CIGNA Long-Term Incentive Plan (Amended and Restated Effective April 28, 2010)
This agreement outlines the CIGNA Long-Term Incentive Plan, which provides key employees of CIGNA Corporation with opportunities to acquire company equity as a reward for creating long-term shareholder value. The plan aims to attract and retain talented employees, supplement existing compensation programs, and align employee interests with those of shareholders. It details eligibility, definitions, and conditions under which awards are granted, including provisions for change of control and other corporate events. The plan applies to all awards authorized after shareholder approval as of April 28, 2010.
(Amended and Restated Effective as of April 28, 2010)
Statement of Purpose
(a) | Reward the creation of long-term value for CIGNA shareholders by providing key employees of the Company with an opportunity to acquire an equity interest in CIGNA Corporation, thereby increasing their personal interest in its continued success and progress, and aligning their interests with those of its shareholders; | |
(b) | Aid the Company in attracting and retaining employees of exceptional ability; | |
(c) | Supplement and balance the Companys salary and incentive bonus programs in support of CIGNA Corporations long-term strategic plans and financial results; | |
(d) | Encourage decisions and actions by Company executives to deliver superior enterprise results, with appropriate consideration of risk, and that are consistent with the long-range interests of CIGNA Corporations shareholders. |
Definitions
2.1 | Affiliate the meaning set forth in Rule 12b-2 promulgated under the Exchange Act. | |
2.2 | Beneficial Owner and Beneficially Owned the meaning set forth in Rule 13d-3 promulgated under the Exchange Act. | |
2.3 | Board the board of directors of CIGNA Corporation or any duly authorized committee of that board. |
2.4 | CEO the Chief Executive Officer of CIGNA Corporation. | |
2.5 | Change of Control any of the following: |
(a) | A corporation, person or group acting in concert, as described in Exchange Act Section 14(d)(2), holds or acquires beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act of a number of preferred or common shares of CIGNA Corporation having 25% or more of the combined voting power of CIGNA Corporations then outstanding securities; or | ||
(b) | There is consummated a merger or consolidation of CIGNA Corporation or any direct or indirect subsidiary of CIGNA Corporation with any other corporation, other than |
(i) | a merger or consolidation immediately following which the individuals who constituted the Board of Directors immediately prior thereto constitute at least a majority of the board of directors of the entity surviving such merger or consolidation or the ultimate parent thereof, or | ||
(ii) | a merger or consolidation effected to implement a recapitalization of CIGNA Corporation (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of CIGNA Corporation (not including in the securities Beneficially Owned by such Person any securities acquired directly from CIGNA Corporation or its Affiliates) representing 25% or more of the combined voting power of CIGNA Corporations then outstanding securities; or |
(c) | A change occurs in the composition of the Board at any time during any consecutive 24-month period such that the Continuity Directors cease for any reason to constitute a majority of the Board. For purposes of the preceding sentence Continuity Directors shall mean those members of the Board who either: (1) were directors at the beginning of such consecutive 24-month period; or (2) were elected by, or on nomination or recommendation of, at least a majority of the Board (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of CIGNA Corporation); or | ||
(d) | The shareholders of CIGNA Corporation approve a plan of complete liquidation or dissolution of CIGNA Corporation or there is consummated an agreement for the sale or disposition by CIGNA Corporation of all or substantially all of CIGNA Corporations assets, other than a sale or disposition by CIGNA Corporation of all or substantially all of CIGNA Corporations assets immediately following which the individuals who constituted the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or any parent thereof. |
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Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of CIGNA Corporation immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of CIGNA Corporation immediately following such transaction or series of transactions. |
2.6 | Code the Internal Revenue Code of 1986, as amended. | |
2.7 | Committee the Boards People Resources Committee or any successor committee with responsibility for compensation. | |
2.8 | Common Stock the common stock, par value $0.25 per share, of CIGNA Corporation. | |
