SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
AETNA INC.
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(Name of Registrant as Specified In Its Charter)
PROVIDENCE INVESTORS, LLC
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[PROVIDENCE CAPITAL LETTERHEAD]
Providence Capital
April 11, 2002
Mr. John W. Rowe, M.D.
Chairman of the Board
Aetna, Inc.
151 Farmington Avenue
Hartford, Connecticut 06156
Dear Dr. Rowe:
As per the attached press release, Providence Capital is holding a meeting of
Aetna's institutional shareholders to discuss our alternative director nominee
and the reasons behind our solicitation. We would like to extend to you, and
other members of Aetna's senior management team and members of the Board of
Directors an invitation to attend.
Please let me know if there are any takers.
Thank you.
Sincerely yours,
/s/ Herbert A. Denton
Herbert A. Denton
President
Enclosures
PROVIDENCE CAPITAL CALLS MEETING OF AETNA
SHAREHOLDERS
NEW YORK, April 11, 2002 -- Providence Capital, Inc. ("Providence") announced
it will hold a meeting for institutional investors regarding Aetna Inc. (NYSE:
AET). Providence, which has submitted a shareholder-sponsored director nominee
at the upcoming Annual Meeting of Shareholders invited interested shareholders
to attend the session on Wednesday, April 17, 2002 at 11:00 a.m. in New York
City at the Peninsula Hotel - Gramercy Room (700 Fifth Avenue at 55th Street).
Providence also extends an invitation to Aetna's Board and management. For
participants who would like to join the meeting by phone, please register with
Providence at 212-888-3200.
"Since September 2000, we have attempted to persuade Aetna's Board to improve
its low-ranking corporate governance and, specifically, to rescind the
company's 'poison pill'." said Bert Denton, President of Providence Capital.
"We offered to withdraw our director nominee if Aetna would simply put its
'poison pill' up to a binding shareholder vote. Aetna refused. We believe in
the post-Enron environment that Boards and managements of publicly-held
companies, including Aetna, need to be held more accountable to its
shareholders, not less. Providence intends to demonstrate numerous specific
examples of how Aetna has destroyed shareholder wealth through repeated poor
strategic decisions, repeated poor operating performance, repeated excess
executive compensation, repeated poor executive selection, and repeated poor
corporate governance. This is why Aetna's Board needs a shareholder-nominated
watchdog."
Providence is taking r.s.v.p.'s for the meeting at 212-888-3200.
Providence Capital, which is led by President Herbert A. Denton, specializes in
shareholder matters with a mission to realize values independent of the stock
market. For additional information on this subject, please contact Jay Hill,
Providence Capital, Inc., 730 Fifth Avenue, Suite 2102, New York, New York,
10019 Tel: 212-888-3200 Fax: 212-888-3203 or email:
jhill@providencecapitalnyc.com
Providence Capital, Inc. is a member of the National Association of Securities
Dealers, ORD #27928.
Page 1/2
AETNA'S STOCK PRICE RECOVERY ISN'T OVER, FORBES MAGAZINE SAYS
Hartford, Connecticut, April 11 (Bloomberg) -- Aetna Inc.'s share price
has risen more than 74 percent from its lowest level of 2001 and the recovery
is far from over, Forbes Magazine reported, citing fund manager Scott
Schermerhorn.
Aetna, the biggest U.S. health insurer, began focusing solely on insurance
in 2000 after selling its financial services and international units to ING
Groep NV, Forbes said.
Shares of Hartford, Connecticut-based Aetna are undervalued and are likely
to increase in value by 15 percent this year, the magazine said, citing
Schermerhorn.
The average health maintenance organization is valued at $1,100 per member
while Aetna's value is $500 per member and the company could earn 75 cents a
share this year and $2 next year, Forbes said, citing Schermerhorn.
(Forbes 4-29 124)
(For the Web site of Forbes Magazine on the Bloomberg, see FORB [GO].
[BLOOMBERG LETTERHEAD]
April 10, 2002
ELECT ONE INDEPENDENT DIRECTOR TO AETNA'S BOARD
Dear Aetna Inc. Shareholder:
We are writing to ask you to VOTE the "GREEN" PROXY CARD to elect one
independent director, Mr. Lawrence G. Schafran, to Aetna Inc.'s ("Aetna") Board
at Aetna's April 26, 2002 shareholder meeting. We are Providence Investors, LLC
("Providence"), a private investment firm which invests in publicly traded
companies. Providence uses applied corporate governance strategies to improve
shareholder value. As of April 10, 2002, Providence and its affiliates
beneficially owned 16,800 shares of Aetna common stock.
