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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.    )
 
 
Filed by the Registrant  
                            Filed by a Party other than the Registrant  
Check the appropriate box:
 
   Preliminary Proxy Statement
  
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(E)(2))
   Definitive Proxy Statement
   Definitive Additional Materials
   Soliciting Material Pursuant to
§240.14a-12
Humana Inc.
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
  No fee required.
  Fee paid previously with preliminary materials
  Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11
 
 
 


Table of Contents
LOGO   

Humana Inc.

500 West Main Street

Louisville, Kentucky 40202

 

 

 

LOGO

 

LOGO

 

(Top Photo: Kurt Hilzinger;

Bottom Photo: Bruce Broussard)

  

Dear Fellow Stockholders:

 

We would like to invite you to attend the Annual Meeting of Stockholders of Humana Inc., to be held on Thursday, April 20, 2023, beginning at 9:30 a.m., Eastern Time at the Company’s headquarters, located at 500 West Main Street, 25th Floor Auditorium, in Louisville, Kentucky. The meeting will also be available through an audio-only webcast via the Internet on the Investor Relations section of the Company’s website, www.humana.com. For further information on how to participate in the meeting, please refer to the “Frequently Asked Questions” section within this Proxy Statement.

 

This proxy statement contains information about our Company and the four proposals to be voted upon by stockholders at the meeting. Please give this information your careful attention.

 

This year, we will once again be taking advantage of U.S. Securities and Exchange Commission (SEC) rules that allow us to furnish proxy materials to our stockholders on the Internet. These materials will be available on the Internet on or about March 8, 2023. We continue to believe that Internet delivery of our proxy materials allows us to provide our stockholders with the information they need, while lowering the costs of delivery and reducing the environmental impact of our Annual Meeting.

 

We hope you can attend the meeting. However, even if you are unable to join us, we urge you to still exercise your right as a stockholder and vote by telephone, mail or using the Internet. The vote of every stockholder is important.

 

This proxy statement is being mailed or transmitted on or about March 8, 2023, to our stockholders of record as of February 28, 2023.

 

 

 

2022 Reflections

 

Early in 2022 we made a number of bold commitments – among them, to create $1 billion of additional sustainable value for the enterprise through cost savings, productivity initiatives and value acceleration from previous investments; to return to industry-leading membership growth; and to further advance our CenterWell heath care services capabilities. And we are proud to have delivered on these commitments, achieving compelling 22 percent annual growth in Adjusted earnings per share (EPS)* while exceeding our value creation goals and making meaningful progress in advancing our strategy.

 

Value Creation Goal. We’re a customer-centric Company and our top priority is the health of the people we serve. This past year, thanks to the focus and dedication of our associates, we delivered on our $1 billion value creation goal designed to create the capacity to fund growth and investments in our Medicare Advantage (MA) business and further the expansion of our health care services capabilities. Through this initiative we were able to make substantial investments in our individual MA plans to better meet our members’ needs. Having achieved this goal, we further committed to driving additional stockholder value through ongoing productivity initiatives, leaning into the best practices learned through our value creation efforts to ensure business thrives over the long-term and we deliver leading benefits offerings to our customers.

 

Membership Growth and Value-Based Care. We have a solid track record of achieving above industry MA membership growth, which is supported by our differentiated MA capabilities, including our industry leading value-based care portfolio, our superior clinical quality solutions, and our differentiated customer-centric operations. Fittingly, we’re pleased to be on track to grow individual MA membership by at least 775,000 members in 2023, returning us to an industry-leading position ahead of our initial expectations. Our highly diversified value-based care solutions and locally oriented provider relationship models also set us apart from our competitors. The higher quality and lower costs associated with value-based care creates a virtuous cycle which allows us to invest more in benefits for our members, driving greater retention and growth at or above industry levels. This is reflected in our plan designs where members associated with value-based providers receive over $500 more in plan benefits annually. We believe that value-based models result in better health outcomes for our members and we proudly closed 2022 with 70 percent of our individual MA members engaged in a value-based arrangement with a provider.

 

CenterWell. As we evolve and accelerate our strategy for continued leadership in an industry that is shifting rapidly toward value-based care, we expect our CenterWell healthcare services will be an increasingly important contributor to our long-term growth. Through strategic and disciplined investments, we remain the largest senior focused value-based primary care platform in the United States, closing 2022 with 235 centers, a 14 percent year-over-year increase. In our Home businesses, our goal is to provide members and patients with access to holistic, value-based care in the home. The strength of our core fee for service home health business was evident in 2022, with total same store admissions up 6.3 percent year over year, and our value-based home model now covers approximately 15 percent of our MA members, up from 5 percent coverage in 2021. Our Pharmacy dispensing business also remains strong with industry leading mail order penetration at 38.6 percent for our individual MA members in 2022. The benefits of mail order extend beyond our pharmacy operations, leading to better medication adherence and health outcomes, benefiting our members and health plan.

 

While we take inventory of our 2022 accomplishments, we are excited about the opportunity ahead. We remain resolute in our commitment and in our ability to provide better health outcomes for our members and patients, while also delivering strong returns to our stockholders through our mid-term Adjusted EPS target of $37 in 2025. Looking across our organization, we are more confident than ever in our competitive position and our ability to execute against our strategic goals.

 

     
  

LOGO

Kurt J. Hilzinger

Chairman of the Board

and Stockholder

 

March 8, 2023

 

  

LOGO

 

Bruce D. Broussard

Director, President and Chief Executive Officer

and Stockholder

 

March 8, 2023


Table of Contents

LOGO

Notice of 2023 Annual Meeting of Stockholders

 

 

Time and Date:    9:30 a.m., Eastern Time, on Thursday, April 20, 2023
Location:    Humana Inc. headquarters, located at 500 West Main Street, 25th Floor Auditorium, in Louisville, Kentucky
Agenda:   

1.  Elect the twelve (12) director nominees named in the proxy statement.

 

2.  Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2023.

 

3.  Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.

 

4.  Non-binding advisory vote regarding the frequency of the voting with respect to the compensation of the Company’s Named Executive Officers.

 

5.  Consider any other business properly brought before the meeting.

Record Date:    February 28, 2023. Humana stockholders of record at the close of business on that date will be entitled to vote.
Proxy Voting:   

Your vote is important so that as many Shares as possible will be represented. Please vote by one of the following methods:

 

  BY INTERNET

 

  BY TELEPHONE

 

  BY RETURNING YOUR PROXY CARD (if you elected to receive printed materials)

 

  BY VOTING DURING THE ANNUAL MEETING (for in person attendance only)

 

See instructions on your proxy card or at the voting site (www.proxyvote.com).

By Order of the Board of Directors,

 

 

LOGO

Joseph M. Ruschell

Vice President, Associate General Counsel & Corporate Secretary

March 8, 2023


Table of Contents

Table of Contents

 

 

Proxy Summary     i  
Company Overview     1  
 

 

Proposal One: Election of Directors

   

 

3

 

 

 

Corporate Governance     14  
Environmental, Social and Governance (ESG)     25  
Director Compensation     37  
Stock Ownership Information     40  
Compensation Discussion and Analysis     43  
Organization & Compensation Committee Report     61  
Executive Compensation     62  
Certain Transactions with Management and Others     77  
Audit Committee Report     78  
 

 

Proposal Two: Ratification of Appointment of Independent Registered Public Accounting Firm

 

   

 

80

 

 

 

 

 

Proposal Three: Non-Binding Advisory Vote with Respect to the Compensation of the Company’s Named Executive Officers

 

   

 

81

 

 

 

 

 

Proposal Four: Non-Binding Advisory Vote with Respect to the Frequency of the Voting with Respect to Compensation of the Company’s Named Executive Officers

 

   

 

82

 

 

 

Frequently Asked Questions     84  
Incorporation by Reference     90  
Additional Information     90  
 


Table of Contents

Proxy Summary

 

General Information

 

Meeting:

   2023 Annual Meeting of Stockholders   Place:    Humana Inc. Headquarters

Date:

   Thursday, April 20, 2023      500 West Main Street

Time:

   9:30 a.m., Eastern Time      25th Floor Auditorium

Record Date:

 

   February 28, 2023      Louisville, KY 40202

How to Vote Your Shares

You may vote if you were a stockholder as of the close of business on February 28, 2023.

