of women at work. | 2020 Founding Member of Leaders across industries collectively committed to upskilling, hiring and promoting one million Black Americans over the next 10 years. |
Corporate Governance• 2021 Proxy Statement | Humana | 13 |
We track and evaluate our workforce representation through self-disclosure by our associates, and are committed to transparent disclosure of our demographic data. The charts below represent our workforce demographics as of December 31, 2020. More information on our inclusion and diversity efforts, along with detailed demographic data, can be found within our Inclusion & Diversity Report located on our website, www.humana.com then click on “Investor Relations,” and then click on “Inclusion and Diversity.”
Associate Demographics |
Pay and Benefits Philosophy, Compensation and Financial Security We believe all of our associates have the right to receive a fair living wage and we are committed to maintaining a pay and benefits philosophy that is market-based and recognizes an associate’s contributions so that we can attract and retain an engaged, talented team. Our Company’s pay and benefits structure is designed to motivate and reward our associates - at all levels of the organization - for their skill development, demonstration of our values and performance. While our programs vary by location and business, they may include: | ||||
90% Of associates believe | ||||
• Competitive Base Pay • Associate Incentive Plan (Annual Bonus) • Supplemental Pay (Including Overtime) • Recognition Pay and Service Awards • 401(k) Retirement Savings Plan with Company Match Program • Life Insurance • Short- and Long-Term Disability Insurance | • Medical, Dental and Vision Benefits • Supplemental Health Benefits • Long-Term Care Insurance • Go365® Wellness and Rewards Program • Health Plan Incentives • On-site Health and Fitness Centers • On-site Health Screenings and Vaccinations | • Paid Time Off, Paid Holidays, Paid Volunteer Time Off and Jury Duty Pay • Paid Parental Leave Program (6 Weeks) • Paid Caregiver Time Off Program (2 Weeks) • Employee Assistance Program • Associate Discount Programs and Services • Helping Hands Program • Transit Services |
14 | Humana | 2021 Proxy Statement •Corporate Governance |
Talent Development / Growth Opportunities
We champion the individual goals and development of our associates, and provide a number of programs to ensure that our associates have the resources and support they need to deliver on their passion. The Humana Learning Center gives our associates the opportunity to earn professional certifications through continued education programs and to participate in instructor-led and online courses designed to strengthen soft and hard-skills and enhance leadership development. Our Career Cultivation team sponsors workshops and events to promote associate accountability within their personal and professional growth as part of overall career development. | ||
84% Of associates believe Humana provides them with opportunity for growth and development |
Our associates are also encouraged to participate in mentoring programs with people of various backgrounds and cultures. We view mentoring as an essential development tool for sharing skills and knowledge so we can all succeed. Our commitment to mentoring feeds the successful future of our Company.
Additionally, we utilize development programs to enhance talent within our business segments through targeted internal initiatives, where we aim to upskill and reskill existing associates for opportunities in new career pathways.
A Workplace With Purpose
Having a purpose and a connection to a community improves well-being. That’s why we strive to make it easy for our associates to give back, either as individuals or a team, to causes that ignite their passion and sense of purpose. Volunteerism is a tangible way to impact the health and well-being of the communities we serve and enrich our workplace.
We’ve created programs and practices to make volunteering easier and more vibrant for associates. | ||||
• Our full-time associates annually receive eight hours of paid Volunteer Time Off (VTO) • We help associates discover and track volunteer opportunities through our Humana Together volunteer portal • We integrate volunteerism in our leadership development and team-building • We offer a matching charitable gift program through The Humana Foundation • We feature associates sharing their volunteerism stories on our Intranet to inspire others | 90% Of associates are inspired by our Bold Goal and commitment to the communities we serve | |||
We offer our associates paid time off to get vaccinated for COVID-19, helping to reduce barriers associates may have in taking time away from work to get vaccinated and supporting healthy communities
Corporate Governance• 2021 Proxy Statement | Humana | 15 |
Board Oversight of Environmental, Social Responsibilityand Governance Matters
Over the past year, we continued to advance our strong corporate governance framework to more formally align our environmental, social and governance (ESG) efforts with our long-standing commitment to operating our business in a socially responsible and sustainable manner that takes into account the interests of all our stakeholders. Our Board of Directors has formally designated our reconstituted Nominating, Governance & Sustainability Committee with the responsibility for Board-level oversight of the Company’s ESG strategy, practices and reporting. In addition, our executive management team established an ESG Steering Committee, overseen by our Chief Administrative Officer and Chief Legal Officer, to guide the integration of our ESG efforts with our long-term business strategy. This ESG governance structure will, in turn, complement the long-standing responsibility of our Board and each of our Board committees in overseeing various aspects of the Company’s ESG-related risks and practices, as illustrated below:
BOARDOF DIRECTORS | ||||||||||||
Nominating, Governance & Sustainability Committee | ||||||||||||
Audit Committee | Organization & Compensation Committee | Technology Committee | Investment Committee | |||||||||
• Risk Management • Cyber Security | • Human Capital Management • Inclusion & Diversity Practices • Company Compensation Plans & Policies | • Privacy & Data Protection • Information Security | • Investment Portfolio • Investment Guidelines | |||||||||
Chief Administrative Officer and Chief Legal Officer (In collaboration with members of the executive management team.) | ||||||||||||
ESG Steering Committee | ||||||||||||
Oversight | Management | Implementation |
Sustainability Highlights
At Humana, our corporate social responsibility (CSR)ESG efforts are driven by our goals to help our members and our associates achieve their best health and to improve the communities we serve byfocused on inspiring health and well-being for each person each community and the future. Fromcommunities we serve, and building our sustainable future. We clearly demonstrate our dedication – from our Bold Goal, to our spirit of volunteerism and philanthropic partnerships, to our commitment to environmental sustainability, inclusion, diversity, and ethics the Board and management team are committed to improving and advancing the Company’s CSR efforts and– by empowering our associates to be a positive influence in the workplace and in their communities. We strive to make living healthy easier for everyone and are proud to share a few highlights of our efforts below.
Well-Being For Each Person
Our members’ achieving their best health is at the top of our mind. We know that health is not linear. Every member is unique as are the communities we serve. That’s why we’re continuously working to ensure that our health plan products and services are as affordable as possible, as well as, addressing access to healthcare barriers so that all of our members can receive the care they need. As we cultivate our philosophy of whole-person health care, we’re addressing the most crucial needs of our members, which means truly caring about them, understanding what is important to them and finding ways to make it easy for them to live their best life. Thanks to processes such as integrated care delivery and using health screenings that consider social determinants of health, we have a clearer view of each member’s very personal barriers to their best health. Through our integrated approach, we are building the tools to addressthe physical, behavioral and social factors that all play such a critical role in promoting improved health outcomes. Please refer to our Value-Based Care Report for more information on these efforts.
Our holistic, integrated approach to care and longstanding commitment to caring for vulnerable populations also afford us a unique opportunity to promote health equity and address the effects of health disparities in the U.S. health care system. In January 2021, we announced our first Chief Health Equity Officer, who will lead work to define enterprise-wide measures of equity, create goals for improvement and coordinate efforts to achieve them—setting direction and establishing strategy to promote health equity across all Company lines of business, including our care delivery assets. Our Chief Health Equity Officer will further the Company’s focus on cultural sensitivity, ensuring that it’s fully integrated into the design and development of our clinical programs, products, services and all member interactions and communications, while working collaboratively with the broader health care community to advance health equity so health care can work better for everyone, regardless of background, age or economic status.
16 | Humana | 2021 Proxy Statement •Corporate Governance |
Our associates are the driving force behind our Company’s well-being initiatives. We believe that when we invest in our associates they pay it forward by investing in others. In this effort we actively live out our Values, cultivating uniqueness and thriving together.
The Company’s Office of Inclusion & Diversity (our “I&D Office”) efforts are led by our Chief Inclusion and Diversity Officer, who reports directly to the Chief Administrative Officer. The I&D Office works with key partners like the Executive Inclusion & Diversity Council (the “Council”), our Network Resource Groups (“NRGs”), local Inclusion and Diversity Councils, and Culture & Engagement professionals across the enterprise, to maximize our vibrant diversity and inclusive culture to empower our business strategy to help the communities we serve achieve their best health.