NUMEROUS GOVERNANCE PROVISIONS LIMIT ACCOUNTABILITY . . .
In December 2000, Aetna adopted numerous corporate governance provisions
which insulate Aetna's Board and management from accountability to shareholders.
Shareholders were not offered the choice to vote separately for the following
corporate governance provisions, but only in combination with the sale of the
financial services and international business in order to receive $35.33 per
share in cash:
1. "Poison Pill" or Shareholder Rights Plan;
2. Super-Majority voting required to amend certain bylaws;
3. Classified Board (to be declassified in 2004);
4. No ability for shareholders to call special meetings;
5. No ability for shareholders to act by written consent;
6. Pennsylvania incorporation subject to onerous state anti-takeover law;
PROVIDENCE ASKED AETNA TO ELIMINATE THE "POISON PILL"...
Since September 2000, Providence has urged Aetna to reform its corporate
governance to make the Board and management more accountable to shareholders. On
February 6, 2002, at a meeting with Aetna's Nominating and Corporate Governance
Committee, Providence offered not to run a proxy contest if Aetna would remove
just one of its anti-takeover mechanisms, the "poison pill." Aetna declined.
On March 27, 2000, Providence offered in a letter to Aetna's CEO, Dr. John Rowe,
that we would withdraw our alternative slate if Aetna would put its "poison
pill" to a binding shareholder vote. Aetna declined.
SHAREHOLDERS' BENEFITED LAST TIME THERE WAS TAKEOVER THREAT
Ironically, we note that the last time there was a takeover threat,
Aetna's shareholders benefited handsomely. On February 14, 2000, Aetna closed
at $39 -- an eight year low. On February 24, 2000, Aetna received a confidential
letter from WellPoint Health Networks Inc. and ING America Insurance Holdings,
Inc. inviting negotiations about a business combination with Aetna for $70 per
share. Although the offer to negotiate was rejected, shareholders were
subsequently rewarded with $35.33 in cash and one share in the "New Aetna" that
closed on April 1, 2002 at $38.66. Thus, shareholders enjoyed a greater than 90%
gain in the value of their Aetna shares -- from an eight year low of $39 just
prior to the takeover threat, to $35.33 in cash plus $38.66 per share in the new
Aetna, for a total equaling $73.99 per share by April 1, 2002.
EXCEPTIONAL EXECUTIVE PAY FOR UNEXCEPTIONAL PERFORMANCE
Aetna reported a pre-tax loss(1) of $401 million in 2000 and $299 million
in 2001. Among the twelve competitor companies in the Morgan Stanley Health Care
Payor Index that were listed by Aetna in its proxy statement, Aetna was the only
one with negative operating margin in 2001 and the only one with a negative
return on equity. However, Aetna paid $43,376,540 in CEO compensation in 2000 to
three separate CEO's.
MANAGEMENT'S NOMINEES...
Aetna's nominees for the Board are Ellen M. Hancock, Joseph P. Newhouse and
Judith Rodin. Ms. Hancock, the Aetna nominee whom Providence would replace with
Mr. Schafran, was the CEO that led Exodus Communications while it incurred
billions in debt before filing for bankruptcy in 2001. We believe such a
debacle disqualifies Ms. Hancock from acting as director of Aetna Inc.
VOTE "GREEN" FOR AN INDEPENDENT DIRECTOR ON AETNA'S BOARD!
Vote for greater accountability to shareholders. VOTE "GREEN" FOR
ACCOUNTABILITY! Thank you for your support on this important issue.
Very truly yours,
Herbert A. Denton
President
For additional information, please contact Garland Associates, Inc. Tel:
646-495-3079.
-----------------------------------
(1) Loss before income tax benefit and equity in earnings of affiliates, net.
[PROVIDENCE CAPITAL, INC. LETTERHEAD]
Providence Capital
April 9, 2002
Mr. John W. Rowe, M.D.
Chairman of the Board
Aetna, Inc.