2.9 | Company CIGNA Corporation, a Delaware corporation, and/or its Subsidiaries. | |
2.10 | Deferred Compensation Plan a Company deferred compensation plan, or another arrangement of the Company which has been designated by the Committee as a Deferred Compensation Plan for purposes of this Plan. | |
2.11 | Disability permanent and total disability as defined in Code Section 22(e)(3). | |
2.12 | Early Retirement a Termination of Employment, after appropriate notice to the Company, (a) on or after a Participant has reached age 55 (but not age 65) and attained at least five years of service (as determined under the elapsed time service counting rules applied by the Company to determine an employees total period of Company service using an adjusted service date), or (b) upon such terms and conditions approved by the Committee or officers of the Company designated by the Board or the Committee. | |
2.13 | Eligible Employee a salaried officer or other key employee of the Company. | |
2.14 | Exchange Act the Securities Exchange Act of 1934, as amended. |
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2.15 | Expiration Date the last date, specified in an Option or SAR grant, on which an Option or SAR may be exercised. | |
2.16 | Fair Market Value the average of the highest and lowest quoted selling prices as reported on the Composite Tape (or any successor method of publishing stock prices) as of 4:00 p.m. Eastern time (or such other time as trading on the New York Stock Exchange may close) on the date as of which any determination of stock value is made. If the Composite Tape (or any successor publication) is not published on that date, the determination will be made on the next preceding date of publication. In the absence of reported Common Stock sales, the Committee will determine Fair Market Value by taking into account all facts and circumstances the Committee deems relevant, subject to the requirements of Code Section 409A. | |
2.17 | Incentive Stock Option an Option described by Code Section 422(b). | |
2.18 | Nonqualified Option an Option that is not an Incentive Stock Option. | |
2.19 | Option a right granted under Article 5 to purchase one or more shares of Common Stock. | |
2.20 | Participant an Eligible Employee who has received an award under the Plan. | |
2.21 | Payment the compensation due a Participant, or Participants estate, under Article 10 of the Plan on account of a grant of Performance Shares or Units. | |
2.22 | Payment Date the date that a Qualifying Plan payment is made (or would have been made if not deferred under Section 9.3). | |
2.23 | Peer Group a group of companies, selected by the Committee, whose financial performance is compared to CIGNA Corporations. | |
2.24 | Performance Measures the measures to be used to assess the Companys performance with respect to Restricted Stock subject to performance conditions, Strategic Performance Units and Strategic Performance Shares. The measures shall be one or more of the following: earnings (total or per share); net income (total or per share); growth in net income (total or per share); income from selected businesses (total or per share); growth in net income or income from selected businesses (total or per share); pre-tax income or growth in pre-tax income; profit margins; revenues; revenue growth; premiums and fees; growth in premiums and fees; membership; membership growth; market share; change in market share; book value; total shareholder return; stock price; change in stock price; market capitalization; change in market capitalization; return on market value; shareholder equity (total or per share); return on equity; assets; return on assets; |
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capital; return on capital; economic value added; market value added; cash flow; change in cash flow; expense ratios or other expense management measures; medical loss ratio; ratio of claims or loss costs to revenues; satisfaction customer, provider, or employee; service quality; productivity ratios or other measures of operating efficiency; and accuracy of claim processing or other measures of operational effectiveness. The Committee may specify any reasonable definition of the measures it uses. Such definitions may provide for reasonable adjustments to the measures and may include or exclude items, including but not limited to: realized investment gains and losses; special items identified in the companys reporting; extraordinary, unusual or non-recurring items; effects of accounting changes, currency fluctuations, acquisitions, divestitures, reserve strengthening, or financing activities; expenses for restructuring or productivity initiatives; and other non-operating items. | ||
