AEtna Aetna Inc. 151 Farmington Avenue Hartford, CT 06156-3122 Ronald E. Compton Chairman 860-273-3087 Fax: 860-273-6872 March 6, 1997 Mr. Joseph T. Sebastianelli Dear Joe: On behalf of the Aetna Board, I am pleased to offer you the position of President of Aetna on terms as set forth in the attached 'Term Sheet' which is incorporated herein by reference. If you agree to accept this position on the terms as set forth, please indicate your acceptance by signing below. Sincerely yours, /s/ Ronald E. Compton _____________________ Ronald E. Compton Accepted and Agreed: /s/ Joseph T. Sebastianelli ___________________________ Joseph T. Sebastianelli TERM SHEET Definitions See Exhibit A Employment Contract Term March 6, 1997 through July 19, 2001 Position; Reporting Relationships President of Aetna Inc. reporting to Chief Executive Officer Duties Supervise the following Business Units: Aetna U.S. Healthcare and Aetna International. These duties will include liaison with Strategic Planning. Supervise the following Staff Units: Human Resources, Corporate Communications, Federal Government Relations and Aetna Business Resources. It is anticipated that over the course of the first year of this Term Sheet, Executive shall be given additional duties and responsibilities as specified from time to time by the Chief Executive Officer. Executive to devote substantially all of his business time to performance of duties under this Term Sheet. Office Location Hartford, Connecticut Residence Establish residence immediately (as soon as possible) in the greater Hartford area. Establish primary residence in the greater Hartford area on a date mutually agreeable to Executive and the Company. Cash Compensation Salary: $725,000 Incentive Compensation: participation in annual and long- term incentive compensation programs of the Company made available to senior executives on a basis commensurate with position. Equity Based Compensation Participation in all stock-based compensation programs of the Company made available to senior executives on a basis commensurate with position. Benefits Continued participation in all benefit plans in which Executive currently participates. Effect of Termination of Employment - by Company without Cause, Earned but unpaid amounts by Executive with Good (including pro rata target bonus), Reason severance payments equal to 3x base salary and target annual bonus, continued benefits for 3 years, continued vesting of equity awards other than restricted stock award for 1 year, accelerated vesting of restricted stock award. - Death Continued payment of base salary and annual bonus for one year. - Disability Continued payment of base salary and annual bonus for one year, offset by amounts paid under Company's long-term disability program. - by Executive without Good Payment of earned but unpaid Reason, by Company for amounts (exclusive of pro-rate Cause bonus) with respect to year of termination. Term Expiration If not offered CEO position on or before February 28, 1998, and Executive elects to leave Company no later than February 28, 1999, earned but unpaid amounts (including 1997 bonus), severance equal to 3x base salary and target annual bonus, continued benefits for 3 years, continued vesting of equity awards other than restricted stock award for 1 year, accelerated vesting of restricted stock award. Change of Control Gross-up for excise tax; provided that if payments to Executive exceed amount which can be paid without incurring an excise tax by less than 5%, the Company may reduce amounts paid to Executive to the maximum amount which may be paid without incurring an excise tax. 2 Restrictive Covenants Noncompetition: During employment term and for one year following termination of employment (including a termination under circumstances described above in 'Term Expiration' which entitles Executive to severance payments and benefits but excluding a termination without cause or for good reason), Executive may not become associated with an entity actively engaged in any business which is in competition with the business or businesses of the Company for which Executive provides substantial services or for which Executive has substantial responsibility. Confidentiality: During the employment term and thereafter. Nonsolicitation: During the employment term and through February 28, 2003, Executive may not: induce any employee, agent or broker of the Company or any of its subsidiaries or affiliates to perform services elsewhere; induce any agent or agency, broker, broker-dealer, supplier or healthcare provider of the Company or any of its subsidiaries or affiliates to cease providing services; or solicit customers of the Company or any of its subsidiaries or affiliates. Effect on Current Contract The Agreement will supersede Executive's current employment contract in its entirety, including without limitation, the requirement that a notice of termination of employment include a supermajority resolution of the Board. Executive shall also waive his rights under Section 7.11(c) of the Merger Agreement. The terms of his equity awards (including his restricted stock awards) granted under the Company's long term stock incentive plan shall be unaffected. Successors The Company will require any successor to the assets or business of the Company to agree to assume the agreement. Governing Law Connecticut 3 Dispute Resolution Binding arbitration in Hartford, Connecticut; provided that the ________ decision as to whether Executive shall be promoted shall be made by the Board, in its sole discretion, and shall not be subject to dispute resolution. Legal Fees Fees and expenses of arbitration borne equally by Executive and the Company; provided that if Executive prevails as to any material issue, the entire cost (including reasonable attorneys' fees) shall be borne by the Company. 