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AETNA INC.
(Name of Registrant as Specified in Its Charter)
(Name of Persons Filing Proxy Statement, if Other Than the Registrant)
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The following materials were provided today by Aetna Inc. to Institutional
Shareholder Services in connection with Aetna's Annual Meeting of Shareholders
currently scheduled for April 26, 2002.
Institutional Shareholder Services (ISS)
April 12, 2002
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Aetna
Today's Attendees
John W. Rowe, M.D. - Aetna Inc. Chairman, President and CEO
L. Edward Shaw, Jr. - Aetna Inc. Executive Vice President and General Counsel
Barbara Hackman Franklin - Aetna Inc. Director, President and Chief Executive
Officer of Barbara Franklin Enterprises; Former U.S. Secretary of
Commerce
Ellen M. Hancock - Aetna Inc. Director, former Chairman and CEO, Exodus
Communications, Inc.; former Senior Executive at IBM, National
Semiconductor and Apple Computer
Aetna Inc. April 2002
Aetna
Today's Discussion
[] Introduction
[] Aetna's Businesses and Turnaround Efforts
[] Corporate Governance
[] Board of Directors
[] Closing Remarks
Aetna Inc. April 2002
Aetna
Business Description
[] Health Care (Medical & Dental)
>> Risk
>> Administrative Services (ASC)
[] Group Insurance
>> Life
>> Disability
>> Long-Term Care
[] Large Case Pensions
Aetna Inc. April 2002
Aetna
Aetna's Strengths
Aetna Brand [] Highly regarded
Scale [] Leading provider of medical, dental, and group
insurance benefits
Geographic Breadth [] Presence in all 50 states
Provider Networks [] The largest, with over 510,000 participating
providers
Multi-Product Capability [] Broad spectrum of products and financial
arrangements including Health, Dental, and
Group Insurance products.
Value Added Information [] USQA database, Navigator & InteliHealth
Aetna Inc. April 2002
Aetna
Aetna's Turnaround Efforts
------> [] Reformulate Senior Management Team
Shaping ------> [] Set A Strategic Direction
the New ------> [] Achieve Operational Excellence
Aetna ------> [] Organizing for Success
------> [] Strengthening Our Balance Sheet
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Aetna
Reformulate Senior Management Team
[] Ronald A. Williams - Chief of Health Operations
[] David B. Kelso - Chief of Strategy and Finance
[] L. Edward Shaw, Jr. - General Counsel
[] William C. Popik, M.D. - Chief Medical Officer
[] Wei-Tih Cheng, Ph.D. - Chief Information Officer
[] Alan M. Bennett - Chief Financial Officer
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Aetna
Set A Strategic Direction
[] Growth opportunities in the middle market
[] Disciplined approach to Small Business
[] Wider range of product choices
[] Increase emphasis on Group products
[] Enhance understanding and access to health care
[] Provide information to improve health care quality
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To create a differentiated and sustainable
competitive position.
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Achieve Operational Excellence
Creating Profitable Servicing Customers Profit and Quality
Customers Profitably Vigilance
> Targeted Case > Integrated Medical Cost > Segment Transition/
Actions Plans Transformation
> Underwriting > Contracting Discipline > Market/Product
Enhancements Withdrawals
> Patient Management Model
> Product > Right Size the
Enhancements and > First Claim Operational Business
New Product Development Efficiencies
> Management
Information Tools
Aetna Inc. April 2002
Aetna
Organizing for Success
[] Board of Directors - Active and engaged
[] Office of the Chairman
[] Executive Council
[] Strategy Council
[] Council on Organizational Effectiveness
[] Segment Based Business Units
Aetna Inc. April 2002
Aetna
Strengthening Our Balance Sheet
[] Replaced $1.6B of short term debt with two successful long term
debt placements
[] Replaced an expiring bank line in November
[] Stayed well within our debt to capital targets
[] Generated additional positive cash flow by reducing the time to
collect our premiums
[] Reduced short term debt to $110M at 12/31/01
Aetna Inc. April 2002
Aetna
Aetna's Priorities for 2002
Return to Profitability
Achieve Operational Excellence
Position Aetna for Long-term Success
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Create Shareholder Value
Aetna Inc. April 2002
Aetna
Stock Price Performance Since Spin-Off
[GRAPHIC OF CHART INDICATING STOCK PRICE PERFORMANCE OF AETNA INC. AND S&P 500
SINCE SPIN-OFF -- DATES BETWEEN 12/13/00 AND 03/28/02]
Note: As of 3/28/02; Stock performance in dollars.
Aetna Inc. April 2002
Aetna
1Q02 Stock Price Performance
[GRAPHIC OF CHART INDICATING 1Q02 STOCK PRICE PERFORMANCE OF
AETNA INC. AND S&P 500 -- DATES BETWEEN 12/31/2001 AND 03/28/2002]
Note: As of 3/28/02; Stock performance in dollars.