2.25 | Performance Objectives the written objective performance goals applicable to performance conditions for Restricted Stock granted under Section 7.3 or Strategic Performance Shares or Strategic Performance Units granted under Section 10.1. To the extent required by Code Section 162(m), the Performance Objectives shall be stated in terms of one or more Performance Measures. Performance Objectives may be stated separately for one or more of the Participants, collectively for the entire group of Participants, or in any combination of the two. Performance Objectives may be for the Company as a whole, for one or more of its subsidiaries, business units, lines of business or for any combination of the foregoing and may be absolute or may require comparing the Companys financial performance to that of a Peer Group or of a specified index or indices, or be based on a combination of the foregoing. Except as prohibited by Code Section 162(m), if CIGNA Corporation is involved in a merger, acquisition or divestiture transaction (even if it does not constitute a Change of Control), the Committee may, in its sole discretion, adjust or modify completely the Performance Measures, and/or Performance Objectives if the transaction has any material affect on the Companys ability to apply the Performance Measures, or meet the Performance Objectives, established at the time of grant. | |
2.26 | Performance Period the period, specified by the Committee, during which Performance Objectives applicable to Strategic Performance Shares or Strategic Performance Units are measured. | |
2.27 | Person the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (a) CIGNA Corporation or any of its Subsidiaries, (b) a trustee or other fiduciary holding securities under an employee benefit plan of CIGNA Corporation or any of its Affiliates, (c) an underwriter temporarily holding securities pursuant to an offering of such securities, or (d) a corporation owned, directly or indirectly, by the stockholders of CIGNA Corporation in substantially the same proportions as their ownership of stock of CIGNA Corporation. |
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2.28 | Plan the CIGNA Long-Term Incentive Plan. | |
2.29 | Prior Plan the CIGNA Long-Term Incentive Plan as restated effective January 1, 2000 and as further amended and restated through January 1, 2008 and, unless otherwise provided under the terms of this Plan, the CIGNA Corporation Stock Plan as adopted effective May 1, 1991, and as amended thereafter. | |
2.30 | Qualifying Plan any Company bonus plan, short-term or long-term incentive compensation plan, any other incentive compensation arrangement or any supplemental retirement benefit plan that is not tax qualified under the Code. Except with respect to payment of Performance Shares or Units in the form of Common Stock, this Plan shall not be a Qualifying Plan. | |
2.31 | Restatement Date April 28, 2010, or, if later, the date Company shareholders approve this amended and restated Plan. | |
2.32 | Restricted Period the period during which Common Stock is subject to restrictions under Section 7.2. | |
2.33 | Restricted Stock Common Stock granted under Article 7 that remains subject to a Restricted Period. | |
2.34 | Retirement a Participants Termination of Employment, after appropriate notice to the Company, on or after a Participant has reached age 65 and attained at least five years of service (as determined under the elapsed time service counting rules applied by the Company to determine an employees total period of Company service using an adjusted service date) or upon such other terms and conditions approved by the Committee, or officers of the Company designated by the Board or the Committee. | |
2.35 | SAR a stock appreciation right granted under Article 6. | |
2.36 | SEC the Securities and Exchange Commission. | |
2.37 | Strategic Performance Share or Performance Share an amount of incentive opportunity available for award to a Participant for a specified Performance Period, with a value equal to the Fair Market Value of one share of Common Stock. | |
2.38 | Strategic Performance Unit or Unit the smallest amount of incentive opportunity available for award to a Participant for a specified Performance Period, with a target value of $75.00 per Unit unless a different target value is established by the Committee at the time a Unit award is made. |
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2.39 | Subsidiary any corporation of which more than 50% of the total combined voting power of all classes of stock entitled to vote, or other equity interest, is directly or indirectly owned by CIGNA Corporation; or a partnership, joint venture or other unincorporated entity of which more than a 50% interest in the capital, equity or profits is directly or indirectly owned by CIGNA Corporation; provided that such corporation, partnership, joint venture or other unincorporated entity is included in the Companys consolidated financial statements under generally accepted accounting principles. | |
