John Kim will receive a bonus equal to his annual bonus target, which was not specified in CIGNA’s federal regulatory filing. Half the retention bonus will be cash and half will be restricted stock units, according to a Hartford Courant report.
Examining his 2002 compensation package though shows Kim – who joined CIGNA in February 2002 – received an annual bonus of $1.32 million for 2002, excluding a one-time sign-on bonus of $50,000. The $1.32 million is believed to be higher than his target bonus, the Courant said.
In order to receive the bonus, Kim had to agree to stay on for three months following the close of any sale of his unit, or until July 23, 2006 – whichever comes first. The bonus comes in addition to a severance package and payment for long-term performance plan units Kim would receive if CR&IS is acquired and he is not offered a suitable position in the Hartford, Connecticut area.
The disclosure by CIGNA comes after the July 30 announcement that the company was exploring the possible sale of the retirement business or separating it from the health insurance business into a new company within CIGNA Corp (See CIGNA Could Sell, Spin-off Retirement Biz ). At the time, reports said potential bidders include Principal Financial Group Inc., Lincoln National Corp., Manulife Financial Corp., Putnam Investments and Fidelity Investments, although CIGNA has only had talks with Prudential thus far.
Kim’s retention bonus came in addition to 100,000 deferred stock units the Hartford, Connecticut-based company awarded to Chief Executive Officer (CEO) H. Edward Hanway and 8,560 units to Terry Kendall, president of CIGNA International. Each unit gives the right to receive one share of common stock, plus dividend equivalent payments on units that aren’t yet vested.
Also receiving some extra pocket money is former CIGNA HealthCare President Patrick Welch. This comes after Welch was ousted from the company in July following a tenure lasting slightly more than a year. Under an agreement signed after his release, Welch was continued on the company’s payroll until September 26, and then gets a year’s salary in biweekly payments. Welch was paid $426,900 of salary last year, having joined CIGNA at the end of May.
Then in March 2004, Welch will get a 2003 cash bonus, which will be 75% of his annual bonus target. Welch received an $800,000 bonus for 2002, but that might be higher than his annual target. In addition, Welch will be paid several million dollars under a long-term incentive plan.