To help integrate inclusion and diversity into the fabric of the organization from the top down, the Council is led by our President and CEO, with top priorities consisting of (i) hiring, developing and retaining a diverse workforce; (ii) creating an inclusive workforce; and (iii) improving transparency and accountability to sustain outcomes. The Council sets company-wide inclusion and diversity goals and objectives.
Our inclusion and diversity objectives also aim to build an awareness of biases and beliefs, identify differences and similarities of our multi-generational workforce and enable associates to leverage differences to drive innovation and create value. We are committed to growing our associates’ inclusion skills and diversity knowledge and provide a variety of associate training programs and workshop opportunities in areas of unconscious bias, disability awareness, cultural competency, racial equity, and social justice, among others.
Our fundamental belief that every person has the right to a safe workplace includes having freedom of gender identity and expression, which we have included within our non-discrimination and anti-harassment policies. Additionally, our Company adopted guidance to support associates who are transgender and/or identify as non-binary. Our Workplace Gender Transition Guidelines, available to all associates, outlines a collaborative process to help guide transitioning associates, their coworkers and leaders by addressing the needs and issues that may arise in the workplace, and includes alignment of workplace resources, education and coaching.
Our suppliers are essential to delivering services within our business. As such, we hold our suppliers accountable for complying with our Company’s Standard of Excellence and Ethics Every Day policy – to the same degree as our associates.
We want our vendors and suppliers to help drive innovation, improve quality and sustain growth. To that end, we strive to attract qualified, certified suppliers who reflect our customers, associates and communities we serve. We support the growth of diverse-owned businesses by investing in them through our Supplier Diversity program. We’ve made it a priority to obtain a diverse supplier base reflective of the overall customers, associates and communities we serve. We’re also committed to fair and equitable business practicesand to social responsibility. Leveraging these suppliers now and in the future is beneficial to Humana’s profitability.
First public release of our September 2020
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Established new position to lead and advance our health equity initiatives. | ||||||||||
31%
Associate participation in at least | ||||||||||
Women’s NRG is the largest |
The charts below representWell-Being For Each Community
As our diverse workforce during 2019, basedCompany shifts from an insurance company with elements of health to a health company with elements of insurance, we are focused on five areas of influence to help improve health and aging: primary care, home health, pharmacy, behavioral health and social determinants of health. Championing this effort is our Bold Goal – a population health strategy launched in 2015 to help the self-identified datacommunities we serve be 20% healthier by 2020 and beyond.
Over the past five years, we’ve continued to adapt as we learned more about our communities and our members. We discovered how important it is to develop personalized solutions, determining how best to meet the needs of our associates.members. That has meant getting to know our members better in order to connect them to people and organizations who can support them – not only in their clinical needs, but also in their individual health-related social needs, such as getting access to healthy food, helping to connect them socially and addressing their housing needs.
With community-based organizations and healthcare practices, we are creating evidence-based, scalable and financially-sustainable solutions to improve population health at a local level. We track our progress using the U.S. Centers for Disease Control and Prevention (CDC) assessment tool, Healthy Days, which measures self-reported mentally and physically unhealthy days of an individual over a 30-day period. Due to our active involvement and partnerships within Bold Goal communities, we have seen a 2.7 percent reduction in unhealthy
Corporate Governance •
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days since 2015. We scaled social determinants of health screenings across our business, which has impacted thousands – connecting those in need to community resources and support. Please refer to our Bold Goal Progress Report for more information on these efforts.
Because we know social determinants of health play a significant role in addressing health needs, we partnered with the University of Houston to establish The Humana Integrated Health System Sciences Institute to disrupt the way healthcare leaders are trained by focusing on advancing population health, improving health outcomes and expanding the use of value-based payment models. Future clinicians will work in teams and be fluent in assessing the social determinants of health. They will be trained to understand the nuances of how patients’ home lives are affecting medication adherence and nutrition. And when those red flags go up, they will connect—not just refer—patients to resources who can help them, resulting in overall improved health outcomes and improved population health.
Invested by Foundation in 2020 supporting fifteen Bold Goal communities through grants
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Hours tracked by our associates in 2020 for volunteerism within their communities | ||||||||||
Social Determinants of Health screenings performed in 2020, exceeding our 3 million screening goal |
ForBuilding a Sustainable Future
We know that a strategic focus on environmental sustainability is critical to fulfilling our Companymission of helping people achieve lifelong well-being. The better we do at protecting the health of our environments, including our operations, supply chain, and communities around us, the better we can do at positively supporting people on their health journeys. We believe that our demonstrated commitment to environmental sustainability not only positions us to offer reliable and cost-effective service to our customers, but also embodies the principle of an intrinsic link between the health of our planet, our business, and the communitiesservices we serveprovide.
As a services company,, success with the Bold Goal means that our membersdirect environmental impacts are achieving lifelong well-being. We’re helping members to address loneliness, social isolation and food insecurity because we know that each of these factors has a direct impact on healthy days. We have developed social determinant predictive models for internal use and informative tool kits to help physician practices screen and refer their patients to community resources. In addition, we have neighborhood locations that offer classes and activities to promote health behaviors and peer engagements that directly address social determinants at a community level. Through community, clinical and business integration we are taking the Bold Goal beyond 2020 because we know that improving population health is a long-term commitment and takes all of us working together to reduce medical costs and improve health outcomes. Our community initiatives have also led to a strategic advantage in under-served markets and demographics.
Well-being for the Future
Environmental sustainability is important for our Company as environmental factors impact health outcomes for our customers. Because we provide services instead of products, the largest opportunity to decrease our environmental impact in areas of energy consumption, greenhouse gas (GHG) emissions, waste and water practices, is throughconcentrated within our internal operations.
Additionally,operations. As such, our focus is on areas where we feel we can make the most impact: energy, emissions, and waste. We augment these initiatives with a broader effort to conserve other resources such as water, manage our real estate footprint, and collaborate with our stakeholders – namely our associates – to proactively embrace sustainability. We understand that climate change impacts such as increased frequency of extreme weather events, higher costs of energy, and consumer and investor interest in our sustainability efforts, pose both risks and opportunities for our business. Webusiness and seek to manage thesesuch impacts by continually in several ways, including: continuous strengthening of our already robust business continuity program, investing in energy management and efficiency projects and pursuingapplying financial incentives into support of efforts to reducetoward reducing our environmental footprint. We also set challenging environmental targets collaboratingthat promote collaboration with vendors and associates to achieve them; thesethem. These efforts both mitigate riskrisks and demonstrate our Company’s commitment to our members, associates and stockholders by validating the intrinsic link between environment and well-being.
Our futureWorkplace Experience team, overseen by our Chief Administrative Officer, is responsible for day-to-day planning, coordination and implementation of the Company’s operational environmental sustainability ispolicies, including those around energy management and climate-change mitigation/adaptation. The Workplace Experience team also dependent uponleads initiatives toward achieving environmental targets in addition to tracking/reporting progress and assessing opportunity toward setting new targets climate-change mitigation/adaptation. The Workplace Experience team also leads initiatives toward achieving environmental targets in addition to tracking/reporting progress and assessing opportunity toward setting new targets
We encourage you to review our Company’s continued focus on ethics, regulatory complianceEnvironmental Sustainability Policy Statement and data privacy, for eachour 2020 CDP Report – where we maintained leadership level achievement – to learn more about our sustainability efforts and areas of which we currently have stringent controls in force. Through conducting business ethically and proactively managing toward environmental efficiency, our Company is positioned to offer reliable and cost-effective services to our customers.concentration.
Humana | |
ENVIRONMENTAL SUSTAINABILITY INITIATIVES
Corporate Responsibility Awards and Recognition We are pleased to have received recognition for our 2020 corporate responsibility efforts and we appreciate the acknowledgement of our commitment to inspiring health and well-being. Highlighted below are just a few of our valued achievements, however a complete list of awards and recognition is available on our website at www.humana.com – from there click “Corporate Responsibility” and then click “See Our Awards.”