151 Farmington Avenue
Hartford, Connecticut 06156
Re: Aetna's "Poison Pill"
Dear Dr. Rowe:
I have enclosed for your review today's press release from Foostar, Inc. (NYSE:
FTS). The company has modified its "poison pill" to make it more "chewable" and
has agreed to a review of its corporate governance practices. These changes
were a direct result of negotiations conducted between Providence Capital, Inc.
and Foostar, Inc. This serves to demonstrate Providence's disposition to
constructively negotiate with managements on the issue of "poison pill." This
is the fifth rescission or modification of five companies' "poison pills" upon
being engaged by Providence on the issue.
Sincerely yours,
/s/ Herbert A. Denton
Herbert A. Denton
President
[FOOTSTAR LETTERHEAD]
Investor Contact: Kathy Guinnessey Media Contact: Wendi Kopsick
Vice President, Finance Jim Fingeroth
Footstar, Inc. Kekst and Company
(845) 727-6675 (212) 521-4800
FOR IMMEDIATE RELEASE
FOOTSTAR REAFFIRMS COMMITMENT TO
SOUND CORPORATE GOVERNANCE
WEST NYACK, NEW YORK, April 9, 2002 -- Footstar, Inc. (NYSE-FTS) today
announced that it will modify its Shareholder Rights Plan. The Plan was adopted
in March 1999 in order to ensure that all shareholders receive fair and equal
treatment in the event of any proposed takeover of the Company and to protect
the Company's shareholders from abusive takeover tactics. In addition, Footstar
will undertake a review of its corporate governance practices.
Footstar's Plan, unlike almost all other plans, has always had a shareholder
friendly "chewability" feature that permits offers that meet certain objective
criteria, and will be further enhanced. Currently, under the Footstar Plan one
of the criteria for permitted offers is that the potential acquirer must obtain
a fairness opinion from an investment banking firm that its offer is fair to
all shareholders. Under the modification announced today, a potential acquirer
will no longer be required to obtain a fairness opinion if the offer represents
a premium of 35% or more over the price of Footstar's common stock.
After thoughtful consideration, Footstar decided to take these actions with
input from shareholders including Providence Investors. These actions
underscore Footstar's commitment to corporate governance practices that are
forward looking and serve the interests of all shareholders.
Mickey Robinson, Chairman and Chief Executive Officer of Footstar, commented,
"The change announced today is in keeping with the most current corporate
governance practices and is consistent with our objectives of protecting the
interests of all Footstar shareholders and enhancing shareholder value."
Footstar, Inc. is a leading footwear retailer. The Company offers a broad
assortment of branded athletic footwear and apparel through its two athletic
concepts. Footaction and Just For Feet and their websites, www.footaction.com
and www.justforfeet.com, and discount and family footwear through licensed
footwear departments operated by Meldisco, including 2,114 in Kmart stores of
which Kmart has a 49% equity interest. As of March 30, 2002, the Company
operated 484 Footaction stores in 41 states, Puerto Rico, and the U.S. Virgin
Islands, 90 Just For Feet superstores located predominantly in the Southern
half of the country and 6,606 Meldisco licensed footwear departments across the
country.
###
[PROVIDENCE CAPITAL LETTERHEAD]
Providence Capital
April 1, 2002
Mr. John W. Rowe, M.D.
Chairman of the Board
Aetna, Inc.
151 Farmington Avenue
Hartford, Connecticut 06156
Dear Dr. Rowe:
Thank you for your letter of March 29, 2002. I am disappointed that you are not
willing to put the matter of Aetna's "poison pill" up to a shareholder vote in
order to avoid the expense and distraction of a proxy contest.
In as much as you had already graciously afforded us the opportunity to present
and discuss our views on Aetna's "poison pill" to the Nominating and Corporate
Governance Committee and, at that meeting, our views were not persuasive to the
Committee, I am perplexed by your proposal to meet a second time if we elect
not to pursue our proxy solicitation. Given the Board's unyielding position on
Aetna's corporate governance to date, I am sorry to say that your offer simply
does not appear to be genuine.
