CIGNA Corporation (NYSE:CI) filed a Form 8-K to disclose the retirement of Herbert A. Fritch, President, Cigna-HealthSpring, effective November 11, 2016.
The Company and Mr. Fritch executed an Agreement and Release in connection with his retirement (the “Agreement and Release”). The Agreement and Release includes customary confidentiality, non-solicitation, non-competition, non-disparagement and release provisions. In addition, the agreement provides for benefits consisting of: (1) accelerated vesting of previously granted restricted stock awards and (2) payout of a prorated portion of previously awarded strategic performance shares (“SPS”) for the 2014–2016, 2015–2017 and 2016–2018 performance periods. The Agreement and Release confirms that, pursuant to the Cigna Long-Term Incentive Plan (the “LTIP”) and the terms of the original grants, Mr. Fritch’s stock options will vest upon his retirement. The estimated aggregate value of these benefits is approximately $7.9 million, based on a stock price of $123.63 per share, the closing price of Cigna’s common stock on October 20, 2016. The actual shares earned percentage and timing of the SPS awards will be determined by the People Resources Committee in accordance with the terms of the LTIP. Stock options awarded under the LTIP will expire at their original term. Stock options awarded under the HealthSpring Amended and Restated 2006 Equity Incentive Plan, all of which had previously vested, will expire the shorter of three years from the retirement date or at their original term.
Mr. Fritch and the Company have also entered into an Advisory Services Agreement (the “Advisory Services Agreement”), pursuant to which Mr. Fritch will provide advice and counsel to senior management on business planning and strategy and consultation to the Board of Directors. Mr. Fritch will be paid a retainer of $500,000, payable in five equal installments. The Advisory Services Agreement expires on December 31, 2017.