Qualifications and Process for Nominating Directors Identifying Nominees for Directors
The Committee receives notice of potential candidates through any of the following avenues: (i) Board self-identification; (ii) third-party recommendations; and (iii) stockholder nominations. While director nominees may be presented to the Board for consideration by the Committee through any of these methods, the Board is ultimately responsible for selecting its own members — with annual stockholder voting thereafter for a director’s continued tenure on the Board. Once the Committee has compiled its group of suitable candidates and conducted appropriate diligence, it then meets with the Board to review the candidates for further consideration. Board Self-Identification. The Committee regularly assesses the appropriate size of the Board, the areas of expertise required to effectively contribute to the Board process, and whether any vacancies are anticipated. It also annually assesses the director qualification criteria to ensure the Board has appropriate skill composition aimed at the Company’s long-term business strategy, operations, risks, thought and perspective. As a result, the Committee may recommend to the Board a need for an additional director, Board refreshment for certain requisite skills and qualifications, and/or suggest the replacement of an existing director for other credible reasons. The self-identification process may also incorporate responses, as appropriate, from the Board’s annual individual self-evaluations. Such evaluations require each director to honestly reflect upon and recount their personal contributions to the Board in the prior year and to provide feedback regarding their performance, the overall Board performance and the performance of certain other key Board positions. The self-evaluations are provided to the Chairman of the Board and to the CEO for their review. Third-Party Recommendations. From time to time, we engage a professional third-party search firm to assist the Board of Directors and the Committee in identifying and recruiting candidates for Board membership. Under its charter, the Committee has committed to include, and requires any third-party search firm that it engages to include, candidates with diversity of race, ethnicity and gender in the pool considered by the Committee and/or the Board for nomination to the Board. Stockholder Nominees. The policy of the Committee is to consider properly submitted stockholder nominations for candidates for membership on the Board as described above under “Identifying Nominees for Directors.” Stockholder nominations for election to the Board of Directors are governed by specific provisions in our Bylaws, a copy of which is available on our website atwww.humana.com. From thewww.humana.com website, click on “Investor Relations,” and then click on “Corporate Governance,” and then click on the link entitled, “Bylaws.” The Bylaws require that a stockholder provide written notice of intent to nominate a candidate for director no less than 60 days or more than 90 days prior to the scheduled date of the Annual Meeting of stockholders. If less than 70 days’ notice of the Annual Meeting is given, written notice by a stockholder would be deemed timely if made no later than the 10th day following such notice of the Annual Meeting. Any stockholder nominations proposed for consideration by the Committee should include, among other information required by the Bylaws, the nominee’s name, qualifications for Board membership and compliance with our Director Resignation Policy discussed in this proxy statement and should be sent to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202. Director Skills and Qualifications
In assessing a director nominee, the Committee considers the appropriate balance of experience, skills and other qualifications required for service on our Board, including (i) qualifications or characteristics that are expected and befitting of all directors, and (ii) specific skills, experience or qualifications that should be represented collectively on our Board. Our Guidelines contain Board membership criteria that apply to all nominees recommended for a position on the Board. Our director nominee screening process is designed to ensure that the Board includes members with diverse backgrounds, including race, ethnicity, gender, skills, thought, perspective and experience, as well as appropriate financial and other expertise relevant to the Company’s business. The Committee further assesses each director nominee’s ability to devote sufficient time and effort to his or her duties as a potential director, his or her willingness to consider all strategic proposals, and any core competencies or technical expertise necessary to staff Board committees. The director nominee analysis also helps to determine whether a nominee would meet the criteria for independence set forth in the Guidelines established by the Board and in accordance with independence requirements of the NYSE and the SEC.
Board Composition and Refreshment To meet the changing needs and strategic direction of our business, and as a result of certain director departures, we changed our Board’s composition during
Board Evaluation Practices
The Board is committed to a rigorous self-evaluation process. Through evaluation, directors annually review the Board’s performance and their own individual contributions, including areas where the Board feels it functions effectively, and most importantly, areas where the Board can improve. The Committee, with participation from our Chairman and Chief Executive Officer, initiates the annual Board evaluation process. We believe that having a review process for each group helps to (i) ensure an adequate representation of requisite skills; (ii) encourage high levels of engagement from directors; and (iii) strengthen the overall effectiveness of our Board. These evaluations may be in written or oral questionnaire form and may be administered by Board members, management or third-party consultants. Results of the evaluations are shared with the Chairman of the Board and the Chairman of the Nominating, Governance &
The Guidelines contain standards to assist the Board in its determination of director independence. In addition, to qualify as independent under the Guidelines, the Board of Directors must affirmatively determine that a director has no material relationship with the Company, other than as a director. Pursuant to the Guidelines, the Board undertakes an annual review of director independence. During this review, the Board considers transactions and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and affiliates, including transactions or relationships that are reported under “Certain Transactions with Management and Others” in this proxy statement. As provided in the Guidelines, the purpose of this review is to determine whether any such transactions or relationships are inconsistent with a determination that a director is independent. In the course of this review for the current year, the Board specifically analyzed and discussed several matters:
Leapfrog. In 2020, we contracted with Leapfrog to obtain a certain data license subscription for which we paid approximately $190,100, which we believe is comparable to other non-affiliated persons obtaining a similar license and does not represent a direct or indirect material interest for Dr. Bono. Pfizer. The relationship between the Company, and Pfizer consists of a negotiated rebate based on the volume of prescriptions of Pfizer drugs obtained by Humana members, which volume includes claims paid by Humana for our members and theco-payments paid by our members. Payments to Humana from Pfizer result from activity with many intermediaries over whom Humana exercises no control (i.e., the providers who prescribe these medications, the distributors who sell to the retailers, and the retailers from which our members get prescriptions). In Insulet. The relationship between the Company, and Insulet consists of a negotiated rebate based on the volume of prescriptions of Insulet insulin management systems obtained by Humana members, which volume includes claims paid by Humana for our members and the co-payments paid by our members. Payments to Humana from Insulet result from activity with many intermediaries over whom Humana exercises no control (i.e., the providers who prescribe these devices, the distributors who sell to the retailers, and the retailers from which our members get prescriptions). In 2020, the Insulet rebates amounted to approximately $2.4 million, substantially all of which were passed through to our members in the form of lower premiums and/or higher benefits and did not represent a direct or indirect material interest for Dr. Frederick. Chrysalis. In Foundation
Thomas Jefferson. Thomas Jefferson serves as a provider in our network, for which services during 2020 we paid approximately $52.1 million in medical claims related expenses. In addition, we paid Thomas Jefferson University, through its Jefferson College of Population Health, $100,000 as an annual retainer fee related to certain consulting services performed by Fiserv. In
benefits provided, including claims funding arrangements, are comparable to those extended to our othernon-affiliated customers. The following relationships were included in this review:
At the conclusion of its review for the current year, the Board affirmatively determined that in each case the relationship between the Company or its affiliate and each director-related entity was not material, was below the thresholds for independence prescribed by the NYSE, and did not impact the independence of any of our directors. Each director recused themselves from the independence assessment relative to himself or herself. Consistent with these considerations, and based on its review of director independence in light of the standards contained in the Guidelines, the Board determined that each member of the Board of Directors (except Mr. Broussard, as a current employee of the Company) is independent. Committee Membership and Attendance The Board of Directors has the following standing committees: Audit; Organization & Compensation; Nominating, Governance &
= Chair = Member
Committee Responsibilities Pursuant to its charter, the Audit Committee:
assists the Board of Directors with the oversight of the integrity of our financial statements and disclosures and internal controls, our compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence and the performance of our internal audit function and the independent registered public accounting firm;
bears responsibility for the appointment, compensation, retention and oversight of the work of the independent registered public accounting firm engaged to prepare the audit report or perform other audit, review or attest services;