Without any tangible movement from Aetna with respect to its imposing
anti-takeover defenses, it seems crystal clear that the Board is out of touch
with changes of its owners' attitudes towards accountability. For example, I
have attached today's "Heard on the Street" column from The Wall Street Journal
wherein Aetna's third largest stockholder, TIAA-CREF, expresses their concern
about the combination of a "poison pill" and a staggered board. Therefore, I
believe the best way to cause the Board to reconsider its position on these
matters is Providence's proxy solicitation.
If I have misread the situation please let me know. Thank you.
Sincerely yours,
/s/ Herbert A. Denton
Herbert A. Denton
President
Providence Capital, Inc.
730 Fifth Avenue
New York, New York 10019
Telephone 212.888.3200
Fax 212.888.3203
Providence Capital
March 27, 2002
Mr. John W. Rowe, M.D.
Chairman, President & CEO
Aetna Inc.
151 Farmington Avenue
Hartford, Connecticut 06156
RE: AETNA'S "POISON PILL"
Dear Dr. Rowe:
Over the past few days, we have become aware that Aetna Inc., in anticipation of
a contested election of directors at the 2002 Annual Meeting of Shareholders,
has hired a second proxy solicitation firm, a prominent investment bank and a
prominent law firm.
In as much as our interests relate primarily to Aetna's "poison pill" and in
order to avoid the expense and management distraction of a contested election,
Providence wishes to make the following proposal: if Aetna would agree to put
the issue of its "poison pill" up to a binding shareholder vote, Providence
would agree to withdraw its slate of director nominees. We believe this
proposal represents a fair solution to our differences and would be welcomed by
Aetna's shareholders as being in the best interests of Aetna and Aetna's
shareholders versus a proxy contest.
Please let us know if you find this proposal to have some appeal. Thank you.
Sincerely yours,
/s/ Herbert A. Denton
Herbert A. Denton
President
[PROVIDENCE CAPITAL LETTERHEAD]
PROVIDENCE CAPITAL
January 18, 2002
Mr. John W. Rowe, M.D.
Chairman, President & CEO
Aetna Inc.
151 Farmington Avenue
Hartford, Connecticut 06156
Re: Enron, Management Accountability, and Aetna's Shareholder Unfriendly
Corporate Governance Structure
Dear Mr. Rowe:
As previously communicated, I am writing to remind you that Providence Capital
is considering submitting to Aetna's shareholders an alternative slate of
director nominees to reconstitute Aetna's Board of Directors and corporate
governance practices. As you can imagine, the recent events at Enron
Corporation have inflamed the institutional investor community with respect to
the accountability of management. With Enron's blood in their eyes, these
institutions will demand more independence on boards and fewer
shareholder-unfriendly corporate governance mechanisms including: poison pills,
staggered boards, super majority voting and the inability for shareholders to
call a special meeting or act by written consent.
In light of Aetna's rapidly approaching director nomination deadline, I believe
a discussion of this issue directly with Providence Capital is both timely and
appropriate. Thus, I would be willing to meet with you at your convenience to
fashion a mutually satisfactory resolution of this issue. I look forward to
your response to this offer. In addition, I would be grateful if you would
circulate this letter to the members of your Board.
Thank you.
Sincerely yours,
/s/ Herbert A. Denton
Herbert A. Denton
President
January 9, 2002
Mr. John W. Rowe, M.D.
Chairman of the Board
Aetna, Inc.
151 Farmington Avenue
Hartford, Connecticut 06156
Dear Dr. Rowe:
Thank you for acknowledging and distributing to the Board my earlier
correspondence.
Upon reflection, it seems to me that due to the fundamental business challenges
facing management at this time in turning around Aetna's operations and due to
the size of Aetna's Board, it might be sensible to assign the task of reviewing
Aetna's highly shareholder unfriendly corporate governance structure to the
Nominating and Corporate Governance Committee.
Upon examination, you will find that Aetna's corporate governance would be
ranked "F" on a comparative basis to its S & P 500 peers. Aetna's state of
incorporation, poison pill, staggered Board, supermajority voting, and
prohibition against the shareholders ability to act by written consent or to
call a special meeting all conspire to make Aetna a tempting corporate
governance example.
I note that recent "anti-poison pill" shareholder proposals at Navistar
International and at Toys "R" Us garnered 83% and 88% of the respective votes.
