Employment Agreement - Aetna Inc. and William H. Donaldson

                                                          151 Farmington Avenue 
                                                        Hartford, CT 06156-3124
May 31, 2000


Mr. William H. Donaldson
860 United Nation's Plaza
New York, NY 10017

Dear Bill:

         This is to notify you that in addition to a bonus of up to $2,000,000
which you are eligible to receive under the Aetna Annual Incentive Plan for
fiscal year 2000, you will be eligible to receive a special bonus (the "Special
2000 Bonus") for fiscal year 2000 outside that plan in an amount determined, and
based on the level of achievement of performance objectives established, by the
Committee on Compensation and Organization (the "Committee") of the Board of
Directors (the "Board") of Aetna. Payment of the Special 2000 Bonus will be
deferred until the termination of your employment with Aetna, subject to such
deferral arrangements as the Committee shall establish.

         If prior to the determination of the amount of the Special 2000 Bonus
you voluntarily elect to terminate your employment with Aetna without the
consent of the Board or your employment with Aetna is terminated by Aetna due to
gross misconduct in the performance of your duties which is demonstrably and
materially injurious to Aetna, you will not be entitled to receive any portion
of the Special 2000 Bonus. If, prior to the determination of the amount of the
Special 2000 Bonus, for any reason other than those stated immediately above
(including disability or death), (A) you cease to hold the positions of Chief
Executive Officer, President and Chairman of Aetna before a spin-off or similar
separation of the Aetna healthcare business from the financial services business
or (B) you cease to hold the positions of Chief Executive Officer and Chairman
of either the healthcare business or the financial services business after the
separation of those businesses, then you will be entitled to receive a payment
in respect of your Special 2000 Bonus in an amount determined by the Committee
(but in no event less than $500,000). In the event of your death, the amount you
would have received hereunder will be paid to your estate.


                                             /s/ Michael H. Jordan
                                             Michael H. Jordan,
                                             Chairman of the Committee
                                             on Compensation and Organization
                                             of the Board of Directors


                                             /s/ Elease E. Wright
                                             Elease E. Wright,
                                             Senior Vice President,
                                             Human Resources