reviews with the independent registered public accounting firm, our internal audit department, and our financial and accounting personnel, the effectiveness of our accounting and financial controls and, where appropriate, makes recommendations for the improvement of these internal control procedures;
reviews the scope, funding and results of our internal audit function, including the independence and authority of our reporting obligations, the proposed audit plans for the year, and the coordination of these plans with the independent registered public accounting firm;
reviews the scope, funding and results of our Enterprise Risk Management program and compliance program, including receiving, at least quarterly, an update from our Chief Risk Office and internal compliance department regarding any significant matters regarding our risk management and compliance with regulatory requirements and contracts with government entities, respectively;
collaborates with the Technology Committee to regularly receive updates on risks, and risk mitigation measures, related to Company’s information technology, internal controls, information security, cyber security, business continuity and disaster recovery programs;
reviews the financial statements and other information contained in our Annual Report and other reports to stockholders with management and the independent registered public accounting firm to determine that the independent registered public accounting firm is satisfied with the disclosure and content of the financial statements to be presented to the stockholders and reviews any changes in accounting principles;
confers independently with our internal auditors, Chief Risk Officer, internal compliance department, key members of management, and the independent registered public accounting firm;
determines and approves the appropriateness of the fees for audit and permissiblenon-audit services performed by the independent registered public accounting firm;
discusses with management our compliance with applicable legal requirements and with our internal policies regarding related party transactions and conflicts of interest;
discusses our policies with respect to risk assessment and risk management;
maintains free and open means of communication between the members of our Board of Directors, the independent registered public accounting firm, our internal audit department, our Chief Risk Officer, our internal compliance department, and our financial management; and
annually evaluates its performance. Corporate Governance Determinations The Board of Directors has determined that each of the members of the Audit Committee at February Organization & Compensation Committee Committee Responsibilities Pursuant to its charter, the Organization & Compensation Committee:
reviews and approves our goals and objectives relevant to the compensation of our CEO, evaluates the CEO’s performance in light of those goals and objectives, and, either as a Committee or together with the other independent directors, determines and approves the CEO’s compensation level based on this evaluation;
review and approves all elements of compensation paid to our current or prospective executive officers, including without limitation, base compensation, incentive-compensation plans and equity-based plans, employment, change in control or severance programs and agreements, and any special compensation or benefits, including supplemental retirement benefits and any perquisites;
approves equity-based grants to our executive officers and other associates;
reviews and discusses with management the Company’s compensation plans and policies for all employees (including the Named Executive Officers) with respect to risk management and risk-inducing incentives;
ensures preparation of the Compensation Discussion and Analysis and the Compensation Committee Report as required by SEC regulations;
monitors compliance of executive officers andnon-employee directors with relevant stock ownership guidelines;
reviews with management periodically, as it deems appropriate, management succession and inclusion and diversity practices;
administers our Executive Management Incentive Compensation Plan and other substantially similar or successor incentive compensation plans; and
annually evaluates its performance. Scope of Authority, Processes and Procedures The Organization & Compensation Committee acts on behalf of the Board of Directors to establish the compensation of our executive officers and provides oversight of our compensation philosophy, as described in this proxy statement under the caption “Compensation Discussion and Analysis.” The role of the executive officers and the outside compensation consultant in establishing executive compensation is discussed in this proxy statement under the caption “Compensation Discussion and Analysis.” Other than routine administrative matters and the ability of our CEO to approve grants of equity awards subject to certain individual and annual thresholds, no executive compensation decisions are delegated to management. Compensation Committee Interlocks and Insider Participation No member of the Organization & Compensation Committee: (i) is or has ever been an officer or employee of the Company; or (ii) is or was, during the last fiscal year, a participant in a “related person” transaction requiring disclosure under Item 404 of the SEC’s regulations (see discussion in this proxy statement under the caption “Certain Transactions with Management and Others”); or (iii) is an executive officer of another entity at which one of our executive officers serves either as a director or on its compensation committee. Corporate Governance Determinations During Compensation Risk Determination In Nominating, Governance & Committee Responsibilities Pursuant to its charter, the Nominating, Governance &
recommends to the full Board criteria for the selection and qualification of the members of the Board;
evaluates and recommends for nomination by the Board candidates to be proposed for election by the stockholders at each annual meeting;
seeks out and assists in the recruitment of highly qualified candidates to serve on the Board;
recommends for Board approval candidates to fill vacancies on the Board which occur between annual meetings;
develops, periodically reviews and recommends to the Board revisions to the Guidelines;
studies and reviews with management the overall effectiveness of the organization of the Board and the conduct of its business, and makes appropriate recommendations to the Board;
reviews the overall relationship of the Board and management;
reviews issues and developments pertaining to corporate governance;
reviews our public policy and political spending practices through regular reviews of our policy on political expenditures, expenditures and payments made with corporate funds, and overall political activity, including review of our Political Contributions and Related Activity Report; reviews the Company’s programs and policies relating to significant ESG and sustainability matters, and periodically receive updates from the Company’s management regarding significant ESG and sustainability undertakings; and
annually evaluates its performance. Pursuant to its charter, the Executive Committee possesses the authority to exercise all the powers of the Board of Directors except as otherwise provided by Delaware law and our Bylaws during intervals between meetings of the Board. The Executive Committee does not have the power, to, among other things, declare a dividend, issue stock, adopt a certificate of merger or sell substantially all of the Company’s business. Pursuant to its charter, the Investment Committee establishes investment objectives and policies for our various investment portfolios and investment options available under various employee benefit plans, reviews investment results, and annually evaluates its performance. Pursuant to its charter, the Technology Committee represents and assists the Board of Directors with the oversight of:
our process, awareness, evaluation and perspective on potentially disruptive technologies and convergences that may represent threats or opportunities for our business operations;
our process and perspective on strategic technology capabilities that enable transformational business capabilities;
our process, execution roadmaps, requisite capital, progress in delivering technology-enabled transformational capabilities and their related outcomes; and
management’s focus on organizational, talent and cultural enablers required to ensure achievement of those outcomes. The Technology Committee may also assist the Audit Committee in its oversight of our information technology internal controls, cyber security, business continuity and disaster recovery programs. Majority Vote Policy Under our Bylaws, a director nominee will be elected if the number of votes cast for the nominee exceeds the number of votes cast against the nominee. In contested elections, those in which a stockholder has nominated a person for election to the Board, the voting standard is a plurality of votes cast. The Board has also adopted a policy to require the Board to nominate for election only nominees who agree that, if they are elected to the Board, they will tender an irrevocable resignation conditioned on, first, the failure to achieve the required vote forre-election at any future meeting at which they facere-election, and second, the Board’s acceptance of their resignation following that election. In addition, the Board may fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors, as described above. The Nominating, Governance &
Change in Director’s Primary Position The Board has adopted a policy requiring that a director whose primary position or affiliation changes must promptly notify the Board and the Nominating, Governance &
Director Stock Ownership Policy Our Board believes that directors should be stockholders and have a significant personal financial stake in the Company. Consequently, the Board has adopted the following stock ownership guidelines:
Eachnon-employee director must maintain a minimum equity ownership level of five times the annual cash retainer.
Shares deferred at the election of the director are considered owned for purposes of the calculation of the ownership requirement.
Any Shares owned by anon-employee director (or Shares received upon the exercise of options or vesting of restricted stock or restricted stock units, less an amount to cover the exercise price and/or current tax liabilities) must be held by the director until the minimum equity ownership level is reached and thereafter maintained.