 

LOGO   

Online

www.proxyvote.com

  LOGO        

By Mail

Complete, sign, date, and return your proxy card

in the envelope provided

LOGO   

By Phone

Call the phone number located on the top

of your proxy card

  LOGO        

During the Meeting

Attend our annual meeting and cast your vote in person

Voting Overview

 

Items of Business

 

  

Board
Recommendation

 

    

 

  

Page     

Reference     

 

 

1.

 

  

 

Elect the twelve (12) director nominees named in the proxy statement.

 

  

 

FOR

 

     3     

 

 

2.

  

Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2023.

 

   FOR      80     

3.

  

Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.

 

   FOR           81     

4.

  

Non-binding advisory vote regarding the frequency of the voting with respect to the compensation of the Company’s Named Executive Officers.

 

   FOR EVERY
YEAR
     82     

5.

 

 

  

Consider any other business properly brought before the meeting.

 

 

       

Board of Directors Nominees

 

     
  Name    Position    Age       First Elected Director  

Kurt J. Hilzinger

  

Chairman of the Board, Independent Director

  

62   

 

07/2003

Bruce D. Broussard

  

Director, President and Chief Executive Officer

  

60   

 

01/2013

Raquel C. Bono, M.D.

  

Independent Director

  

66   

 

09/2020

Frank A. D’Amelio

  

Independent Director

  

65   

 

09/2003

David T. Feinberg, M.D.

  

Independent Director

  

60   

 

03/2022

Wayne A.I. Frederick, M.D.    

  

Independent Director

  

51   

 

02/2020

John W. Garratt

  

Independent Director

  

54   

 

02/2020

Karen W. Katz

  

Independent Director

  

66   

 

09/2019

Marcy S. Klevorn

  

Independent Director

  

63   

 

02/2021

William J. McDonald

  

Independent Director

  

66   

 

10/2007

Jorge S. Mesquita

  

Independent Director

  

61   

 

02/2021

Brad D. Smith

  

Independent Director

  

58   

 

09/2022

 

   
i      

Humana  |  2023 Proxy Statement    Proxy Summary


Table of Contents

Company Overview

 

Headquartered in Louisville, Kentucky, Humana Inc. (NYSE: HUM) is a leading (2022 Fortune #40 ranking) health and well-being company focused on making it easy for people to achieve their best health with clinical excellence through coordinated care. Our strategy integrates care delivery, the member experience, and clinical and consumer insights to encourage engagement, behavior change, proactive clinical outreach and wellness for the millions of people we serve across the country. As of December 31, 2022, we had approximately 17.1 million members in our medical benefit plans, as well as approximately 5.2 million members in our specialty products.

During December 2022, Humana realigned certain of its businesses among its previously reportable segments, Retail, Group and Specialty and Healthcare Services, into two distinct segments: Insurance and CenterWell. In addition to the new segment classifications being utilized to assess performance and allocate resources, we believe this simpler structure will create greater collaboration across the Insurance and CenterWell businesses and will accelerate work that is underway to centralize and integrate operations within the organization.

Our Strategy

We are committed to addressing the most important health needs of our millions of medical and specialty insurance members and health services patients. Our Insurance segment delivers products that aim to provide affordable, high-quality access to medical, dental, hearing, vision, and prescription drug care to our members. Our CenterWell segment delivers health services to customers from a variety of payors, including Humana, in what we consider the most significant areas of influence for managing chronic conditions and total cost of care. These include primary care, home health, and pharmacy solutions. Together these offerings, underpinned by leading data, analytics, clinical quality, and commercial capabilities, enable us to deliver solutions that promote wellness and advance population health.

The core franchise of our business is Medicare Advantage, which is one of the fastest growing and most attractive segments of healthcare. We aim to sustainably grow that business at or above market growth rates. We plan to achieve this attractive growth rate by leveraging several differentiated capabilities in our Insurance segment, including our leadership in value-based care arrangements, our leading clinical quality as evidenced by our consistently high Stars performance, our first-mover advantage in interoperability, data, and analytics solutions, and our award-winning customer experience. We also have an attractive diversification of insurance offerings across product offerings (medical, dental, vision, hearing, prescription drug), and customer segments (Medicare Advantage, Medicaid, and Military). We also realize that in our complex industry effective partnership is required to meet the needs of our diverse customers. We have a proud history of partnering with multiple stakeholders, including our government partners at the Centers for Medicare & Medicaid Services (CMS), distribution and channel partners, care delivery providers, technology companies, and retailers to name just a few.

Our CenterWell segment includes health service offerings of significant scale and scope across primary care, home health, and pharmacy solutions. These businesses deliver healthy revenue, profit, and attractive growth rates that benefit from the overall growth of our Insurance segment. These businesses also expand our addressable market by serving patients from multiple health plans and Original Medicare in addition to Humana health plan members. And most importantly, these businesses enable us to participate directly in the areas of highest influence for successful proactive management of disease progression. As a result, we are able to lower avoidable hospital admissions (and readmissions) and lower inappropriate ER utilization while improving NPS and quality scores relative to competitive benchmarks.

While our businesses have attractive revenue, margin, and growth profiles in their own right, the collection of assets we’ve assembled at meaningful scale position us to create a new kind of integrated care delivery with the power to address our customers’ most significant needs that impede simpler health care and better health by (i) making care more predictable, understandable, and affordable, (ii) addressing medical, behavioral, and social needs, and (iii) delivering care whenever and wherever our customers need it. We understand that health care is complicated and navigating the system can be a confusing and daunting task. This is particularly true for vulnerable populations, which tend to over index in the markets we serve. That is one of the principal reasons why Humana continues to enhance its integrated care delivery strategy in key areas to enable a better and more seamless locally delivered health care experience for our members.

We also understand we operate in an increasingly competitive environment, and as such, we are continually focused on better understanding and addressing the unmet needs that matter the most to our customers. We call this delivering “human care.” Human care separates Humana from other traditional healthcare companies, demonstrating that our approach is more caring, personalized, and simple. We do this by (i) listening to our customers, (ii) establishing strong partnerships with trusted individuals who are involved in their care, such as providers and caregivers, (iii) developing technologies and other solutions that offer convenient and easy ways for them to engage with their health, and (iv) leveraging data, analytics, and digital solutions to improve how they engage and interact with us.

Finally, we aim to be responsible stewards of capital with leading return on invested capital (ROIC) driven by sustainable organic growth and strategic M&A. We also plan to continue to innovate with our government partners to advance the Medicare Advantage and Medicaid programs to deliver great outcomes for our members and patients and great value to the taxpayer in one of the finest examples of public/private partnership in the country. And last, and most fundamental to our strategy, is the continual focus on nurturing the culture of the Company and engagement of our associates, which power all of our efforts to deliver the best health and simplest experience possible for the members and patients we are privileged to serve.

 

     

Company Overview    2023 Proxy Statement  |  Humana

 

    1


Table of Contents

 

LOGO

Our Performance

Our 2022 financial results reflect strong core performance.

 

   

We reported diluted earnings per common share (EPS) of $22.08 on a Generally Accepted Accounting Principles (GAAP) basis and Adjusted EPS of $25.24.*

 

   

We returned approximately $2.5 billion to our stockholders in the form of dividends and stock repurchases,** with our dividend continuing to increase year-over-year.

