- The Washington Times - Thursday, March 19, 2009

NEW YORK (AP) - Cigna Corp. Chief Executive H. Edward Hanway received 50 percent less compensation in 2008 on a plunge in his performance bonus as the health insurer’s stock plummeted.

Hanway received overall compensation worth $11.4 million, down from $22.7 million in 2007. His salary rose 3 percent to just over $1.1 million, but his performance bonus plunged 63 percent to just under $6.7 million. That bonus is actually for work performed between 2005 and 2007 under a three-year, or long-term incentive program. The Philadelphia-based company said he and other top executives did not receive a performance bonus for 2008.

Meanwhile, perks, including tax preparation and a car allowance, fell 32 percent to $21,792.

Hanway received a 1 percent boost to $3.6 million in stock and option awards, based on the value on the day the were granted. But, the shares are now “underwater,” or worth substantially less than the closing price of $47.72 when they were granted in Feb. 27, 2008. Shares closed Thursday at $17.82 per share.

The Associated Press formula is designed to isolate the value the company’s board placed on the executive’s total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don’t include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission, which reflect the size of the accounting charge taken for the executive’s compensation in the previous fiscal year.”

In 2008, shares plummeted to a close of $16.85 from a 2007 close of $53.73. Profit plunged to $292 million from $1.12 billion on a series of charges and medical costs.

“2008 was a challenging year for many companies as a result of the unprecedented economic conditions,” Cigna said, in statement. “Partly as a result of this environment, Cigna’s performance in 2008 did not meet its plans or expectations.

Consistent with its compensation policy, the company said, its top three executives, including Hanway, did not receive a cash performance bonus. Executive officers, along with all salaried employees who are not eligible for overtime, will see base salaries freeze and will have their long-term peformance bonuses cut by 20 percent.

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