Once the minimum equity ownership level has been achieved, any Shares received upon the vesting of restricted stock or restricted stock units, less an amount to cover current tax liabilities, must be held by the director until one year following the vesting date. Compliance with these guidelines is monitored by the Organization & Compensation Committee. Director Attendance The Board has developed a number of specific expectations of directors to define their responsibilities and to promote the efficient conduct of the Board’s business. With respect to the level of commitment expected of directors and related attendance protocols, as part of the Guidelines, the Board formally adopted a policy that all directors should make every effort to attend all meetings of the Board and the Committees of which they are members, and the Company’s Annual Meeting of Stockholders. Attendance by telephone or video conference may be used to facilitate a Director’s attendance. During Executive Sessions ofNon-Management Directors In Code of Ethics and Code of Business Conduct The Company has adopted the “Code of Conduct for the Chief Executive Officer and Senior Financial Officers,” which we refer to as the Executive Code of Ethics, violations of which are reported to the Audit Committee. In addition, we operate under the omnibus Humana Inc. Ethics Every Day, which we refer to as the Code of Ethics, which applies to all associates (including executive officers) and directors. The Humana Ethics Office is responsible for the design and enforcement of our ethics policies, the goal of which is to create a workplace climate in which ethics is so integral today-to-day operations that ethical behavior is self-enforcing. All employees are required annually to review and affirm in writing their acceptance of the Code of Ethics. The Code of Ethics and the Executive Code of Ethics may be viewed on our website atwww.humana.com. Any waiver for directors or executive officers from the provisions of the Code of Ethics or the Executive Code of Ethics must be made by the Board of Directors, and will be disclosed within four days of the waiver on our website atwww.humana.com. To see either the Code of Ethics or the Executive Code of Ethics or any waivers to either policy, go towww.humana.com, then click on “Investor Relations,” then click on “Corporate Governance,” and then click on the relevant link. Policy Regarding Employee, Officer and Director Hedging The Company has a policy prohibiting all associates (including executive officers and independent directors) from hedging or pledging transactions using Company stock, including: (1) engaging in short sales of Company securities; (2) engaging in transactions in puts, calls or other derivative securities designed to hedge or offset any decrease in the market value of the Company’s equity securities, on an exchange or in any other organized market; or (3) engaging in certain monetization transactions, including holding Company securities in margin accounts or pledging Company securities as collateral.
Public Policy Our Company has an active voice on healthcare policy issues that matter most to the people we serve. From Medicare, TRICARE and home health; to integrated care, Medicaid and healthcare reform – we are committed to advancing public policy that moves us toward a future in which everyone can enjoy lifelong health and well-being. The Company has also established and sponsors a Political Action Committee (PAC), for which Company associates may voluntarily contribute. The PAC is registered with the Federal Election Commission (FEC) and certain states nationwide as required by applicable law. As a matter of policy, all Company political activities must promote the interests of the Company, and must be made without regard for the private political preferences of Company officers or executives. Furthermore, Humana does not make independent expenditures nor does it contribute to ballot measure committees. Distributions from the PAC are made to Communication with Directors Stockholders and other interested parties may communicate directly with our Chairman,non-management directors as a group, or any other individual director by writing to the speciale-mail address published on our
Election of Directors
The Board of Directors of the Company, in accordance with the provisions of the Company’s Articles of Incorporation and Bylaws, has determined that the number of directors to be elected at the Annual Meeting of the Company shall be Each of the nominees has consented to be named as a nominee and agreed to serve if elected. If any nominee becomes unable to serve for any reason (which is not anticipated), the Shares represented by the proxy granted to Messrs. Hilzinger and Broussard may be voted for the substituted nominee as may be designated by the Board of Directors. The Board has established a policy thatnon-employee directors must retire at the first annual meeting following his or her seventy-third birthday. The following table shows certain information concerning the nominees at March 1,
Board of Directors Nominee Determination At the recommendation of the Nominating, Governance & We believe that the current Board members have a deep commitment to the Company’s success, as evidenced by the key qualifications, skills, experiences and diversity of backgrounds of each director described below. For additional information, please refer to the section entitled, “Qualifications and Process for Nominating Directors” in this proxy statement. The information given in this proxy statement concerning the nominees is based upon statements made or confirmed to the Company by or on behalf of the nominees.
Director Nominees’ Biographies
Vote Required and Recommendation of the Board of Directors A director nominee will be elected if the number of votes cast for the nominee exceeds the number of votes cast against the nominee. Shares not present at the Annual Meeting and Shares voting “abstain” or brokernon-votes have no effect on the election of directors. Under the Company’s Majority Vote Policy, following election to our Board of Directors, a director is required to submit his or her irrevocable resignation to our Board of Directors, conditioned upon (i) the director not achieving the requisite stockholder vote at any future meeting at which they facere-election, and (ii) acceptance of the resignation by the Board of Directors following that election. The Board of Directors has 90 days to determine whether or not to accept the director’s resignation and to report this information to our stockholders. FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ALL NOMINEES.
During
The following table shows the compensation earned by ournon-employee directors in connection with their service on our Board of Directors during all or a portion of the
Security Ownership of Certain Beneficial Owners of Company Common Stock We know of no person or entity that may be deemed to own beneficially more than 5% of our outstanding common stock except for:
Security Ownership of Directors and Executive Officers The following table shows stock ownership as of January 15,
The number of Shares listed:
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (CD&A) presents in detail our executive compensation policies and practices, describing each element of compensation and the decision-making process by our Organization & Compensation Committee (“Committee”) that supports it. We encourage you to read this CD&A in conjunction with the compensation tables that follow for additional context to the Committee’s decisions with respect to the
CD&A Table of Contents
From the outset of the COVID-19 pandemic, we recognized our important role in assisting our employees, members, employer groups, providers, and communities to navigate this unprecedented health crisis; investing in benefits and initiativesdesigned to improve access to care and ease the financial burdens that our stakeholders faced. The restrictions on movement and economic measures implemented throughout the country to reduce the spread of COVID-19 resulted in a significant deferral of healthcare services among our members during the first half of 2020. In response to that deferral, our Company committed that any positive financial impact we experienced from this lower medical utilization would be offset by our COVID-19 support and relief efforts – we kept our promise. Fiscal Year 2020 Performance Highlights While the emergence and persistence of a global health crisis in 2020 created many unexpected challenges, we believe that our dedication to delivering human care allowed us to respond swiftly, decisively and constructively to the pandemic by quickly launching and executing on initiatives that have benefited each of our stakeholders. Our Company’s ongoing strategy to center our approach on holistic care that addresses our members’ most important health needs and our forward-thinking mindset, commitment to strategy and steadfast dedication to the health and well-being – of every person, community and our future – is reflected within our resilient financial performance, as illustrated below. OUR FACTS & FIGURES
OUR STAKEHOLDER FOCUS
Compensation Program Highlights The Committee is dedicated to maintaining a robust, structured and balanced compensation program
Compensation Program Design Principles Our executive compensation programs support our philosophy of attracting, retaining and motivating leaders that align with and will help us deliver on our strategy of creating an integrated care-delivery
Key Compensation Program Our robust and structured compensation program reflects the Committee’s belief that strong corporate governance is imperative for prudent compensation decision-making. Below are key governance elements of our compensation programs. We also identify certain common pay practices that
Overview of Compensation Elements The material components of our executive compensation programs are: (i) base salary; (ii) short-term cash incentives; and (iii) long-term equity incentives. We believe that having a combination of pay elements motivates and challenges our executives to achieve positive results for our Company and our stockholders. Each element of compensation is summarized as follows:
Inputs For
Independent Compensation Consultant For The Committee considered certain factors to determine whether
Whether the firm provided other services to the Company;
The amount of fees received by the firm from the Company, as a percentage of such firm’s total revenue;
The firm’s policies and procedures that are designed to prevent conflicts of interest;
Whether the firm’s representatives providing services to the Committee have any business or personal relationship with a member of the Committee;
Whether the firm’s representatives providing services to the Committee own Company stock; and
Whether the firm’s representatives providing services to the Committee, or the firm itself, have any business or personal relationship with any of our executive officers.
After considering all of the above factors, the Committee determined that the service provided to the Committee as an independent compensation consultant
Stockholder Engagement andSay-on-Pay The Board, together with its committees and management team, routinely
Our peer group is used as a reference point in making compensation decisions, such as developing base salary ranges, developing short-term and long-term incentive award ranges, determining competitiveness of the total compensation package for our NEO’s and comparing our performance in order to validate if our compensation programs are informed by market practices. The Committee uses the framework below, in consultation with its independent compensation consultant, to filter and select a broad group of potential peers. This framework yields multiple perspectives that enrich our understanding of competitive executive pay practices while also ensuring that our peer group is comprised of companies with whom we may compete for talent and whose revenues, market capitalization, and business focus are similar to our own.
For
Humana’s 2020 Peer Group Financial Comparison
Plan Design and Award Decisions On an annual basis, the Committee, in consultation with its independent compensation consultant, reviews the market data and current base salaries for our executives, considering adjustments as deemed appropriate. Salary increases, if any, must receive advance approval from the Committee.
