This excerpt taken from the CI DEF 14A filed Mar 21, 2005.
This table provides information about long-term incentive awards granted in 2004 to the named executive officers.
One form of long-term incentive that CIGNA provides to executive officers and other key employees is strategic performance unit awards, called SPUs, under the Long-term Incentive Plan. The Committee sets performance metrics, payout formulas and a target value for the SPUs when they are awarded. For awards made in 2004, the People Resources Committee used total shareholder return, as a proxy for profitable growth, weighted equally with return on equity, as the performance metrics. The target value is currently $75 per unit, and is to be paid when CIGNAs three-year return on equity and total shareholder return is in the median range compared to the competitors. The payout value of SPUs is based on CIGNAs achievement relative to those performance metrics over a three-year period in comparison to a group of competitors that overall have business lines similar to CIGNAs. The final dollar value of each unit may be from zero to $200.
The Committee assigns a value to SPUs by comparing CIGNAs performance each year in the three-year performance period with the performance for a defined group of competitors and then assigns dollar values to the units based on the rankings, using a conversion formula. The Committee has discretion to reduce the dollar value of each SPU by up to $25, based on its judgment regarding strategic and financial performance during the period, and to otherwise reduce the payment or eliminate it entirely.
If within two years after a change of control of CIGNA an employee is terminated, or resigns because of certain adverse changes in employment conditions, that employee must be paid within 30 days for all SPU awards not yet valued and paid. The dollar value of each SPU would be the greatest of:
No payment is made to an employee terminated after conviction of a felony involving fraud or dishonesty directed against CIGNA.