2.40 | Termination for Cause a Termination of Employment initiated by the Company on account of the conviction of an employee of a felony involving fraud or dishonesty directed against the Company. | |
2.41 | Termination of Employment the termination of the Participants employment relationship with the Company (unless otherwise expressly provided by the Committee) or a transaction by which the Participants employing Company ceases to be a Subsidiary. | |
2.42 | Termination Upon a Change of Control a Termination of Employment upon or within two years after a Change of Control (a) initiated by the Company or a successor other than a Termination for Cause or (b) initiated by a Participant after determining in the Participants reasonable judgment that there has been a material reduction in the Participants authority, duties or responsibilities, any reduction in the Participants compensation, or any change caused by the Company in the Participants office location of more than 35 miles from its location on the date of the Change of Control. | |
2.43 | Vesting Percentage the ratio, determined by the Committee, of Performance Shares payable under Section 10.3 to Performance Shares granted under Section 10.1. |
Participation
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Authorized Incentive Awards
(a) | The CEO may not grant any awards to or for the benefit of (1) members of the Board or (2) anyone subject to the requirements of Exchange Act Section 16(a); |
(b) | The CEO must be a member of the Board when the CEO grants any award under the Plan and must be properly empowered by the Board to grant such award; and |
(c) | The total number of shares of Common Stock which may be issued pursuant to awards granted under this Section 4.3 is limited to a maximum of 10% of the number of shares of Common Stock authorized to be issued under the Plan. |
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Stock Options
(a) | Except as provided elsewhere in Section 5.5, any outstanding Option held by a Participant at Termination of Employment shall expire on the date of Termination of Employment. | |
(b) | Any outstanding Option held by a Participant at Termination Upon a Change of Control shall: |
(1) | Become exercisable no later than the date of the Participants Termination of Employment to the extent not already exercisable; and |
(2) | Expire on the earlier of 3 months from the date of Termination of Employment or the Expiration Date. |
(c) | Any outstanding Option held by a Participant at Termination of Employment due to death, Disability, Early Retirement or Retirement shall become or remain exercisable in accordance with the terms and conditions established by the Committee at the time of grant. |
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(a) | Cancel a previously granted Option and grant a replacement Option if the new Option exercise price is lower than that of the canceled Option; |
(b) | Provide for any automatic grant of a new Option upon a Participants exercise of any Option granted under the Plan; |
(c) | Except in connection with a corporate transaction involving CIGNA Corporation (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), (i) amend the terms of an Option to reduce the Option exercise price, or (ii) to the extent the exercise price of an Option exceeds the Fair Market Value of a share of Common Stock, cancel, exchange, substitute, buyout or surrender an outstanding Option in exchange for cash, other awards or Options or SARs with an exercise price that is less than the exercise price of the original Option; or | |
(d) | Take any other action that could constitute a repricing. |
(a) | Incentive Stock Options may be granted only to Eligible Employees who are employed by CIGNA Corporation or a corporation that is either a direct Subsidiary or an indirect Subsidiary through an unbroken chain of corporations. | |
(b) | No Incentive Stock Option may be granted after December 31, 2019. |
(c) | No Incentive Stock Option may be granted to any person who, at the time of grant, owns (or is deemed to own under Code Section 424(d)) shares of outstanding Common Stock possessing more than 10% of the total combined voting power of all classes of stock of CIGNA Corporation or a Subsidiary, unless the Option exercise price is at least 110% of the Fair Market Value on the grant date of the stock subject to the Option and the Option by its terms is not exercisable after the expiration of five years after the Option grant date. |