4 EXHIBIT A Definitions 'Termination for Cause' means a termination of Executive's employment by the Company due to (i) the willful failure by Executive to perform substantially Executive's duties as an employee of the company (other than due to physical or mental illness) after reasonable notice to Executive of such failure, (ii) Executive's engaged in serious misconduct that is injurious to the Company or any subsidiary or any affiliate of the Company, (iii) Executive's having been convicted of, or entered a plea of nolo contendere to, a crime involving an act that ____ __________ is immoral or wrong in and of itself (e.g., burglary, larceny, murder ____ or arson) or a crime involving deceit, fraud, perjury or embezzlement, (iv) the breach by Executive of any written covenant or agreement not to compete with the Company or any subsidiary or any affiliate or (v) _ the breach by Executive of his duty of loyalty to the Company which shall include, without limitation, (A) the disclosure by Executive of _ any confidential information pertaining to the Company or any subsidiary or any affiliate of the Company other than (x) in the _ ordinary course of the performance of his duties on behalf of the Company or (y) pursuant to a judicial or administrative subpoena from _ a court or governmental authority with jurisdiction over the matter in question, (B) the harmful interference by Executive in the business or _ operations of the Company or any subsidiary or any affiliate of the Company, (C) any attempt by Executive directly or indirectly to induce _ any employee, insurance agent, insurance broker or broker-dealer of the Company or any subsidiary or any affiliate to be employed or perform services elsewhere, (D) any attempt by Executive directly or _ indirectly to solicit the trade of any customer or suppliers, or prospective customer or suppliers, of the Company on behalf of any person other than the Company or a subsidiary thereof (E) any breach _ or violation of the company's Code of Conduct, as amended from time to time. Notwithstanding the foregoing, a breach of Executive's duty of loyalty to the Company as described in subclause (A) or a breach of the Company's Code of Conduct as described in the subclause (E) of clause (v) of the preceding sentence shall not be grounds for a Termination for Cause unless such breach has had or could reasonably be expected to have a significant adverse effect on the business or reputation of the Company. 'Termination due to Disability' means a termination of Executive's employment by the Company because Executive has been incapable of substantially fulfilling the positions, duties, responsibilities and obligations set forth in this Agreement because of physical, mental or emotional incapacity resulting from injury, sickness or disease for a period of (i) at least four consecutive months or (ii) more than six months in any twelve month period. Any question as to the existence, extent or potentiality of Executive's disability shall be made by a qualified, independent physician selected by the chief or assistant chief (or the equivalent position) of the department which treats the disease giving rise to Executive's absence at a nationally or regionally recognized teaching hospital chosen by the Company. The determination of any such physician shall be final and conclusive for all purposes of this Agreement. Notwithstanding the foregoing, (i) a Termination for Disability shall not 5 affect Executive's right to receive any amount that would otherwise have been payable to Executive under the Company's plans, policies, practices or programs pertaining to short-term or long-term disability had Executive's employment continued and (ii) if it is determined, at the time Executive is first eligible to receive long-term disability benefits under the Company's plans, policies, practices or programs, that Executive is not entitled to receive such long-term disability benefits (other than due to Executive's failure to cooperate), Executive shall, for purposes of the Paragraph __, be deemed to have been terminated as of the date of such determination pursuant to a Termination Without Cause and to be entitled to receive any additional benefits payable hereunder in respect of a Termination Without Cause. 'Termination for Good Reason' means a termination of Executive's employment by Executive within 90 days following a reduction in Executive's annual Base Salary or incentive compensation opportunity. Notwithstanding the foregoing, a termination shall be not be treated as a Termination for Good Reason (i) if Executive shall have consented in writing to the occurrence of the event giving rise to the claim of Termination for Good Reason or (ii) unless Executive shall have delivered a written notice to the Board within 60 days of his having actual knowledge of the occurrence of one of such events stating that he intends to terminate his employment for Good Reason and specifying the factual basis for such termination, and such event shall not have been cured within 30 days of the receipt of such notice. 'Change in Control' means the happening of any of the following: (i) When any 'person' as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the 'Exchange Act') and as used in Section 13(d) and 14(d) thereof, including a 'group' as defined in Section 13(d) of the Exchange Act but excluding the Company and any subsidiary thereof and any employee benefit plan sponsored or maintained by the Company or any Subsidiary (including any trustee of such plan acting as trustee), directly or indirectly, becomes the 'beneficial owner' (as defined in Rule 13d-3 under the Exchange Act, as amended from time to time), of securities of the Company representing 20 percent or more of the combined voting power of the Company's then outstanding securities. (ii) When, during any period of 24 consecutive months, after the Commencement Date, the individuals who, at the beginning of such period, constitute the Board (the 'Incumbent Director') cease for any reason other than death to constitute at least a majority thereof, provided that a director who was not a director at the ________ ____ beginning of such 24-month period shall be deemed to have satisfied such 24-month requirement (and be an Incumbent Director) if such director was elected by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either actually (because they were directors at the beginning of such 24-month period) or by prior operation of this Paragraph; or 6 (iii) The occurrence of a transaction requiring stockholder approval for the acquisition of the Company by an entity other than the Company or a subsidiary through purchase of assets, or by merger, or otherwise. 7
Employment Agreement - Aetna Inc. and Joseph T. Sebastianelli
Was this helpful?