 

Stockholder Dividends

 

 

  

Cumulative Total Shareholder Return (TSR)

 

LOGO

 

 

 

* 

Please refer to section entitled “Organization & Compensation Committee Report” in this proxy statement for a reconciliation of non-GAAP to GAAP financial measures. We encourage each stockholder to read the full financial analysis for year ended December 31, 2022 contained in our Annual Report on Form 10-K, filed with the SEC on February 16, 2023.

**

Stock repurchases includes $96 million in connection with employee stock plans.

 

     
2    

Humana  |  2023 Proxy Statement    Company Overview

 


Table of Contents

Proposal One

Election of Directors

 

The Board of Directors of the Company, in accordance with the provisions of the Company’s Articles of Incorporation and Bylaws, has determined that the number of directors to be elected at the Annual Meeting of the Company shall be twelve (12). The directors are elected to hold office until the Annual Meeting of Stockholders in 2024 and until a qualified successor is elected.

Each of the nominees has consented to be named as a nominee and agreed to serve if elected. If any nominee becomes unable to serve for any reason (which is not anticipated), the Shares represented by the proxy granted to Messrs. Hilzinger and Broussard may be voted for the substituted nominee as may be designated by the Board of Directors.

The following table shows certain information concerning the nominees at March 1, 2023.

 

Name

    Age         Position

First Elected

Director

Kurt J. Hilzinger

62

Chairman of the Board, Independent Director

07/2003

Bruce D. Broussard

60

Director, President and Chief Executive Officer

01/2013

Raquel C. Bono, M.D.

66

Independent Director

09/2020

Frank A. D’Amelio

65

Independent Director

09/2003

David T. Feinberg, M.D.

60

Independent Director

03/2022

Wayne A.I. Frederick, M.D.

51

Independent Director

02/2020

John W. Garratt

54

Independent Director

02/2020

Karen W. Katz

66

Independent Director

09/2019

Marcy S. Klevorn

63

Independent Director

02/2021

William J. McDonald

66

Independent Director

10/2007

Jorge S. Mesquita

61

Independent Director

02/2021

Brad D. Smith

58

Independent Director

09/2022

Vote Required and Recommendation of the Board of Directors

A director nominee will be elected if the number of votes cast for the nominee exceeds the number of votes cast against the nominee. Shares not present at the Annual Meeting and Shares voting “abstain” or broker non-votes have no effect on the election of directors. Under the Company’s Majority Vote Policy, following election to our Board of Directors, a director is required to submit his or her irrevocable resignation to our Board of Directors, conditioned upon (i) the director not achieving the requisite stockholder vote at any future meeting at which they face re-election, and (ii) acceptance of the resignation by the Board of Directors following that election. The Board of Directors has 90 days to determine whether or not to accept the director’s resignation and to report this information to our stockholders.

FOR THE REASONS STATED HEREIN, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ALL NOMINEES.

 

     

Proposal One    2023 Proxy Statement  |  Humana

 

    3


Table of Contents

Director Attributes and Qualifications

The Nominating, Governance & Sustainability Committee (“Committee”) regularly assesses the skills and experiences necessary to ensure that the Board has appropriate skill composition to oversee the Company’s long-term business strategy, operations, and risks. The Committee recognizes that our Board should represent a diverse group of individuals who bring a range of experience, skills and other attributes to their individual role on the Board and to the Board as a collective group. On an annual basis, the Committee assesses each Board candidate to determine whether to recommend currently serving directors for reelection to the Board and whether to recommend candidates for initial election to the Board. In assessing a director nominee, the Committee considers the appropriate balance of experience, skills and other qualifications required for service on our Board, including (i) core attributes that are expected of our directors, and (ii) specific skills, experience or qualifications most closely aligned to our strategic priorities that should be represented collectively on our Board.

 

Core Director Attributes       Substantive Areas of Expertise

 

LOGO

   Independent under our Guidelines, as well as meeting the independence requirements of, as applicable, the NYSE, SEC, IRS;   

 

LOGO

   Public company CEO, CFO or COO experience;
LOGO    External public company board service is limited (maximum of three);   

LOGO

   Financial oversight (including capital markets experience);
LOGO    Risk oversight ability with respect to the particular skills of the individual director;   

LOGO

   Corporate governance (including Board of Directors experience, sustainability, and environmental, social and related-governance (ESG));
LOGO    Understanding of and experience with complex public companies or like organizations;   

LOGO

   Health care industry experience (including clinical practice);
LOGO    Standing and reputation in the individual’s field;   

LOGO

   Information technology and digital innovation; data privacy; and cybersecurity;
LOGO    Ability to work collegially and collaboratively with other directors and our management team;   

LOGO

   Marketing and consumer insights (including product design and growth models);
LOGO    High integrity and ethical standards; and   

LOGO

   Government relations, public policy and regulatory experience; and
LOGO    A commitment to diversity, equity and inclusion (DEI).    LOGO    Strategy development.

The Committee further assesses each director nominee’s ability to devote sufficient time and effort to his or her duties as a director, his or her willingness to consider all strategic proposals, and any core competencies or technical expertise necessary to staff Board committees. This annual assessment may also incorporate responses, as appropriate, from the Board’s annual individual self-evaluations. More information about the Board self-evaluation process can be found in the section entitled “Board Evaluation Process.” The director nominee analysis also helps to determine whether a nominee would meet the criteria for independence set forth in the Guidelines established by the Board and in accordance with independence requirements of the NYSE and the SEC.

The following matrix summarizes the most significant skills, attributes and experiences represented on our diverse, knowledgeable and experienced Board. More information about each director can be found in the section entitled “Director Nominee Biographies.”

 

                       
  LOGO LOGO LOGO LOGO LOGO LOGO LOGO LOGO LOGO LOGO LOGO LOGO
                       
Public Company CEO, CFO,
or COO Experience
                       
Financial Oversight
                       
Corporate Governance
                       

Healthcare Industry

Experience

                       
IT/Digital; Data Privacy; Cyber
                       

Marketing/Consumer

Insights

                       

Government Relations/

Public Policy

                       
Strategy Development
                       
Risk Assessment
                       
Sustainability/ESG

 

     
4    

Humana  |  2023 Proxy Statement    Proposal One

 


Table of Contents

Board Composition and Refreshment

The Committee and the Board follow a thoughtful refreshment process to ensure the Board composition best reflects the most appropriate mix of skills and experiences to perform strong oversight of the Company’s strategic priorities. The Committee and the Board strive to maintain a balance of tenure on the Board. Longer-serving directors bring valuable experience and a deep understanding of our complex business and industry, along with a historical perspective of our long-term successes, challenges and business cycles, and how these past experiences may inform our current strategy. Newer directors are also critical to the advancement of our strategy, bringing new skills and experiences and contributing fresh perspectives. The Board has established a policy that non-employee directors must retire at the first annual meeting following his or her seventy-third birthday. To encourage director refreshment, there are no exemptions or conditions in this policy.

As further shown below, our Board has undergone significant refreshment in recent years. Since January 2017, ten new directors have been appointed to our Board. Eight of those directors are standing for election this year, all of whom are independent and joined the Board since 2019, deepening the Board’s C-Suite experience, financial expertise, healthcare industry experience, technology expertise, consumer perspective, and public policy expertise while also building on the Board’s focus on diversity.

 

LOGO

Regarding diversity, our Company and our Board actively promote and foster a culture of inclusion and diversity to enable an environment where the unique characteristics, backgrounds and beliefs of our teammates can drive the groundbreaking, strategic thinking that gives our Company its competitive edge in a diverse marketplace.

