FINAL
as of 3/2/99
AETNA INC.
1999 DIRECTOR CHARITABLE AWARD PROGRAM
1. PURPOSE OF THE PROGRAM
The Aetna Inc. Director Charitable Award Program (the 'Program') allows
each eligible Director ('Director') of Aetna Inc. (the 'Corporation') to
recommend that the Corporation make a donation of $1,000,000 to the
eligible tax-exempt organization(s) (the 'Donee(s)') selected by the
Director, with the donation to be made, in the Director's name, in ten
equal annual installments, with the first installment to be made
following the Director's retirement. The purpose of the Program is to
recognize the interest of the Corporation and its outside Directors in
supporting worthy educational institutions and other charitable
organizations.
2. ELIGIBILITY
All persons serving as outside Directors of the Corporation as of
February 1, 1999, shall be eligible to participate in the Program. All
outside Directors who join the Corporation's Board of Directors after
that date shall be immediately eligible to participate in the Program
upon election to the Board.
3. RECOMMENDATION OF DONATION
When a Director becomes eligible to participate in the Program, he or she
may make a written recommendation to the Corporation, on a form approved
by the Corporation for this purpose, designating the Donee(s) which he or
she intends to be the recipient(s) of the corporate donation to be made
on his or her behalf. A participating Director may revise or revoke any
such recommendation by signing a new recommendation form and submitting
it to the Corporation.
4. AMOUNT AND TIMING OF DONATION
Each eligible Director may choose one organization to receive a donation
of $1,000,000, or up to five organizations to receive donations
aggregating $1,000,000. Each recommended organization must be recommended
to receive a donation of at least $100,000. The donation will be made by
the Corporation in ten equal annual installments, with the first
installment to be made shortly after the Director's termination of
service as a Director on account of the Corporation's mandatory director
retirement policy in effect on the date of such termination of service
('Retirement'). In the event of a Director's earlier termination of
service, provided he or she has satisfied the vesting requirements, the
first installment of the donation will be made when the Director
otherwise would have reached his or her Retirement date. If a Director
recommends more than one organization to receive a donation, each will
receive a prorated portion of each annual installment. Each annual
installment payment will be divided among the recommended organizations
in the same proportions as the total donation amount has been allocated
among the organizations by the Director.
5. DONEES
In order to be eligible to receive a donation, a recommended organization
must initially, and at the time each donation installment is to be made,
(a) qualify to receive tax-deductible donations by the Corporation under
the Internal Revenue Code and (b) meet the then current criteria
established by the Aetna Foundation, Inc. for its matching grant program;
provided, however, that United Way, the Combined Health Appeal and any
other organization conducting a workplace campaign at Aetna not eligible
for the Aetna Foundation, Inc. matching grant program will be permitted
Donees if otherwise eligible. Upon the request of the Corporation's Chief
Executive Officer, or in the event Aetna Foundation, Inc. or a successor
foundation is dormant or not in existence, a recommended organization
must be reviewed and approved by the Nominating and Corporate Governance
Committee. A recommendation will be approved unless it is determined that
a donation to the organization would not be in the best interests of the
Corporation. A Director's private foundation will not be an eligible
Donee. If an organization recommended by a participating Director ceases
to qualify as a Donee, and if the Director does not submit a form to
change the recommendation, the amount recommended to be donated to the
organization will instead be donated to the Director's remaining
recommended qualified Donee(s) on a prorated basis. If none of the
recommended organizations qualify, the donation will be made to the
organization(s) selected by the Corporation.
6. VESTING
A participating Director will be vested in the Program: (a) when he or
she completes five years of Board service as an outside Director, or (b)
in the event he or she terminates service prior to the completion of five
years of service as a Director, by reason of death or disability, or (c)
if there is a Change of Control of the Corporation while he or she is
actively serving on the Board. The term 'Change of Control' shall have
the same meaning as is defined for that term in the Aetna Inc.
Non-Employee Director Deferred Stock and Deferred Compensation Plan. For
persons serving as outside Directors on February 1, 1999, Board service
as an outside Director prior to that date will count as vesting service
(including service on the Boards of Aetna Life and Casualty Company and
U. S. Healthcare, Inc.). If a participating Director terminates Board
service (other than due to death or disability) before becoming vested,
no donation will be made on his or her behalf, provided, however, that in
the event a participating Director terminates service prior to the
completion of five years of service as a Director by reason of acceptance
of a position in government service or any other reason, all years of
service will be counted towards the vesting requirement in the event of
such Director's return to the Board.
7. FUNDING AND PROGRAM ASSETS
The Corporation may fund the Program or it may choose not to fund the
Program. If the Corporation elects to fund the Program in any manner,
neither the participating Directors nor their recommended Donee(s) shall
have any rights or interests in any assets of the Corporation identified
for such purpose. Nothing contained in the Program shall create, or be
deemed to create, a trust, actual or constructive, for the benefit of a
Director or any Donee recommended by a Director to receive a donation, or
shall give, or be deemed to give, any Director or recommended Donee any
interest in any assets of the Program or the Corporation. If the
Corporation elects to fund the
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Program through life insurance policies, a participating Director must
cooperate and fulfill the enrollment requirements necessary to obtain
insurance on his or her life in order to be eligible to participate or
continue to participate in the Program. In the event a Director has
cooperated and fulfilled such requirements, but is considered to be
uninsurable, such Director shall still be permitted to participate in the
Program.
8. AMENDMENT OR TERMINATION
The Board of Directors of the Corporation may, at any time, without the
consent of the Directors participating in the Program, amend, suspend, or
terminate the Program. However, once a participating Director becomes
vested in the Program, the Program may not be amended, suspended or
terminated with respect to such Director by lengthening such Director's
vesting period or by reducing the amount or timing of a donation to be
made in the name of such Director without his or her consent, unless
there has been an adverse change in laws or regulations affecting the
Program (e.g., reduction or elimination of the tax deductibility of the
donation by the Corporation).
9. ADMINISTRATION
The Program shall be administered by the Nominating and Corporate
Governance Committee. The Committee shall have plenary authority in its
discretion, but subject to the provisions of the Program, to prescribe,
amend, and rescind rules, regulations and procedures relating to the
Program. The determinations of the Committee on the foregoing matters
shall be conclusive and binding on all interested parties.
10. NON-ASSIGNMENT
A Director's rights and interests under the Program may not be assigned
or transferred.
11. GOVERNING LAW
The Program shall be construed and enforced according to the laws of the
State of Connecticut, and all provisions thereof shall be administered
according to the laws of said state.
12. EFFECTIVE DATE
The Program effective date is February 1, 1999. The recommendation of an
eligible Director will not be effective until he or she completes the
Program enrollment requirements.
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