Short-Term
The AIP plan year is effective January 1 through December 31 of each fiscal year. Associates who participate in other Company incentive plans, such as Sales Incentive/Commission Plans and Targeted Incentive Plans, are not dually eligible to participate in the On an annual basis the Committee, in consultation with its independent compensation consultant, reviews and approves the AIP as outlined below:
The Committee selected the following performance measures for the
In addition to the above performance measures, the Committee also established a funding gate for our executive officers who are direct reports to the CEO, whereby no AIP would be paid unless the Company achieves threshold Adjusted EPS performance. The Committee retains the ability to exercise negative (but not positive) judgment with respect to the payout results. Under our AIP, individual performance and contributions are also taken into consideration when determining each associate’s final payout. For the 2020 AIP period, the Committee determined that contributions to the advancement of the Company’s inclusion and diversity efforts would be included in the assessment of the individual performance of our executive officers and members of senior management levels, with the potential for an individual’s payout to be decreased (but not increased) in connection with the individual’s contributions to these efforts.
A Closer Look at AIP Strategic Measures The Company has a set of strategic initiatives that, if achieved, will improve member health, improve relationships with our providers and position us for long-term sustainable growth. The Committee believes that having strategic measures embedded within the AIP targets is critical to help drive organizational focus and prioritization in advancing our long-term strategy. The
For 2020, based on our performance with no exceptions or adjustments, the Committee approved a funding rate of 139.4% of target for the CEO and other NEOs as follows:
Long-Term Incentives provide a vital link between the long-term results achieved for our stockholders and the financial rewards provided to our NEOs. The Committee
The Committee believes that
Aligns executives with the interests of our stockholders;
Allows executives to focus on measures they have the ability to influence while also satisfying stockholder expectations of using a relative measure;
Ensures that our long-term incentive compensation program is not overly dependent upon rTSR as an independent measure; and
Adjusts to general economic conditions that would impact all companies in our The Committee
Performance of our 2018-2020 Performance-Based Restricted Stock Units In 2018, the Committee granted performance-based stock unit awards to our then-serving NEOs, with performance criteria for these awards based on the Company’s adjusted return on invested capital (Adjusted ROIC) against an established set of targets over the three-year period beginning January 1, 2018 and ending December 21, 2020, referred to herein as our “2018-2020 performance-based awards.” The 2018-2020 performance-based awards also included a relative total stockholder return modifier (rTSR) that could adjust final payout results up or down based on the Company’s TSR ranking against an approved comparator group. The following discloses the three-year cumulative goals included in the 2018-2020 performance-based awards, which provide for incremental payout between steps:
When determining the vesting value of the 2018-2020 performance-based awards, the Committee reviewed final Company results showing a three-year cumulative Adjusted ROIC of 14.60% and a rTSR ranking in the 87th percentile of the comparator group. As part of this review, the Committee also noted that Adjusted ROIC and rTSR performance are a by-product of both the financial and operational performance of the Company over the three-year period. As such, the Company took into account strong earnings, revenue and membership growth, TSR, and substantial progress made in executing on its long-term strategy. This strategy includes moving from an insurance company with elements of health to a health company with elements of insurance. The Company took further steps to execute this strategy by strengthening its consumer-centric operating approach and making significant investments to advance the quality of care delivered to the Company’s members.
During its February 2021 meeting, based on the review described above, the Committee approved an award payout at 200% of target amounts, with no exceptions or adjustments made, as shown below.
The Committee determined the above results were appropriate given the substantial progress made on long-term initiatives and the strong financial performance achieved during the 3-year performance period, particularly within the challenges presented during 2020. Other Benefits and Perquisites We operate in a highly competitive, complex and consolidating industry and offer certain benefits that we believe are critical to attract and retain talent. In general, our NEO’s are eligible for the same benefits as our associate population.
Compensation Risk Management, Policies and Practices We review our compensation programs to ensure appropriate governance and risk management practices. We believe that our policies and practices align with evolving best practices, while ensuring appropriate balance of risk and reward. Certain key risk management policies that pertain to executive compensation are as follows:
Organization & Compensation Committee Report
The Organization & Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis for the year ended December 31, All members of the Organization & Compensation Committee of the Company whose names follow submit the foregoing report: ORGANIZATION & COMPENSATION COMMITTEE
Frank J. Bisignano Wayne A. I. Frederick, M.D. David A. Jones, Jr.
Summary Compensation Table The following Summary Compensation Table shows the compensation earned for the time period served as an executive officer during the last three fiscal years by (i) Bruce D. Broussard, our President and Chief Executive Officer, (ii) Brian A. Kane, our Chief Financial Officer, and (iii) each of our three other highest compensated executive officers serving at December 31,
The aggregate grant date fair value of each 2020 performance-based restricted stock unit award assuming that the highest level of performance conditions will be achieved is as follows:
The assumptions used for valuing the Named Executive Officers’ stock options as a group, applying the Black-Scholes methodology, were as follows:
CEO Pay Ratio
Our
We identified the median associate using our associate population as of December 31, 2020, which included 48,742 global full-time, part-time, temporary and seasonal associates employed on that date;
We consistently applied
During
We then calculated the median associate’s compensation in the same manner as the Named Executive Officers in the Summary Compensation Table;
Applying this methodology, our median associate’s total compensation was
Grants of Plan-Based Awards The following table provides information about equity awards granted in
Outstanding Equity Awards at FiscalYear-End The following table provides information on the stock option, restricted stock units and performance-based restricted stock unit holdings of our Named Executive Officers as of December 31,
Option Exercises and Stock Vested The following table provides information on the stock options exercised by, and Shares acquired upon the vesting of restricted stock units held by, our Named Executive Officers in
Nonqualified Deferred Compensation The following table and narrative that follows provides information on contributions and earnings for the Humana Retirement Equalization Plan and the Humana Deferred Compensation Plan for the Named Executive Officers in
We have a 401(k) plan, the Humana Retirement Savings Plan, and a nonqualified, unfunded, defined contribution plan, the Humana Retirement Equalization Plan. The Internal Revenue Code imposes limitations on the contributions that may be made to a qualified plan, like our Humana Retirement Savings Plan. In The benefits accrued under the Humana Retirement Equalization Plan are those Company contributions that cannot be made to the qualified Humana Retirement Savings Plan because of the IRS limitations. The maximum percentage of compensation (base salary and incentive compensation) that can be contributed by a highly compensated employee to the Humana Retirement Savings Plan is 35% for
allows daily rebalancing of funds and allows direction of investment elections. Benefits in the Humana Retirement Equalization Plan, as directed by the participants, are distributable upon termination of employment, death, total disability, retirement or a change in control of the Company. Distribution of benefits may take the form of a lump sum payment or periodic installments not to exceed twenty (20) years — if the Humana Retirement Equalization Plan balance exceeds $100,000. All of the Named Executive Officers, except Mr. Broussard (who elected installments for 10 years following termination), eligible for a contribution under the Humana Retirement Equalization Plan in We also maintain a Humana Deferred Compensation Plan, which is designed to provide certain key employees of the Company and its subsidiaries with the opportunity to defer receipt of a portion of certain incentive compensation to which they may become entitled while the plan is in effect. The Humana Deferred Compensation Plan is an unfunded, nonqualified deferred compensation plan that is maintained for the purpose of allowing deferred compensation to certain highly-compensated employees, within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, whose annual rate of base compensation exceeds the limitation provided in IRS Code Section 401(a)(17) for the plan year. For
Potential Payments Upon Termination or Change in Control of the Company In accordance with our past disclosure practice, the table below discloses amounts payable to our Named Executive Officers under various scenarios had such occurred as of December 31,
(1) Severance Policy We have a Severance Policy that covers all of our Named Executive Officers, or NEOs. Under the Severance Policy our NEOs, if involuntarily terminated for reasons not meeting the definition of Cause, would receive salary continuation during the Severance Period (24 months for the CEO; eighteen (18) months for other NEOs) following the termination date at their respective Severance Rate. The Severance Rate for all NEOs is equal to their then current Annual Base Salary, however, the CEO’s Severance Rate also includes the target annual incentive compensation calculated as if goals had been met during the Company’s then-current fiscal year, pursuant to the relevant incentive compensation plan. All other terminated Named Executive Officers would remain eligible to receive prorated incentive compensation to be paid at the normal time after year end, provided plan targets and other plan provisions were met. The calculations in the table assume a December 31, Under the terms of the Severance Policy, each Named Executive Officer is required to enter into a written agreement containing certain restrictive covenants, including,non-compete andnon-solicitation provisions as well as provisions relating tonon-disparagement and cooperation, in each case for the duration of the applicable Severance Period. (2) Stock Option and Restricted Stock Unit Agreements At December 31, Voluntary Termination. Under the Stock Plan, upon a voluntary termination for reasons not having to do with Cause or Retirement, in each case as defined below, each NEO would have 90 days to exercise any vested options, but in no event beyond the expiration date. Any unvested stock options held by our NEOs would be forfeited. Any unvested restricted stock units held by our NEOs would also be forfeited upon a voluntary termination for reasons not having to do with Cause or Retirement, in each case as defined below; provided, however, that the Committee may determine, in its sole discretion, that the restrictions on some or all of such unvested restricted stock units shall immediately lapse upon such termination.