Many shareholders of these two large cap companies are also some of the largest
shareholders of Aetna -- our judgment, more than enough to have elected an
alternative minority slate running on a corporate governance platform. With 66%
of Aetna's shares in the hands of just 20 institutional investors (and 89% held
by institutional investors overall), I believe, particularly in light of Aetna's
continuing operating losses, that a well qualified alternative slate running on
a corporate governance platform could not be easily dismissed by Aetna's Board.
If you wish to discuss any of this further, we would be happy to do so at your
convenience.
Sincerely yours,
Herbert A. Denton
President
[PROVIDENCE CAPITAL LETTERHEAD]
Providence Capital
December 17, 2001
Mr. John W. Rowe, M.D.
Chairman of the Board
Aetna, Inc.
151 Farmington Avenue
Hartford, Connecticut 06156
Dear Dr. Rowe:
As per the attached correspondence to Mr. William H. Donaldson, I challenged
Aetna's Board to reconsider the anti-shareholder corporate governance measures
that were planned for the "new" Aetna, Inc. The Board totally disregarded my
challenge and adopted several measures which disenfranchised Aetna's
shareholders. This is absolutely unacceptable for a company of Aetna's stature.
Therefore, I am considering whether to file proxy materials for Aetna's 2002
Annual Meeting of stockholders in order to reconstitute Aetna's Board of
Directors and corporate governance practices. If I were to proceed, the first
proposal would consist of an alternative slate of director nominees. This
proposal would be followed by certain other proposals to create a Corporate
Governance Committee of the Board and to address specific corporate governance
issues raised in last year's correspondence.
Please feel free to contact me with any questions or responses to the above.
Meanwhile, I would be most grateful if you would circulate this letter to
Aetna's Board of Directors.
Thank you.
Sincerely yours,
/s/ HERBERT A. DENTON
Herbert A. Denton
President
Enclosure
Providence Capital, Inc.
730 Fifth Avenue
New York, New York 10019
Telephone 212.888.3200
Fax 212.888.3203
Providence Capital
September 25, 2000
Mr. William H. Donaldson
Chairman/President/Chief Executive Officer
Aetna, Inc.
151 Farmington Avenue
Hartford, Connecticut 06156
Dear Bill:
"The Company does not have a poison pill, staggered board or similar
anti-takeover devices because it believes that the way to remain
independent is by means of superior performance in building shareholder
wealth."
Excerpt from "Corporate Governance Standards"
Campbell Soup Company
Proxy Statement
I have read Aetna's preliminary proxy materials with dismay. "New Aetna's"
proposed corporate governance contains a number of highly objectionable changes
that disenfranchise shareholders, including, among others, the following:
- No shareholder action by written consent.
- No shareholder ability to call a special meeting.
- Certain by-laws require an 80% super-majority vote.
Frankly, these provisions are disgraceful. Not only are they quite unnecessary
entrenchment devices and not only are they contrary to the policies and
sensibilities of Aetna's institutional investors (78% of shares); they
repudiate the basic principals of corporate democracy: majority rule and, as a
result, are an affront to all shareholders.
You were selected to lead this venerable company out of a self-inflicted
operational morass. I believe you are meant to set the highest standards of
leadership and business principles, not the lowest. Also, your stature in the
investment world demands better than this. Instead, you are setting a terrible
example of lowering the bar for all that follow. As a part of your considerable
personal legacy, how can you face the thought of every schlocky management
pointing to you and Aetna as their justification for chipping away at America's
capitalist system via undemocratic principles? As recognized by no less of an
authority than Delaware law, if 51% of a company's shareholders are motivated
enough to repudiate management by actually signing a written consent, it is
illegal for the Board of Directors to stand in their way.
I believe that, on further reflection, Aetna's accomplished and well-intended
Board will agree with the fundamental truth of Providence's position. Thus, I am
confident that you will immediately address this oversight by amending Aetna's
Schedule 14-A to allow for shareholder written consent; to allow shareholders to
call a special meeting; to remove super-majority voting and professionally
address other areas of Aetna's "shareholder unfriendly" corporate governance
(such as the "poison pill")*.
Sincerely,
/s/ Herbert A. Denton
Herbert A. Denton
President
cc: Board of Directors
* I refer you to Campbell Soup as a model for the best in corporate governance
(i.e., no "poison pill", staggered board, etc.) - please see attached
"Corporate Governance Standards" from Campbell Soup's proxy materials.