(d) | To the extent that the aggregate Fair Market Value of stock with respect to which the Incentive Stock Options first become exercisable by a Participant in any calendar year exceeds $100,000 (taking into account both Common Stock subject to the Incentive Stock Options under this Plan and stock subject to Incentive Stock Options under all other Company plans, if any), such Options shall be treated as Nonqualified Options. For this purpose the Fair Market Value of the stock subject to Options shall be determined as of the date the Options were awarded. In reducing the number of options treated as Incentive Stock Options to meet the $100,000 limit, the most recently granted Options shall be reduced first. To the extent a reduction of simultaneously granted Options is necessary to meet the $100,000 limit, the Committee may, in the manner and to the extent permitted by law, designate which shares of Common Stock are to be treated as shares acquired pursuant to the exercise of an Incentive Stock Option. |
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(e) | Any grant of Incentive Stock Options shall include whatever terms and conditions are required to meet the requirements of Code Section 422. |
Stock Appreciation Rights
(a) | Total number of shares subject to the SAR that the Participant designates for SAR exercise, up to the maximum number available for exercise as of the SAR exercise date; |
(b) | Excess of (1) the Fair Market Value of a share of Common Stock on the SAR exercise date over (2) the Fair Market Value of a share of Common Stock on the grant date of the SAR; and | |
(c) | Fair Market Value of a share of Common Stock on the SAR exercise date. |
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(a) | Except as provided elsewhere in Section 6.5, any outstanding SAR held by a Participant at Termination of Employment shall expire on the date of Termination of Employment. | |
(b) | Any outstanding SAR held by a Participant at Termination Upon a Change of Control shall: |
(1) | Become exercisable no later than the date of the Participants Termination of Employment to the extent not already exercisable; and |
(2) | Expire on the earlier of 3 months from the date of Termination of Employment or the SAR Expiration Date. |
(c) | Any outstanding SAR held by a Participant at Termination of Employment due to death, Disability, Early Retirement or Retirement shall become or remain exercisable in accordance with the terms and conditions established by the Committee at the time of grant. |
(a) | Cancel a previously granted SAR and grant a replacement SAR if the Fair Market Value on date of grant of the new SAR is lower than the Fair Market Value on date of grant of the canceled SAR; |
(b) | Provide for any automatic grant of a new SAR upon a Participants exercise of any SAR granted under the Plan; |
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(c) | Except in connection with a corporate transaction involving CIGNA Corporation (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), (i) amend the terms of an SAR to reduce the SAR exercise price, or (ii) to the extent the exercise price of an SAR exceeds the Fair Market Value of a share of Common Stock, cancel, exchange, substitute, buyout or surrender an outstanding SAR in exchange for cash, other awards or Options or SARs with an exercise price that is less than the exercise price of the original SAR; or | |
(d) | Take any other action that could constitute a repricing. |
Restricted Stock Grants
(a) | Restricted Stock may automatically be forfeited to the Company at the end of the Restricted Period unless, and to the extent that, the Company meets specified Performance Objectives; or |
(b) | The Restricted Period applicable to Restricted Stock may end earlier if, and to the extent that, the Company meets specified Performance Objectives, but no earlier than one year after the date of grant. |
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(a) | Except as provided below, Restricted Stock (and all related rights) held by a Participant at Termination of Employment during a Restricted Period shall be forfeited to the Company immediately upon Termination of Employment (unless otherwise expressly provided by the Committee). |
(b) | If a Participants Termination of Employment during a Restricted Period is due to Early Retirement or Retirement, the Committee or its designee (in the sole discretion of either) may provide before the Participants Termination of Employment that the Restricted Period applicable to any Restricted Stock (other than Restricted Stock granted pursuant to Section 7.3(a)) held by the Participant shall lapse immediately upon the Participants Termination of Employment. |
(c) | If a Participants Termination of Employment during a Restricted Period is a Termination Upon a Change of Control or is due to death or Disability, the Restricted Period applicable to any Restricted Stock held by the Participant shall lapse immediately on date of Termination of Employment. |
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Dividend Equivalent Rights
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Common Stock in Place of Other Awards
Strategic Performance Units; Strategic Performance Shares
(a) | The Committee may in its sole discretion grant Strategic Performance Shares, Strategic Performance Units or both to Eligible Employees selected for participation for a Performance Period. |