Our Board does not establish specific goals with respect to diversity; rather, the Board’s diversity is a consideration in the overall director nomination process and is a component of the overall assessment of the Board’s composition and effectiveness. Under the Nominating, Governance & Sustainability Committee Charter, the Board has further committed to include, and require any third-party search firm that it engages to include, candidates with diversity of race, ethnicity and gender in the slate of candidates considered by the Committee and/or the Board for nomination to the Board.

The illustrations below depict independence, age, tenure and diversity represented in the current composition of our director nominees.

 

         
Director Independence   Director Age Distribution   Board Tenure
   

 

92%

 

 

61

Years

 

 

6.85

Years

Average director tenure

 

67%

Of directors have served < 5 years

 

33%

Of directors have served 10+ years

 

Of our directors are independent

(11 of 12 directors)

 

Average age of director nominees

(Age Range: 51 – 66)

     

 

Gender Representation

 

 

Race/Ethnicity Representation

 

25%

 

 

17%

Of our directors are women

(3 of 12 directors)

 

Of our directors are racially and/or ethnically diverse

(2 of 12 directors)

 

(Based on service as of March 1, 2023)

         

 

 

     

Proposal One    2023 Proxy Statement  |  Humana

 

    5


Table of Contents

Identifying Nominees for Directors

The Board has delegated an established screening process for director nominees to the Nominating, Governance & Sustainability Committee, with counsel from our Chairman, our Chief Executive Officer, and outside consultants as appropriate. The goal of the screening process is to assemble a group of potential board members with deep, varied experience, sound judgment, and commitment to the Company’s success.

The Committee receives notice of potential candidates through any of the following avenues: (i) Board self-identification; (ii) third-party recommendations; and (iii) stockholder nominations. While director nominees may be presented to the Board for consideration by the Committee through any of these methods, the Board is ultimately responsible for assessing the needs of the Board, appointing candidates to the Board, and nominating candidates for election by our stockholders at our annual meeting. Once the Committee has compiled its group of suitable candidates and conducted appropriate diligence, it then meets with the Board to review the candidates for further consideration.

Board Self-Identification. The Committee regularly assesses the appropriate size of the Board, the areas of expertise required to effectively contribute to the Board process, and whether any vacancies are anticipated. It also annually assesses the director qualification criteria to ensure the Board has appropriate skill composition aimed at the Company’s long-term business strategy, operations, risks, thought and perspective. As a result, the Committee may recommend to the Board a need for an additional director, Board refreshment for certain requisite skills and qualifications, and/or suggest the replacement of an existing director for other credible reasons.

Third-Party Recommendations. From time to time, the Committee engages a professional third-party search firm to assist the Board of Directors and the Committee in identifying and recruiting candidates for Board membership.

Stockholder Nominees. The policy of the Committee is to consider properly submitted stockholder nominations for candidates for membership on the Board as described above under “Identifying Nominees for Directors.” Stockholder nominations for election to the Board of Directors are governed by specific provisions in our Bylaws, a copy of which is available on our website at www.humana.com. From the www.humana.com website, click on “Investor Relations,” and then click on “Corporate Governance,” and then click on the link entitled, “Bylaws.” The Bylaws require that a stockholder provide written notice of intent to nominate a candidate for director no less than 90 days or more than 120 days prior to the first anniversary of the preceding year’s Annual Meeting of Stockholders. Any stockholder nominations proposed for consideration by the Committee should include, among other information required by the Bylaws, the nominee’s name, qualifications for Board membership and compliance with our Director Resignation Policy discussed in this proxy statement and should be sent to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202.

Board of Directors Nominee Determination

At the recommendation of the Nominating, Governance & Sustainability Committee, the Board has nominated twelve (12) individuals for this year’s election. The Board believes that each director nominee possesses and demonstrates the character, integrity, independence, business judgment and all other requisite skills, qualifications and attributes necessary to effectively (i) act in the best interests of the Company and its stockholders and (ii) exercise active and independent oversight of the of the Company’s management team, business affairs and assets. As a group, the director nominees’ create a diverse, knowledgeable and experienced Board with strong executive experience; financial expertise; knowledge and experience in healthcare; expertise in information systems; protection and digital innovation; and consumer orientation necessary to oversee the Company’s business and the execution of our strategy.

We believe that the current Board members have a deep commitment to the Company’s success, as evidenced by the key qualifications, skills, experiences and diversity of backgrounds of each director described below. The information given in this proxy statement concerning the nominees is based upon statements made or confirmed to the Company by or on behalf of the nominees.

 

     
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Director Nominee Biographies

 

 

Kurt J. Hilzinger

   

 

Age 62    Director since 2003

          
 

LOGO

Chairman of the Board

Independent Director

 

 

    

 

Kurt J. Hilzinger was initially elected to the Board in July 2003, and was elected Chairman of the Board effective January 1, 2014. Mr. Hilzinger served as Lead Director from August 2010 until his appointment as Chairman. Mr. Hilzinger is a Partner at Court Square Capital Partners, an independent private equity firm, having held this position since November 2007. At Court Square, Mr. Hilzinger focuses principally on investments in the healthcare industry. Prior to that, he was a Director of AmerisourceBergen Corporation from March 2004 to November 2007; having previously served as President and Chief Operating Officer of AmerisourceBergen Corporation from October 2002 to November 2007, and as Executive Vice President and Chief Operating Officer from August 2001 to October 2002. Mr. Hilzinger also serves on the Board of Directors of Outlook Therapeutics, Inc. and several privately held companies.

 

Committees

 

 

  Executive

     
   

 

The Board believes that Mr. Hilzinger is a strong operating executive with a finance and strategic background, whose operational experience and financial expertise in the health care sector contributes valuable insight to the Board.

 

 
     
     

 

Bruce D. Broussard

   

 

Age 60    Director since 2013

          
 

LOGO

Director, President and

Chief Executive Officer

 

    

 

Bruce D. Broussard, President and CEO, joined Humana in 2011. Under his leadership, Humana has created an integrated care delivery model centered on improving health outcomes, driving lower costs, enhancing quality, and providing a simple and personalized member experience. With its holistic, human care approach, Humana is dedicated to improving the health of the communities it serves by making it easier for people to achieve their best health.

 

Bruce brings to Humana a wide range of executive leadership experience in publicly traded and private organizations within a variety of healthcare sectors, including oncology, pharmaceuticals, assisted living/senior housing, home care, physician practice management, surgical centers and dental networks. Prior to joining Humana, Bruce was Chief Executive Officer of McKesson Specialty/US Oncology, Inc. US Oncology was purchased by McKesson in December 2010. At US Oncology, Bruce served in a number of senior executive roles, including Chief Financial Officer, President, Chief Executive Officer and Chairman of the Board.

 

Bruce plays a leadership role in key business advocacy organizations such as the Business Roundtable, the Business Council, and the American Heart Association CEO Roundtable. He is a member of the Board of Directors of HP Inc. and is a member and previous chair of America’s Health Insurance Plans (AHIP). Additionally, Bruce serves on the Board of the Trust for the National Mall, a nonprofit philanthropic partner of the National Park Service dedicated to restoring and preserving the National Mall.

 

 

Committees

 

 

 

 

  Executive

 

 
   

    

 

 

 
   

 

The Board believes that Mr. Broussard’s wide range of executive leadership experience in publicly traded and private organizations within a variety of healthcare sectors, including oncology, pharmaceuticals, assisted living/senior housing, home care, physician practice management, surgical centers, and dental networks, as well as his in-depth knowledge of the Company’s operations, finances and strategy, brings valuable insight to the Board.

 

 
     

 

     

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Raquel C. Bono, M.D.