Involuntary Termination Involuntary Termination for Cause. Under the Stock Plan, in the event of termination for Cause, all options and unvested restricted stock units are forfeited for all NEOs, regardless of whether the options are vested. Under the Stock Plan, Cause is defined as “a felony conviction of a Participant or the failure of a Participant to contest prosecution for a felony, or a Participant’s willful misconduct or dishonesty, any of which is determined by the Committee to be directly and materially harmful to the business or reputation of the Company or its Subsidiaries.” Retirement. Under the Stock Plan, an eligible Retirement means a combination of age and years of service with the Company totaling 65 or greater, with a minimum required age of 55 and a minimum requirement of five years of service. With respect to grants of options prior to July 2, 2015, in the event of an eligible Retirement by a NEO, any outstanding options that have vested as of the retirement date of that NEO will be exercisable within two years of such retirement date. For awards granted after July 2, 2015, in the event of an eligible Retirement by a NEO, any outstanding options and restricted stock units will vest pro rata on the next scheduled vesting date, and any remaining outstanding options or restricted stock units would then be forfeited. Death or Disability. Under the Stock Plan, in the event of death or Disability of a NEO, all outstanding options shall become immediately exercisable in full and the NEO, or his estate or representative shall have two years to exercise the options regardless of the expiration date. Under the Stock Plan, in the event of death or Disability of a NEO, any unvested restricted stock units shall immediately vest, and any unvested Shares of performance-based restricted stock units will vest at the maximum level. Change in Control. Under the Stock Plan, in the event of a termination other than for Cause or resignation for Good Reason within two years following a Change in Control, (x) all outstanding options shall become immediately exercisable in full and the NEO shall have two years to exercise the options, but in no event beyond the expiration date, and (y) any unvested restricted stock units shall immediately vest, and any unvested Shares of performance-based restricted stock units will vest at the target level. (3) Change in Control Policy and Benefits We have a Change in Control Policy (CIC Policy), as adopted by the Organization & Compensation Committee. For the period ended December 31, Under the CIC Policy for the period ended December 31, Further, under the CIC Policy, each NEO is entitled to receive all life insurance, health insurance, dental insurance, accidental death and dismemberment insurance and disability insurance under plans and programs in which the NEO and/or the NEO’s dependents and beneficiaries participated immediately prior to the date of termination. These benefits shall continue for 18 months following termination. These benefits are valued at the amounts listed in the table above for the applicable period. Pursuant to our long-standing Company policy, the CIC Policy does not include an excise taxgross-up provision with respect to payments contingent upon a change in control. (4) Treatment of Equity Awards Granted to our CEO Prior to 2018 The Company and Mr. Broussard previously had in force an Amended and Restated Employment Agreement, dated as of February 27, 2014, later amended on July 2, 2015 and August 16, 2018, which we refer to herein as the Broussard Agreement. Effective as of January 1, 2019, Mr. Broussard and the Company agreed not to renew the Broussard Agreement, but that certain provisions pertaining to the treatment of equity awards granted prior to December 31, 2018, in the event of termination or change in control, would continue to apply. For all other purposes, Mr. Broussard is governed by the Severance Policy and CIC Policy generally applicable to Company as described in Notes 1 and 3 above.
The table above discloses potential payments upon termination or a Change in Control that would be owed to Mr. Broussard as of December 31, The following will apply to Mr. Broussard’s equity-based compensation awards, granted on or prior to December 31, 2018, that are outstanding on the Termination Date upon a termination of Mr. Broussard’s employment by us without Cause or by Mr. Broussard for Good Reason in circumstances not related to a Change in Control, notwithstanding any contract provision in the applicable award agreement or plan under which the award is granted:
In the table above, time-based equity awards other than stock options are shown assuming pro rata vesting as of December 31, In addition to the above, the following will apply to Mr. Broussard’s equity-based compensation awards, granted on or prior to December 31, 2018, that are outstanding on the Termination Date upon a Change in Control Termination, notwithstanding any contract provision in the applicable award agreement or plan under which the award is granted:
In the event that Mr. Broussard’s employment is terminated due to his death or Disability, on or after a Change in Control, any outstanding equity awards granted on or prior to December 31, 2018 held by Mr. Broussard will be treated as follows: (i) all time-based equity awards other than stock options will become vested and all restrictions thereon will lapse as of the termination date, (ii) all time-based stock options will become vested and exercisable as of the termination date, (iii) all performance-based stock options will become vested and exercisable as of the termination date as if the target performance level had been attained, (iv) all vested stock options (including those that vest pursuant to clauses (ii) and (iii)) will remain outstanding and exercisable until the earlier of the second anniversary of the termination date and the term of the stock option, and (v) apro-rated portion of all performance-based equity awards other than stock options that would have vested at the end of the applicable performance period had the target performance level been attained will vest as of the termination date. In the table above, performance-based equity awards are shown at the target level of performance. (5) Pension and Retirement Plans In the event of termination, each NEO would receive their account balance under the Humana Retirement Equalization Plan and the Humana Deferred Compensation Plan, as disclosed in the Nonqualified Deferred Compensation table, together with their Humana Retirement Savings Plan benefit. The Humana Retirement Savings Plan is a qualified 401(k) plan generally available to all Humana associates.