(b) | The Committee, the CEO or the CEOs designee may grant Strategic Performance Shares (subject to the requirements of Delaware law), Strategic Performance Units, or both to a person who becomes an Eligible Employee during a Performance Period as long as any such grant made by the CEO or the CEOs designee is (1) in accordance with guidelines approved by the Committee or (2) subject to ratification by the Committee before any resulting Payment is made. |
(c) | During any calendar year an Eligible Employee may receive no more than 500,000 Performance Shares or 250,000 Units. When an Eligible Employee receives a combination of Performance Shares and Units, each Unit awarded shall reduce the maximum number of awardable Performance Shares by two and every two Performance Shares awarded shall reduce the maximum number of awardable Units by one. That is, the Performance Shares-to-Units parity ratio shall be 2 to 1. For example, if an Eligible Employee is awarded 50,000 Units in a calendar year, the maximum number of awardable Performance Shares the Eligible Employee could receive for that year is 400,000. |
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(d) | In the event of a stock dividend, stock split, or other subdivision or combination of the Common Stock, effective as the date of such dividend, split, subdivision or combination, the maximum number of Performance Shares that may be awarded in any calendar year, and the Performance Shares-to-Units parity ratio described in Section 10.1(c), shall be adjusted proportionately in accordance with Section 12.1. |
(a) | Establish in writing the Performance Objectives and the Performance Measures applicable to the Performance Period; |
(b) | Determine the length of the Performance Period and, if the Performance Objectives require comparing the Companys financial results to those of a Peer Group, the composition of the Peer Group; and |
(c) | Determine the formula or method for determining the Vesting Percentage for Performance Shares and the value of Units. |
(a) | After the Committee has determined the Vesting Percentage or Unit value for a Performance Period and subject to Sections 10.5 and 10.6, the Company shall make Payments to Participants to whom Performance Shares or Units were granted for the Performance Period. |
(b) | Payment to a Participant for a grant of Performance Shares shall equal (1) the number of Performance Shares granted to the Participant multiplied by (2) the Vesting Percentage determined under Section 10.3. This product shall be multiplied by the Fair Market Value of Common Stock on the date the Committee determines the Vesting Percentage, to the extent the Committee provides for payment of Performance Shares in cash. |
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(c) | Payment to a Participant for a grant of Units shall equal the number of Units granted to the Participant multiplied by the Unit value determined under Section 10.3. |
(d) | Notwithstanding the above, the Committee in its sole discretion may reduce the amount of any Payment to any Participant or eliminate entirely the Payment to any Participant. The Committees authority under this Section 10.4(d) shall expire immediately upon a Change of Control. |
(a) | Except as described in Section 10.5(b), (c) and (d), a Participant shall be eligible to receive a Payment for a Performance Period under Section 10.4 only if the Participant has been employed by the Company continuously from the date of Participants grant of Performance Shares and/or Units through the date of Payment. |
(b) | For the purposes of this Section 10.5, a leave of absence of less than three months duration with the approval of the Company is not considered to be a break in continuous employment. In the case of a leave of absence of three months or longer, the Committee shall determine whether or not the leave of absence constitutes a break in continuous employment for purposes of a Payment. |
(c) | If the employment of a Participant is terminated by reason of Early Retirement, Retirement, death or Disability after receipt of a Performance Share or Unit grant, but before the related Payment is made, the Committee or its designee shall determine whether a Payment under Section 10.4 shall be made to or on behalf of such Participant, and whether the Payment, if made, shall be in full or prorated based on factors determined in the sole discretion of the Committee or its designee. Any such Payment shall be made to the Participant or the Participants estate in accordance with Section 10.6. |
(d) | In the event of a Participants Termination Upon a Change of Control, all of the Participants outstanding Performance Share and Units as of the date of the Participants Termination Upon a Change of Control shall be paid in accordance with Section 10.6. |