 

   

 

Age 66    Director since 2020

 

   

LOGO        

Independent Director

 

 

    

 

 

 

Raquel C. Bono, M.D., was initially elected to the Board in September 2020. She is a Principal at RCB Consulting having held this position since October 2019, as well as, Chief Health Officer at Viking having held this position since November 2020. Dr. Bono, a board-certified trauma surgeon and retired Vice Admiral, U.S. Navy Medical Corps, previously served as the Chief Executive Officer and Director for the Defense Health Agency (DHA). In this capacity, Dr. Bono led a joint, integrated combat support agency that enables all branches of the U.S. military medical services to provide health care services to combatant commands in times of both peace and war. Dr. Bono integrated an unprecedented $50 billion worldwide health care enterprise for the Army, Navy, Air Force, and Marine Corps, composed of 50 hospitals and 300 clinics that provide care to 9.5 million military personnel, oversaw the Department of Defense deployment of the electronic health record, and facilitated the collaboration between the largest federated health systems of the Department of Defense and Department of Veterans Affairs (VA). An American College of Surgeons (ACS) Fellow since 1991, Dr. Bono served on the ACS Board of Governors and the Governors Health Policy and Advocacy Workgroup. She has been honored with the Defense Distinguished Service Medal, three Defense Superior Service Medals, four Legion of Merit Medals, two Meritorious Service Medals, and two Navy and Marine Corps Commendation medals. Dr. Bono also serves on the Board of Alcon, Inc.

 

 

Committees

  Audit

  Technology

 

 
             
   

 

The Board believes that Dr. Bono’s decorated military service and distinguished and successful career in trauma surgery and healthcare administration bring an important perspective to Humana’s Board and further contribute to its strategic composition. Dr. Bono’s extensive operational expertise and discipline in managing and advancing healthcare delivery systems will be vital as the Company continues to evolve its clinical and care delivery strategies.

 

 
     

 

 

Frank A. D’Amelio

   

 

Age 65    Director since 2003

   

LOGO       

Independent Director

 

 

    

 

 

 

Frank A. D’Amelio was initially elected to the Board in September 2003. Mr. D’Amelio was formerly Executive Vice President, Chief Financial Officer at Pfizer Inc. having held this position from January 2022 until May 2022. Mr. D’Amelio began his career at Pfizer in 2007 and since then has held various roles of increasing responsibility, including, SVP & Chief Financial Officer (September 2007-December 2010), Executive Vice President, Business Operations and Chief Financial Officer (January 2011-October 2018) and Chief Financial Officer and Executive Vice President, Global Supply (November 2018-December 2021). Prior to that, Mr. D’Amelio was Senior Executive Vice President of Integration and Chief Administrative Officer at Alcatel-Lucent from December 2006 to August 2007, and Chief Operating Officer of Lucent Technologies Inc. from February 2006 to November 2006. From May 2001 until January 2006, he was Executive Vice President, Administration and Chief Financial Officer of Lucent. Mr. D’Amelio also serves on the Board of Directors of Zoetis, Inc. and on the Board of Directors of Hewlett Packard Enterprises.

 

  

 

Committees

 

 

  Audit (Chair)

  Nominating, Governance & Sustainability

 

 
 
             
   

 

The Board believes that Mr. D’Amelio’s skills, global experience and proven leadership in both financial and operational roles contribute greatly to the Board’s composition. As a senior executive at various global companies undergoing the kind of rapid and complex changes that the Company has undertaken in response to the rapidly changing markets and regulatory environment, Mr. D’Amelio has extensive knowledge of the capital markets as well as broad experience working with the investment community, regulatory bodies and rating agencies.

 

 
     

 

     
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David T. Feinberg,
M.D.

 

   

 

Age 60    Director since 2022

 

      

 

 

LOGO

Independent Director

 

    

 

 

 

David T. Feinberg, M.D., was initially elected to the Board in March 2022. Dr. Feinberg is Chairman of Oracle Health, where he is committed to making healthcare more accessible, affordable, and equitable. His work advances thought leadership and strategy related to unleashing the healing power of data through an open and connected healthcare ecosystem. Previously, Dr. Feinberg served as President and Chief Executive Officer and member of the Board of Directors of Cerner Corporation (Cerner), which is now Oracle Health. In that role Dr. Feinberg focused on delivering tools and technology to help caregivers optimize the health of their patients and communities.

 

Dr. Feinberg joined Cerner from Google, where he held the position of Vice President of Google Health since 2019 and led Google’s worldwide health efforts, bringing together groups from across Google and Alphabet that used artificial intelligence, product expertise and hardware to tackle some of healthcare’s biggest challenges, and was responsible for organizing and innovating Google’s various healthcare initiatives. Prior to Google, he served as President and CEO of Geisinger Health where he led an operational turnaround, and pushed the use of new platforms and tools, including an IT system called a Unified Data Architecture that allowed the company to integrate big data into existing data analytics and management systems. During his Geisinger tenure, Dr. Feinberg also introduced programs and services to put a greater focus on precision medicine and better patient care. Prior to Geisinger, Dr. Feinberg worked at UCLA for more than 20 years and served in a number of leadership roles, including President, CEO and Associate Vice Chancellor of UCLA Health Sciences, Vice Chancellor and CEO for the UCLA Hospital System, and CEO of UCLA’s Ronald Reagan Medical Center.

 

Dr. Feinberg earned his undergraduate degree at the University of California, Berkeley. He graduated with distinction from the University of Health Sciences/Chicago Medical School. He completed an internship in pediatrics at Loyola University Medical Center, and residency and fellowship training in psychiatry, addiction psychiatry, and child and adolescent psychiatry at the UCLA School of Medicine. He earned a Master of Business Administration from Pepperdine University. Dr. Feinberg is a member of the Alpha Omega Alpha Medical Honor Society, a Distinguished Fellow of American Psychiatric Association and received the Cancro Academic Leadership Award from the American Academy of Child & Adolescent Psychiatry. Dr. Feinberg also serves on the Board of Directors of Douglas Emmett Inc.

 

 

Committees

 

 

 

 

  No Current Committees

 

 

 

   
   
 
             
   

 

The Board believes that Dr. Feinberg’s experience leading healthcare organizations focused on leveraging technology and digital innovation to improve clinical care, including public and private companies, brings valuable insights to the Board and further contribute to its strategic composition. Dr. Feinberg’s clinical background, patient-centric mindset, operating experience, and expertise in guiding systems transformations qualify him to offer key perspectives as the Company continues to advance the integration of its clinical systems and care models to improve the customer experience and reduce costs.

 

 
     

 

     

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Wayne A. I. Frederick,
M.D.

   

 

Age 51    Director since 2020

      

 

 

LOGO

Independent Director

 

 

    

 

 

 

Wayne A. I. Frederick, M.D., was initially elected to the Board in February 2020. He is the President of Howard University, having held this position since July 2014. Prior to that Dr. Frederick served as Howard University’s Interim President (elected October 2013) after serving as Provost and Chief Academic Officer for more than a year. Following his post-doctoral research and surgical oncology fellowships at the University of Texas MD Anderson Cancer Center, Dr. Frederick began his academic career as Associate Director of the Cancer Center at the University of Connecticut. Upon his return to Howard University, his academic positions included Associate Dean in the College of Medicine, Division Chief in the Department of Surgery, Director of the Cancer Center and Deputy Provost for Health Sciences. He also earned a Master of Business Administration degree from Howard University’s School of Business in 2011. Dr. Frederick continues to operate and lectures to the medical students and residents of Howard University’s College of Medicine. Dr. Frederick is a fellow of the American College of Surgeons (ACS) and belongs to numerous surgical and medical organizations, including, the ACS’ Academy of Master Surgeon Educators, the American Surgical Association and the National Academy of Medicine. Dr. Frederick also serves on the Board of Directors of Agostini Limited, Insulet Corporation, Workday, Inc. and Mutual of America Life Insurance Co.

