Aetna Inc. (NYSE:AET) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain OfficersItem 5.02
As previously disclosed, on December 3, 2017 Aetna Inc. (“Aetna”) entered into an Agreement and Plan of Merger with CVS Health Corporation and Hudson Merger Sub Corp. (the “Merger Agreement”). Certain Aetna executive officers might be subject to tax penalties applicable to benefits they may receive if their employment is terminated upon or following the closing of the transactions contemplated by the Merger Agreement. These adverse tax consequences can be mitigated if certain amounts that would otherwise become vested or payable in the ordinary course of business in 2018 are vested and paid before the end 2017. Accordingly, on December 19, 2017, the Committee on Compensation and Talent Management (the “Committee”) of the Aetna Board of Directors determined that the applicable performance measures for the performance stock units (“PSUs”) granted to Aetna’s executive officers in 2015 have been achieved at a level of 120% of the target level of performance and approved the vesting and payment of the following amounts to the affected executive officers before the end 2017:
| · | the vesting on December 27, 2017 of the following PSUs granted in 2015: for Richard M. Jelinek, Executive Vice President, Enterprise Strategy – 2,276 PSUs originally scheduled to vest on November 2, 2018 (which at 120% of target will convert to 2,732 Aetna common shares); and for Gary W. Loveman, Executive Vice President, Consumer Health and Services – 11,132 PSUs originally scheduled to vest on October 26, 2018 (which at 120% of target will convert to 13,359 Aetna common shares); and |
| · | the vesting on December 27, 2017 of the following restricted stock units (“RSUs”) granted in 2015: for Mr. Jelinek – 26,011 RSUs originally scheduled to vest November 2, 2018; for Mr. Loveman – 27,830 RSUs originally scheduled to vest on October 26, 2018; and for Thomas J. Sabatino, Jr., Executive Vice President and General Counsel – 21,842 RSUs originally scheduled to vest on May 10, 2018. |
Each vested RSU represents one Aetna common share. Vested PSUs and vested RSUs will be paid in Aetna common shares, net of taxes.
These measures were taken solely for the inherent tax efficiencies. The affected executive officers will forfeit other significant compensation awards if they resign or are terminated for cause in the future. The Committee believes that these executive officers’ remaining awards provide ample retention and performance incentives for these executive officers.
About Aetna Inc. (NYSE:AET)
Aetna Inc. is a diversified healthcare benefits company. The Company operates through three segments: Health Care, Group Insurance and Large Case Pensions. The Health Care segment’s products and services consist of medical, pharmacy benefit management services, dental, behavioral health and vision plans offered on both an insured basis and an employer-funded, or administrative services contact, basis and emerging businesses products and services, such as accountable care solutions (ACS). The Group Insurance segment’s products consist of Life Insurance Products, Disability Insurance Products and Long-Term Care Insurance Products. The Large Case Pensions segment manages a range of retirement products, (including pension and annuity products) primarily for tax-qualified pension plans. Its customers include employer groups, individuals, college students, part-time and hourly workers, health plans, healthcare providers (providers), Government-sponsored plans, labor groups and expatriates.