(e) | In the case of Units described in Section 10.5(d), the value of each Unit shall be the greatest of: |
(1) | The Unit target value; |
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(2) | The highest value established by the Committee for any Unit Payments made to any Participants during the twelve-month period immediately preceding the date of Participants Termination Upon a Change of Control; or |
(3) | The average of the highest values established by the Committee for the last two Unit Payments made to any Participants before the Participants Termination Upon a Change of Control. |
(f) | In the case of Performance Shares described in Section 10.5(d), the applicable Vesting Percentage shall be the greatest of: |
(1) | 100%; |
(2) | The Vesting Percentage for the Performance Period that ended immediately before the Participants Termination Upon a Change of Control; or |
(3) | The average of the Vesting Percentages established by the Committee for the last two Performance Periods that ended before the Participants Termination Upon a Change of Control. |
(a) | Unless otherwise provided at the time of award, Payments shall be made in the year following the close of the Performance Period. Payments shall be made in a single lump sum in the form of cash, shares of Common Stock, or a combination of these forms of Payment, as determined by the Committee in its sole discretion. |
(b) | If a Payment is made wholly or partially in shares of Common Stock, the Payment shall be made in a number of whole shares. That number of shares shall have an aggregate Fair Market Value that most closely approximates, but does not exceed, the dollar amount of the Payment if made in cash. |
Shares Authorized under the Plan
(a) | The number of shares of Common Stock that, prior to the Restatement Date, were authorized to be issued pursuant to Options, SARs, rights, grants or other awards under the Prior Plan is (a) 75 million shares under the CIGNA Long-Term Incentive Plan, plus (b) any shares remaining on April 27, 2005 of the 30 million shares authorized under the CIGNA Corporation Stock Plan. |
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(b) | The number of shares of Common Stock authorized to be issued pursuant to Options, SARs, rights, grants or other awards made under this Plan from and after the Restatement Date shall be 6.6 million shares plus the number of: |
(1) | shares reserved for issuance upon exercise of Options granted under Prior Plans, to the extent the Options are outstanding on March 5, 2010, and subsequently expire or are canceled or surrendered; |
(2) | shares reserved for issuance under Article 9 upon vesting of restricted stock units granted under Qualifying Plans, to the extent the restricted stock units are outstanding on March 5, 2010, and subsequently expire or are canceled or surrendered; and |
(3) | shares of Restricted Stock granted under Prior Plans, to the extent the applicable Restricted Period has not expired as of March 5, 2010 and the Restricted Stock is subsequently forfeited under Section 7.5 or is otherwise surrendered to the Company before the Restricted Period expires. |
(c) | Prior to the Restatement Date, the maximum aggregate number of shares that could be issued as Incentive Stock Options was 30 million. The maximum aggregate number of shares that may be issued as Incentive Stock Options under this Plan from and after the Restatement Date is 2 million. |
(d) | Prior to the Restatement Date, no more than nine million shares could be awarded or granted, from and after April 27, 2005, under Articles 7, 8, 9 and 10 in the form of Common Stock. Effective as of the Restatement Date, the preceding limit shall be replaced by the share counting rules under Section 11.3(a). |
(a) | Subject to the other provisions of Section 11.3, the following rules shall apply in determining whether shares of Common Stock remain available for issuance under Section 11.1(a) of the Plan. |
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(1) | Each share reserved for issuance upon exercise of any Option or SAR granted under the Plan shall reduce the number of remaining authorized shares by one, provided that an SAR that may be settled only in cash shall not reduce the number of authorized shares. |
(2) | Each share of Common Stock awarded under Articles 7, 8, 9 or 10 of the Plan, up to the Applicable Limit (described below in Section 11.3(a) (4)), shall reduce the number of authorized shares by one. |
(3) | Each share of Common Stock awarded under Articles 7, 8, 9 or 10 of the Plan in excess of the Applicable Limit shall reduce the number of authorized shares by one and one-half. |
(4) | The Applicable Limit is 2.8 million shares plus any shares described in Section 11.1(b)(2) and (3). |
(b) | The following shall not reduce the number of authorized shares of Common Stock available for issuance under this Plan: |