 

Committees

 

 

  Organization & Compensation

  Technology

 

 

 
             
   

 

The Board believes that Dr. Frederick’s exemplary career as a leader in medical research, healthcare academics and business administration brings valuable insights to the Board to assist in the advancement of its strategic healthcare goals. Dr. Frederick’s extensive healthcare and disease management background will be instrumental to our company’s relationships with our members and our physician partners, as Humana continues to innovate in the area of health data analytics.

 

 
     

 

 

John W. Garratt

   

 

Age 54    Director since 2020

      

 

 

LOGO

Independent Director

 

    

 

 

 

John W. Garratt was initially elected to the Board in February 2020. He is the President and Chief Financial Officer of Dollar General Corporation, having held this position since September 1, 2022. Mr. Garratt joined Dollar General in October 2014 as Senior Vice President, Finance & Strategy and subsequently served as Interim Chief Financial Officer from July 2015 to December 2015 and most recently served as Executive Vice President and Chief Financial Officer from December 2015 to September 1, 2022. Prior to joining Dollar General, Mr. Garratt held various positions of increasing responsibility with Yum! Brands, Inc., one of the world’s largest restaurant companies, between May 2004 and October 2014, holding leadership positions in corporate strategy and financial planning. Mr. Garratt served as Vice President, Finance and Division Controller for the KFC division and earlier for the Pizza Hut division and for Yum Restaurants International between October 2013 and October 2014. Mr. Garratt also served as the Senior Director, Yum Corporate Strategy, from March 2010 to October 2013, reporting directly to the corporate Chief Financial Officer and leading corporate strategy as well as driving key cross-divisional initiatives. Mr. Garratt served in various other financial positions at Yum from May 2004 to March 2010. Prior to his career at Yum! Brands, Mr. Garratt served as Plant Controller for Alcoa Inc. between April 2002 and May 2004, and held various financial management positions at General Electric from March 1999 to April 2002. He began his career in May 1990 at Alcoa, where he served for approximately nine years. Mr. Garratt also serves as a Class B Director of the Federal Reserve Bank of Atlanta.

 

 

Committees

 

 

  Investment (Chair)

  Audit

 

 

 
 
   

 

       

 
   

 

The Board believes that Mr. Garratt’s substantial executive leadership at large public companies, combined with his extensive experience in key areas of finance, accounting, strategic planning and business analytics, supplement existing expertise essential to the Board‘s oversight function as Humana continues to evolve its population health and care delivery strategies. Mr. Garratt’s contributions to organizations across varied consumer-based industries further qualifies him to offer key perspectives as the Company enhances products and capabilities for our members.

 

 
     

 

     
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Karen W. Katz

   

 

Age 66    Director since 2019

      

 

 

 

LOGO

Independent Director

 

 

    

 

 

 

Karen W. Katz was initially elected to the Board in September 2019. Ms. Katz was most recently the interim CEO of Intermix, LLC from June 2022 to December 2022. Prior to Intermix, Ms. Katz served as the President and CEO of Neiman Marcus Group LTD LLC from 2010 to February 2018. Neiman Marcus Group is an international multibrand omni-channel retailer whose portfolio of brands includes Neiman Marcus, Bergdorf Goodman and MyTheresa. Having joined Neiman Marcus in 1985, Ms. Katz served in key executive and leadership roles in the company’s merchant, stores and eCommerce organizations as Executive Vice President—Stores, a member of the Office of the Chairman of Neiman Marcus Group, and President, Neiman Marcus Online, and President and CEO, Neiman Marcus Stores. Ms. Katz currently serves on the Board of Directors of Under Armour, Inc. and The RealReal, Inc.

 

 

Committees

 

 

  Nominating, Governance
& Sustainability

  Technology

   

 

       

 
   

 

The Board believes that Ms. Katz is an extremely accomplished executive with deep experience and a demonstrated commitment to understanding, and meeting, the needs of customers by maintaining a personalized experience enabled by digital transformation. She brings a holistic approach to customer service, including acumen for employing technology to advance service delivery, combined with demonstrated success in growing business through forward thinking leadership, providing valuable perspective and expertise to the Board.

 

 
     

 

 

Marcy S. Klevorn

   

 

Age 63    Director since 2021

      

 

 

LOGO

Independent Director

 

 

    

 

 

 

Marcy S. Klevorn was initially elected to the Board in February 2021. Ms. Klevorn was formerly the Chief Transformation Officer of Ford Motor Company (Ford) from May 2019 until her retirement in October 2019. In this role, she accelerated the company’s transformation by helping to refine its corporate governance systems, facilitate faster adoption of agile teams across the business and ensure process improvements across the enterprise. She also facilitated strategic partnerships with key technology partners and supported the company’s diversity efforts. Having joined Ford Motor Company in 1983, Ms. Klevorn served in key executive and leadership roles within the company’s information technology organization including Director of the Office of the Chief Information Officer and Group Vice President of Information Technology. Ms. Klevorn also served as Executive Vice President and President of Ford Smart Mobility LLC, a division of Ford Motor Company, where she oversaw certain acquisitions and other investments and helped to accelerate the company’s plans to design, build, grow and invest in emerging mobility services and global data insight and analytics. Ms. Klevorn currently serves on the Board of Directors of Northern Trust Corporation.

 

 

Committees

 

 

  Technology (Chair)

 
             
   

 

The Board believes that Ms. Klevorn’s extensive executive experience and leadership in digital innovation and systems transformation brings valuable insights to the Board as the Company continues to enhance its technology-driven platforms for members and providers. Ms. Klevorn’s deep understanding of information technology, cyber security, and systems management and infrastructure, combined with her proven ability to connect systems to strategy execution qualify her to provide key insights in the Company’s consumer-focused approach to care.

 

 
     

 

     

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William J. McDonald

   

 

Age 66    Director since 2007

      

 

 

LOGO

Independent Director

 

 

    

 

 

 

William J. McDonald was initially elected to the Board in October 2007. Mr. McDonald is the managing partner of Wild Irishman Advisory, LLC, a marketing consulting firm. Prior to that, McDonald was Executive Vice President, Brand Management of Capital One Financial Corporation, having held that position from 1998 until his retirement in 2013. Prior to joining Capital One, he served as chief marketing officer for Boston Chicken, Inc. Previously, he was chief marketing officer for KFC and also served in marketing and branding leadership roles for Pizza Hut and PepsiCo. Mr. McDonald also serves on the advisory board of The University of Texas at Austin Longhorn Family Leadership Council.

 

 

Committees

 

 

  Audit

  Investment

   

 

       

 
   

 

The Board believes that Mr. McDonald’s service in various senior executive marketing positions contributes significant experience and expertise in brand development, marketing and related disciplines.

 

 
     

 

 

Jorge S. Mesquita

   

 

Age 61    Director since 2021

      

 

 

LOGO

Independent Director

 

 

    

 

 

 

Jorge S. Mesquita was initially elected to the Board in February 2021. Mr. Mesquita was formerly Chief Executive Officer of BlueTriton Brands from July 2021 until March 2022. In this role Mr. Mesquita led the company’s initiatives to expand market leadership, advance commitment to sustainability and environmental stewardship and to realize the potential of the company’s portfolio of water brands.