Aetna Inc. April 2002
Aetna
Corporate Governance
[] Corporate Governance is sound
[] Board is very active and informed
[] Board is overwhelmingly independent
[] Temporary Classified board sunsets in April 2004
[] TIDE shareholder rights plan
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Aetna
Corporate Governance
[] Board consists of an overwhelming majority of independent
directors.
[] Fully independent Nominating and Corporate Governance Committee
periodically reviews corporate governance policies.
[] Corporate Governance carefully reviewed by the Board prior to
the spin-off and aligned with shareholder interests.
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Aetna
Corporate Governance
[] Corporate governance structure generally consistent with former
Aetna
[] Designed to foster shareholder interests, since these features
can assist the Board in protecting those interests, and help
preserve turnaround opportunity for shareholders
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Aetna
Temporary Classified Board
[] Board currently divided into three classes, with one class
elected each year
[] Beginning with 2004 annual meeting, all directors elected
annually
[] Designed to allow for turnaround opportunity without disruption
following spin-off
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Aetna
TIDE Shareholder Rights Plan
[] Shareholder rights plan with 15% trigger threshold (in 1999
former Aetna eliminated ability to lower threshold to 10%)
[] Independent director TIDE review every three years (also put in
place in 1999 by former Aetna)
Aetna Inc. April 2002
Aetna
Corporate Governance
[] Affirmatively opted out of a number of the shareholder
unfriendly provisions of Pennsylvania law, including:
>> Statutory Put Right
>> Control Share Acquisition Law
>> Disgorgement Law
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Aetna
Board is Experienced, Knowledgeable
and Overwhelmingly Independent
[] 10 of 11 directors are independent
[] Diverse group, wealth of experience in Medicine, Health Care,
Insurance, large public corporations.
[] Nominating and Corporate Governance Committee is fully
independent
Aetna Inc. April 2002
Aetna
Board is Very Active and Informed
[] Board met 10 times during 2001
[] Members active and involved
[] Reviews business plans with management regularly
[] Understands what needs to be done
Aetna Inc. April 2002
Aetna
Aetna's Board of Directors
[] Concerned and responsive to shareholder interests
[] Examples:
>> ING/WellPoint and sale to ING and spin-off
>> Relationship with outside auditors
Aetna Inc. April 2002
Aetna
Prior Discussions with Providence
[] Prior to 2000 spinoff - Providence contacted Company regarding
ING/WellPoint and corporate governance structure
[] June 2000 - Providence expresses thanks to Aetna's Board
following announced financial services and international sale
negotiations
[] December 2001/early 2002 - Providence contacts Company
regarding dissatisfaction with Corporate Governance decisions
and intention to nominate competing slate of directors
[] February 2002 - Members of Nominating and Corporate Governance
Committee meet with Providence to consider their views
[] Providence on several occasions reiterates its focus is limited
solely to shareholder rights plan
Aetna Inc. April 2002
Aetna
Providence's Nominee
[] Lacks meaningful experience at large, public companies
[] Lacks healthcare insurance experience
[] Lacks achievement in other relevant areas
[] Does not fit the profile that our Nominating Committee would
look for in director candidates in an open Director search
[] Providence offers no proposals to help with the Company's
turnaround, but does offer the potential to disrupt that
process
[] Current Board aligned with Management on the turnaround design,
and turnaround is at a critical stage
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Aetna
Conclusion
[] Aetna is in the middle of a turnaround
[] Turnaround efforts are successfully underway and at a critical
stage
[] Aetna's corporate governance is appropriate, particularly given
its turnaround strategy
[] Aetna's Board is overwhelmingly independent, active and engaged
[] Aetna's Board and new Management team agree on a new strategy;
we have the right Board to lead the Company
[] Providence focused on single issue; has no meaningful insight
into business or industry
[] If Providence's proxy contest succeeds it would disrupt Board
and could jeopardize our turnaround efforts
[] Shareholders should support the Company's experienced,
independent nominees
Aetna Inc. April 2002
Aetna
Additional Information;
Cautionary Statement
Aetna's 2002 Proxy Statement was filed with the Securities and Exchange
Commission on March 18, 2002 and mailed to Aetna's shareholders on or
about March 20, 2002. Aetna filed additional participant information
with the SEC on April 4, 2002. Aetna's shareholders should read these
materials, and any additional materials that Aetna files with the SEC,
because they contain important information relating to the 2002 Annual
Meeting. In addition, this presentation contains forward-looking
statements, including those regarding Aetna's performance and the
status of its turnaround. These represent management's best view of
these matters, although important risk factors, including unanticipated
increases in medical costs, could cause actual future results to differ
materially from those currently estimated by management. For more
discussion of important factors that could materially affect Aetna,
please see the risk factors discussed on pages 36-41 of Aetna's 2001
Annual Report, Financial Report included with our 2002 Proxy Statement.
Aetna Inc. April 2002
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