Aetna CEO Takes 6 Percent Compensation Cut In 2009

INDIANAPOLIS -- Aetna Inc. gave Chairman and CEO Ronald A. Williams a 6 percent cut in compensation last year, and his total could take another hit if the health insurer misses an earnings goal.

Williams, 60, received 2009 compensation valued at $16.4 million from the Hartford, Conn., insurer, according to an Associated Press analysis of a proxy statement filed Monday afternoon.

That included a salary of $1.1 million that rose less than 1 percent from 2008 and a performance-based cash bonus of $900,000, which was down 54 percent from the previous year.

Williams also received about $209,000 in other compensation, which included $183,182 for the use of company aircraft, something Aetna requires for security.

The company gave Williams stock and options valued at $14.2 million when they were granted. But Williams will receive $4.3 million of that total only if Aetna meets a goal of 8 percent earnings-per-share growth from 2009 to 2010, and the insurer said in a statement that was unlikely.

Spokesman Fred Laberge said the company canceled a similar, $4.3 million payment from Williams' 2008 compensation total because it missed an earnings goal.

Aetna provides health, dental, group life and disability coverage and is the third-largest publicly traded health insurer. Williams has served as chairman and CEO since 2006, and he steered the company through a rough year in 2009.

Aetna struggled with medical costs that rose faster than its pricing and had to reduce its earnings forecast for the year. The insurer also cut more than 1,200 jobs in two rounds of layoffs in November and this past February, blaming the slumping economy and the potential impact of health care reform.

For the full year, Aetna's profit fell 8 percent to $1.28 billion, while its revenue rose 12 percent to about $34.8 billion.

Aetna's stock price climbed 11 percent during the year to close 2009 at $31.70. The Standard & Poor's 500 index rose 23 percent over the same span.

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, making the AP total different in most cases from the total reported by companies to the Securities and Exchange Commission.

Aetna shares fell 62 cents, or nearly 2 percent, to $32.30 in midday trading Tuesday.