 

Prior to joining BlueTriton Brands, Mr. Mesquita was formerly the Executive Vice President, Worldwide Chairman, Consumer of Johnson & Johnson (J&J) from December 2014 until February 2019, where he was responsible for increasing the competitiveness of J&J’s consumer business through a comprehensive transformational strategy. In this role, Mr. Mesquita served on J&J’s Executive Committee and led the Consumer Group Operating Committee. Prior to that, Mr. Mesquita spent 29 years with The Procter & Gamble Company (P&G), where he held various roles leading P&G consumer product business units. During his tenure at P&G, Mr. Mesquita served as Group President – New Business Creation and Innovation from March 2012 until June 2013, Group President – Special Assignment from January 2012 until March 2012, Group President, Global Fabric Care from 2007 to 2011 and President, Global Home Care from 2001 to 2007, also serving as President of Commercial Products and President of P&G Professional from 2006 to 2007. Mr. Mesquita currently serves on the Board of Directors of Mondelez International, Inc.

 

Committees

 

 

 

 

  Organization & Compensation

   
   
   
   
   
   

 

       

 
   

 

The Board believes that Mr. Mesquita’s proven experience in leading business units for significant global, consumer-oriented companies provides a valuable perspective to Humana’s Board and further contribute to its strategic composition. Mr. Mesquita’s forward-thinking, transformational mindset and strong track record of building and marketing global brands, developing consumer insight-driven innovation capabilities, and driving strong, profitable growth will be essential as the Company continues to create seamless consumer experiences and help its members achieve their best health.

 

 
     

 

     
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Brad D. Smith

   

 

Age 58    Director since 2022

      

 

 

LOGO

Independent Director

 

 

    

 

 

 

Brad D. Smith was initially elected to the Board in September 2022. Mr. Smith is the President of Marshall University, having held this position since January 2022. Prior to joining Marshall, Mr. Smith was Executive Chairman of the Board of Intuit Inc. from January 2019 until January 2022 and Chairman from January 2016 until January 2019, following 11 years as Intuit’s President and CEO from January 2008 until December 2018. Mr. Smith began his career at Intuit in February 2003, and prior to his time as President and CEO, he served in various leadership positions within the company. Prior to joining Intuit, Mr. Smith held several executive positions with ADP, where he served from 1996 to 2003. Mr. Smith holds a Bachelor of Business Administration degree from Marshall University and a Master’s degree in Management from Aquinas College. Mr. Smith currently serves on the Board of Directors of Intuit Inc.

 

Committees

 

 

 

 

  No Current Committees

   

 

       

 
   

 

The Board believes that Mr. Smith’s executive leadership experience and business acumen in driving transformation through data-driven decision making, rapid experimentation, and customer focus bring valuable perspectives to the Board. Mr. Smith’s deep operating experience and ability to innovate across all organizational layers, while also being mission driven and health equity oriented, will be vital as the Company continues to grow its core Medicare Advantage business, drive operational efficiencies, and mature and further integrate its healthcare services offerings.

 

 
     

 

     

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Corporate Governance

 

Humana is committed to having sound corporate governance principles and operates within a comprehensive plan of governance for the purpose of defining responsibilities, setting high standards of professional and personal conduct, and ensuring compliance with such responsibilities and standards. Sound corporate governance is essential to running our business effectively and to maintaining our reputation of integrity in the marketplace. In addition, our Board of Directors has adopted Corporate Governance Guidelines, which we refer to as the Guidelines, intended to comply with the requirements of Section 303A.09 of the NYSE Listed Company Manual. The Guidelines may be viewed on our website at www.humana.com. From the www.humana.com website, click on “Investor Relations,” then click on “Corporate Governance” subcategory and then click on the link entitled “Corporate Governance Guidelines.”

Role of the Board and Board Leadership

Role of the Board

The business of the Company is managed under the direction of the Board, whose members are elected annually by the Company’s stockholders. The basic responsibility of the Board is to lead the Company by exercising its business judgment to act in what each director reasonably believes to be in the best interests of Humana and its stockholders, while engaging in active and independent oversight of the management of the Company’s business affairs and assets. In order to fulfill its responsibilities to the Company’s stockholders, the Board, both directly and through its committees, regularly engages with management to both evaluate the Company’s current operations and encourage the innovations and strategic imperatives that will drive our success in the future. The Board monitors management performance through reviews of the most critical issues facing the Company, including approval of the Company’s strategy and mission, execution of the Company’s financial and operational goals, oversight of risk management, succession planning, and determination of executive compensation. The Board plans for the future by ensuring management focuses on innovation in our strategy to meet the speed of change in our industry and monitoring the Company’s human capital management functions, working closely with the management team to ensure the Company has the correct levels of talent in place – within each business segment – for continued success in present and future states of the Company.

Board Oversight of Risk

While management is responsible for designing and implementing the Company’s risk management process, controls and oversight, the Board, both as a whole and through its committees, has overall responsibility for oversight of the Company’s risk management. The full Board regularly reviews risks that may be material to the Company, including those detailed in the Audit Committee’s reports and as disclosed in the Company’s quarterly and annual reports filed with the SEC. While the Board has established committees designated for various oversight functions, it is common practice for committees to collaborate on overlapping issues.

 

 

BOARD OF DIRECTORS

 

Oversees Management of Major Risks

 Regulatory & Public Policy

Financial

 

Succession Planning

Strategic Execution

 

 

Brand & Reputation

Legal

 

Cybersecurity

Data Governance

 

 Investment Objectives

Clinical Quality

Audit

Committee

  Organization & Compensation Committee  

 

Nominating,

Governance & Sustainability Committee

 

Technology

Committee

 

Investment

Committee

         

  Financial Statement integrity and reporting

  Legal, regulatory and compliance

  Internal controls

  Cybersecurity risk oversight

 

 

  Executive compensation policies and practices

  Non-executive compensation policies and practices

  Succession planning

  Human Capital Management

 

 

  Governance structure and processes

  Legal and policy matters

  Stockholder concerns

  Board refreshment

  Environmental, Social and related Governance (ESG) oversight

 

 

  Information security, technology and privacy & data protection

  Company IT strategy and consumer facing technology

 

  Investment objectives and policies

  Investment results and performance evaluation

       

 

Management

Business units identify and manage business risks; Central functions design risk framework (setting boundaries and monitoring risk appetite); and Internal Audit provides independent assurance on design and effectiveness of internal controls and governance processes.

 

 

     
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The Company’s Enterprise Risk Management (ERM) governance structure consists of oversight from the Board and the Audit Committee (in collaboration with material risks overseen by other committees), and implementation through the Company’s management team utilizing a three lines of defense model to delegate responsibility for critical risk management processes across the business functions and operational areas, as well as risk management, compliance, and internal audit teams.

Humana’s first line of defense consists of business areas and operational teams across the Company, and is responsible for identifying, assessing, mitigating, monitoring, and managing risk within their respective areas. The Company’s Enterprise Risk Management and Regulatory Compliance departments represent the Company’s second line of defense. These teams are led by Humana’s Chief Legal Officer (CLO), to whom the Chief Risk Officer (CRO) and Chief Compliance Officer (CCO) each report and lead the Enterprise Risk Management and Regulatory Compliance functions, respectively. Humana’s Internal Audit Consulting Group (IACG) represents the third line of defense, which provides independent and objective assurance to senior management and the Board regarding first and second line risk management functions, internal control systems, and governance processes.

The Board and each Committee receive updates no less than quarterly, with the CRO, CCO, and IACG updating the Audit Committee on the assessment, monitoring and mitigation of risks material to the Company in the short, intermediate, and long-term, the effectiveness of the Company’s control environment in managing these risks, the functioning of the Company’s internal controls and procedures, and the identification and analysis of key emerging risks.

The goal of the Company’s ERM governance is to achieve robust and thoughtful board-level attention to the Company’s risk management process and system, the nature of the material risks faced by the Company, and the adequacy of the Company’s risk management process and system designed to respond to and mitigate these risks, each in a manner that closely aligns to the Company’s disclosure controls and procedures.