(1) | Common Stock reserved for issuance upon exercise or settlement, as applicable, of awards granted under the Plan, to the extent the awards expire or are canceled or surrendered; |
(2) | Restricted Stock granted under the Plan, to the extent such Restricted Stock is forfeited under Section 7.5 or is otherwise surrendered to the Company before the Restricted Period expires; |
(3) | Common Stock reserved, upon the grant of restricted stock units under any Qualifying Plans, for issuance under Article 9 when such restricted stock units vest, to the extent the restricted stock units are forfeited, canceled or surrendered; and | ||
(4) | Awards, to the extent the payment is actually made in cash. |
(c) | The following shares shall not become available for issuance under the Plan: |
(1) | Shares tendered by Participants as full or partial payment to the Company upon exercise of Options granted under this Plan; |
(2) | Shares reserved for issuance upon grant of SARs, to the extent the number of reserved shares exceeds the number of shares actually issued upon exercise of the SARs; and |
(3) | Shares withheld by, or otherwise remitted to, the Company to satisfy a Participants tax withholding obligations upon the lapse of restrictions on Restricted Stock or the exercise of Options or SARs granted under the Plan or upon any other payment or issuance of shares under the Plan. |
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Antidilution Provisions
(a) | The number of authorized shares of Common Stock, and any numerical share limits, under the Plan will be adjusted proportionately; and |
(b) | There will be a proportionate adjustment in: the number of shares of Common Stock subject to unexercised stock Options and SARs; the per share Option and SAR exercise price (but without adjustment to the aggregate Option or SAR exercise price); the number of shares of Restricted Stock outstanding; and the number of Strategic Performance Shares outstanding. |
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Administration of Plan
Amendments
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Other Provisions
(a) | No derivative security (as defined in rules promulgated under Exchange Act Section 16), including any right to receive Common Stock (such as Options, SARs or similar rights), or any Strategic Performance Shares or Strategic Performance Units, or any right to payment under the Plan, shall be assignable or transferable by a Participant except by will or by the laws of descent and distribution. Any other attempted assignment or alienation shall be void and of no force or effect. Any right to receive Common Stock or any other derivative security (including Options, SARs or similar rights) shall be exercisable during a Participants lifetime only by the Participant or by the Participants guardian or legal representative. |
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(b) | Notwithstanding Section 15.5(a), the Committee shall have the authority, in its discretion, to grant (or to sanction by way of amendment of an existing grant) derivative securities (other than Incentive Stock Options) that may be transferred without consideration by the Participant during the Participants lifetime to any member of the Participants immediate family, to a trust established for the exclusive benefit of one or more members of the Participants immediate family, to a partnership of which the only partners are members of the Participants immediate family, or to such other person as the Committee shall permit. In the case of a grant, the written documentation containing the terms and conditions of such derivative security shall state that it is transferable, and in the case of an amendment to an existing grant, such amendment shall be in writing. A derivative security transferred as contemplated in this Section 15.5(b) may not be subsequently transferred by the transferee except by will or the laws of descent and distribution and shall continue to be governed by and subject to the terms and limitations of the Plan and the relevant grant. The Committee, in its sole discretion at the time the transfer is approved, may alter the terms and limitations of the relevant grant and establish such additional terms and conditions as it shall deem appropriate. As used in this subparagraph, immediate family shall mean, as to any person, a current or former spouse or domestic partner (as defined under the CIGNA 401(k) Plan), any child, stepchild or grandchild, and shall include relationships arising from legal adoption. |
(a) | require the Participant (or personal representative or beneficiary) to remit an amount sufficient to satisfy applicable federal, state and local withholding taxes; or |
(b) | deduct from any amount payable the amount of any taxes the Company may be required to withhold because of the transaction. |
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