At December 31,
The Humana Retirement Savings Plan amounts are payable under various forms of distribution, the specific form to be elected by the participant. The forms of distribution are a single lump sum in cash or our common stock (if invested in the Humana common stock fund); substantially equal monthly, quarterly, or annual installments for a period of 5, 10, 15 or 20 years not to exceed the life expectancy of the participant, or the joint and last survivor expectancy of the participant and a designated beneficiary. (6) Retirement As noted above, under the Stock Plan, the definition of retirement eligibility means a combination of age and years of service with the Company totaling 65 or greater, with a minimum required age of 55 and a minimum requirement of five years of service. For additional information on the stock options and restricted stock units held by each of our NEOs, please refer to the table entitled, “Outstanding Equity Awards at Fiscal Year End” in this proxy statement. The table above does not include amounts that would be realized from continued vesting of stock option and restricted stock unit awards. (7) Life, Health and Other Benefits Upon termination (other than a termination in connection with a Change in Control as described above), all officers elected by our Board of Directors, including our NEOs, are eligible for continuation of health and dental coverage pursuant to COBRA. Such coverage is not included in the table above (except for a Change in Control, where a two year expense for health benefits is included, assuming a 10% increase in premiums year over year). In the event of death, the estate of each NEO is entitled to receive a life insurance benefit in the amount of three times the current base salary of the officer (up to a maximum of $3 million), reduced by 50% when the age of 70 has been attained. As of December 31,
Certain Transactions with Management and Others
The Board of Directors has determined that there are no material transactions involving a director of the Company. For a discussion of the transactions reviewed, please see the discussion under “Independent Directors” herein. The Board of Directors has determined that there are no material transactions involving an executive officer or greater than 5% stockholder, other than the following:
During During 2020, the Company maintained a mutual fund with FMR LLC, or Fidelity Investments, in which the Company invested in the Fidelity Investments Money Market Treasury Portfolio mutual fund. In connection with this mutual fund, the Company paid approximately $320,800 in management fees for the year ended December 31, 2020. The fees were determined solely based on the institutional share class expense ratio of 0.14%, as disclosed in fund’s prospectus, and, to our knowledge, said share class is available to all non-affiliated investors that meet the minimum required investment balance. The Board of Directors has adopted a policy for review, approval and monitoring of transactions involving the Company and directors and executive officers or their immediate family members, or stockholders owning five percent or greater of the Company’s outstanding stock. The policy covers any related person transaction that meets the minimum threshold for disclosure under the SEC’s regulations. The Related Party Transaction Approval Policy may be viewed on our website. From thewww.humana.comwebsite, click on “Investor Relations,” then click on “Corporate Governance,” and then click on the link entitled “Policy Regarding Related Person Transactions.” Pursuant to that policy, our Board of Directors has approved the continuation for
Our Audit Committee currently is comprised of As set forth in its Charter, our Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of the independent registered public accounting firm engaged to prepare the audit report or perform other audit, review or attestation services. The Audit Committee has retained PricewaterhouseCoopers LLP, or PwC, as the Company’s independent registered public accounting firm for fiscal The Audit Committee reviews Humana’s financial reporting processes on behalf of the Board of Directors. In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited financial statements contained in our Annual Report on Form10-K for the year ended December 31, During The Audit Committee reviewed and evaluated the relevant requirements of the Sarbanes-Oxley Act of 2002, the rules of the SEC and the listing standards of the NYSE regarding audit committee procedures and responsibilities, including a review of our internal controls and procedures. The Audit Committee reviewed and approved the services provided by PwC to us consisting of the following:
Audit Fees include activities relating to the audit of our consolidated financial statements, the audit of internal control over financial reporting, statutory and other separate Company audits, and consultations related to miscellaneous SEC and financial reporting matters.
Audit Related Fees include other assurance and related services including the audits of our employee benefit plans, Service Organization Controls (SOC) reports,
Tax Fees include activities relating to tax compliance, consultation and support services.
All Other Fees include activities related to advisory services and the annual renewal of software licenses for accounting research.
The Audit Committee discussed with our internal auditors and with PwC the overall scope and plans for their respective audits. At each meeting, the Audit Committee is provided the opportunity to meet with the internal auditors and with PwC with and without management present, and, in fact, met with the internal auditors and with PwC with and without management present in connection with each regularly scheduled Board of Directors meeting in The Audit Committee has established policies and procedures forpre-approving all audit, review and attest services that are required under the securities laws and all other permissible tax andnon-audit services necessary to assure PwC’s continued independence. The Audit Committee annuallypre-approves the following permissiblenon-audit services:
related assurance and attestation services;
risk and control services;
transaction services; and
tax services. The fees shown in the table above were allpre-approved in accordance with these policies and procedures. The Audit Committee separately will consider any proposed retention of the independent registered public accounting firm for permissiblenon-audit services other than those listed above. The Audit Committee is responsible for the audit fee negotiations associated with the Company’s retention of PwC. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in the Humana Annual Report on Form10-K for the year ended December 31, All members of the Audit Committee of the Company whose names follow submit the foregoing report: AUDIT COMMITTEE Frank A. D’Amelio, Chairman Raquel C. Bono, M.D. John W. Garratt William J. McDonald
Ratification of Appointment of Independent Registered Public Accounting Firm
Background The Board of Directors, in accordance with the recommendation of its Audit Committee, believes that the continued retention of PwC as the Company’s independent registered public accounting firm is in the best interests of the Company and its stockholders, and therefore has appointed PwC to audit the consolidated financial statements of the Company for the year ending December 31, We are asking our stockholders to ratify the appointment of PwC as our independent registered public accounting firm. Although ratification is not required by our Charter, Bylaws, Delaware law or otherwise, the Board is submitting the appointment of PwC to our stockholders for ratification because we value our stockholders’ views on our independent registered public accounting firm. If our stockholders fail to ratify the appointment, it will be considered as anon-binding recommendation to the Board and the Audit Committee to consider the appointment of a different firm for fiscal year Vote Required and Recommendation of the Board of Directors The affirmative vote of a majority of the votes present and entitled to vote with respect to the proposal is required for the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm. Shares not present at the meeting have no effect on the ratification of the appointment of PricewaterhouseCoopers LLP, while Shares voting “abstain” will be counted as “against” votes. Pursuant to NYSE regulations, brokers and other NYSE member organizations have discretionary voting power over the ratification of the appointment of the Company’s independent registered public accounting firm. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
Non-Binding Advisory Vote with Respect to the Compensation of the Company’s Named Executive Officers
Background The Dodd-Frank Act requires that we include in our proxy statement anon-binding advisory stockholder vote with respect to the frequency of future advisory votes regarding the compensation of our Named Executive Officers as described in the Compensation Discussion and Analysis section, the compensation tables and the accompanying narrative disclosure, set forth in this proxy statement (commonly referred to as“Say-on-Pay”). At our 2017 Annual Meeting, held on April 20, 2017, our stockholders recommended an annualSay-on-Pay vote, and our Board of Directors subsequently adopted that recommendation. In RESOLVED, that the stockholders of Humana Inc. approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as described in the Compensation Discussion and Analysis section, the compensation tables, and the accompanying narrative disclosure, set forth in the Company’s proxy statement. The compensation of our Named Executive Officers is disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related disclosures contained in this proxy statement. As discussed in those disclosures, our philosophy is that compensation should be market-based, competency-paced and contribution-driven. Our compensation programs are designed to challenge participants as well as reward them for superior performance for our Company and our stockholders, with an emphasis on pay for performance principles to align the interests of our Named Executive Officers with those of our stockholders. Our compensation practices and policies enable us to attract and retain talented and experienced executives to lead the Company successfully in a competitive environment. Your vote on this Proposal Three is an advisory one, and therefore is not binding on the Company, the Organization & Compensation Committee, or the Board. The vote will not be construed to create or imply any change to the fiduciary duties of the Company or the Board, or to create or imply any additional fiduciary duties for the Board. Nevertheless, our Board and our Organization & Compensation Committee value the opinions of our stockholders, and intend to consider any stockholder concerns evidenced by this vote. We will continue to evaluate and disclose whether any actions are necessary to address those concerns. Vote Required and Recommendation of the Board of Directors The affirmative vote of a majority of the votes present and entitled to vote with respect to the proposal is required for the approval of thenon-binding advisory vote with respect to the compensation of the Company’s Named Executive Officers. Shares not present at the meeting and brokernon-votes have no effect on the approval of thisnon-binding advisory vote, while abstentions will count as votes “against.” Pursuant to NYSE regulations, brokers do not have discretionary voting power over this proposal, and therefore, if you hold Shares through a broker or other NYSE member organization and do not provide voting instructions to your broker or other NYSE member organization, your Shares will not be voted with respect to this proposal. If you timely submit a signed proxy but fail to specify instructions to vote with respect to this proposal, the accompanying proxy will be voted FOR this proposal. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THE COMPENSATION DISCUSSION AND ANALYSIS, THE COMPENSATION TABLES, AND THE RELATED DISCLOSURES CONTAINED IN THIS PROXY STATEMENT.
The Organization & Compensation Committee Report and the Audit Committee Report (including the reference to the independence and financial expertise of the Audit Committee members), each contained in this proxy statement, are not deemed filed with the SEC and shall not be deemed incorporated by reference into any prior or future filings made by Humana under the Securities Act of 1933, except to the extent that we specifically incorporate such information by reference into any of these future filings.
Our Annual Report on Form10-K for the year ended December 31, Our Annual Report onForm 10-K and all other filings with the SEC may also be accessed via the Investor Relations page on our website atwww.humana.com. From thewww.humana.comwebsite, click on “Investor Relations,” and then click on the report you wish to review under the “SEC Filings and Financial Reports” subcategory. By Order of the Board of Directors,
Joseph M. Ruschell Associate Vice President, Assistant General Counsel & Corporate Secretary
DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
(SEE REVERSE SIDE TO VOTE)
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