Board Leadership

Leadership of the Board is essential to facilitate the Board acting effectively as a working group to the benefit of the Company and its performance. As Chairman of the Board, Mr. Kurt J. Hilzinger assumes key duties to ensure effectiveness and collaboration in all aspects of the Board’s design, operations, and risk oversight function.

 

 

Duties of Our Chairman

 

LOGO    Serves as Chair of regular sessions of the Board and manages the overall Board process, including meeting design topics and agendas.

 

LOGO    Leads the Board in anticipating and responding to crises, including the ability to call special meetings for the consideration of risk oversight and other matters.

 

LOGO    Oversees and monitors Board engagement, participation and continued education to ensure our directors are in-tune with issues of our dynamic industry and the evolving landscape.

 

LOGO    Partners with and supports the Nominating, Governance & Sustainability Committee with the director selection process, as well as director on-boarding and orientation programs.

 

LOGO    Models culture, philosophy, inclusivity and values expected of all directors.

 

LOGO    Conducts individual meetings with other directors, including the CEO, and management team to encourage open communication, collaboration and differences in perspective.

  

 

LOGO    Evaluates overall Board effectiveness, with emphasis on identifying areas of enhancement, development and/or furtherance and communicating these observances to the Board for discussion.

 

LOGO    Represents the Board on occasions where it is important for the Board to respond on matters independently from the Company’s management team.

 

LOGO    Provides guidance and direction to the CEO and management team.

 

LOGO    Engages with stockholders, through verbal or written communications, and presides over the Company’s Annual Meeting of Stockholders. Also recommends to the Board an agenda to be followed at the Annual Meeting.

 

LOGO    Works with the Organization & Compensation Committee to develop the process for CEO compensation evaluations.

The Board believes the advisability of having separate or combined chairman and chief executive officer positions is dependent upon the strengths of the individual or individuals that hold these positions and the most effective means of leveraging these strengths, to lead the Board, set Board agendas, and identify and oversee key rights in light of the challenges and circumstances facing the Company, which may change over time. During a period in which the chairman and chief executive officer positions are combined, a Lead Director is appointed from our independent directors. The Lead Director sets agendas for and convenes meetings and executive sessions of the independent directors, approves Board meeting agendas, and otherwise represents the Board on occasions where it is important for the Board to respond independently from the Company’s management team. Our stockholders would be notified of a combination of the chairman and chief executive officer role promptly upon the Board’s decision to do so.

 

     

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At this time, given the composition of the Company’s Board, the effective interaction between Mr. Hilzinger, as Chairman, and Mr. Broussard, as Chief Executive Officer, Mr. Hilzinger’s status as an independent director and previous service as our Lead Director, and the current challenges faced by the Company, the Board believes that separating the chief executive officer and board chairman positions provides the Company with the right foundation to pursue the Company’s strategic and operational objectives, while maintaining effective independent oversight and objective evaluation of the performance of the Company.

Board Engagement and Undertakings

The Board holds itself to a high standard of engagement, with a hands-on approach that leads to critical insights regarding our customers, operations and business and enhances their level of governance and oversight. An essential component to the Board’s engagement is communicating with the Company’s internal and external stakeholders. To accomplish this, meetings of the Board may be held in key Company markets where, together with management, the Board will personally meet with associates, customers, providers and other stakeholders to gain direct feedback into the Company’s operations, experiences and overall effectiveness. The Board also holds virtual meetings to both increase the efficiency of the Board’s time, and expand its reach of engagement with Company personnel and other stakeholders.

Certain other engagement practices of our Board are described below.

 

   

Follows an annual topical calendar used to balance strategic, operational, compliance, and cultural matters, among others, and receives detailed reports on those topics, in addition to ad hoc subjects, throughout the year.

 

   

Utilizes clear and proactive Board meeting agendas to achieve high productivity at each meeting.

 

   

Holds executive sessions during every meeting, with the CEO present and then with only the independent directors. Relevant feedback is then reported to the CEO and the management team, creating a feedback loop from the Board to the management team.

 

   

Maintains regular communication with the CEO and management team, apart from formal Board meetings, to ensure consistent and continuous progress toward established goals.

 

   

Employs Board technology tools to review Board materials and to remain informed of ongoing Company endeavors, to efficiently communicate with the management team and to take formal action when necessary.

 

   

Performs in-depth organizational structure reviews, through the Organization & Compensation Committee, of line and functional teams within the Company to assess leadership bench strength, culture, succession planning, diversity and related matters, and engages regularly with rising leaders within the Company. The Organization & Compensation Committee also regularly reviews associate engagement scores, and for 2022, 87% of associates were highly engaged, representing the 81st percentile.

 

   

Receives continued education from external consultants on a wide range of industry topics to keep them apprised of the latest trends and anticipated future trajectories. In addition to our director’s individual pursuits, Board education opportunities during 2022, included, (i) a formal education session with external consultants; (ii) guest speaker attendance during select meetings; and (iii) briefings on regulatory developments.

 

   

Participates in the Company’s robust stockholder engagement program.

 

 

 

 

2022 Notable Board Actions

 

  Appointed 2 new directors to the Board as part of Board refreshment practices.

 

  Oversaw successful implementation of the Company’s $1 billion value creation initiative.

 

  Oversaw development and execution on the Company’s mid-term Adjusted EPS target for 2025, as announced at the Company’s 2022 Investor Day.

 

  Approved divestiture of a majority interest in Kindred at Home’s Hospice and Personal Care divisions (KAH Hospice).

 

     

 

2022 Board and Committee       Meetings      

 

44      

Videoconference / Teleconference      

19      

In-person      

1      

Annual Stockholder      

 

     

 

2022 Director Attendance Average

 

97%

 

(Based on aggregated Board and Committee meeting attendance; includes all directors having served during 2022.)

 

 

     
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Board Evaluation Practices

The Board is committed to a rigorous self-evaluation process. Through evaluation, directors annually review the performance of the Board and each committee, as well as their own individual contributions, including areas where the Board feels it functions effectively, and most importantly, areas where the Board can improve. The Nominating, Governance & Sustainability Committee, with participation from our Chairman and Chief Executive Officer, initiates the annual Board evaluation process. We believe that having a review process for each group helps to (i) ensure an adequate representation of requisite skills; (ii) encourage high levels of engagement from directors; and (iii) strengthen the overall effectiveness of our Board. Results of the evaluations are shared with the Chairman of the Board and the Chairman of the Nominating, Governance & Sustainability Committee and then later discussed with the entire Board in an aggregated manner, with agreed upon actions and improvements then implemented and monitored for effectiveness.

 

       

 

Board Evaluation

 

    
  

 

The Board evaluation typically consists of a written questionnaire containing qualitative scaled and open-ended questions related to the effectiveness of the Board during the prior year. The questionnaire hones in on specific areas of responsibility and critical attributes of the Board in order to solicit candid feedback from each director. The questionnaire also seeks practical input as to what the Board is doing well, areas in which the Board could improve and any undertakings that the Board should commence or terminate. Every third year, this written evaluation process is supplemented by oral interviews and an analysis of Board and committee effectiveness conducted by an independent consultant.

 

 
  

 

Director Self-Evaluation

 

 
  

 

The director self-evaluation requires each director to honestly reflect upon and carefully consider his or her performance based on key characteristics that are expected of all board members. The self-evaluation also allows directors to provide additional or updated information regarding their skills and qualifications which in turn helps the Nominating, Governance & Sustainability Committee make future assessments and determinations regarding Board composition. The Company encourages directors to participate in continuing education programs focused on the Company’s business and industry, their committee roles and responsibilities, as well as legal and ethical matters. Annually, the Board will meet for purpose of furthering their education through external guest speakers to gain insights into key issues facing the industry and the Company, to supplement management’s views and perspectives.

 

 
  

 

Committee Evaluation

 

 
  

 

Each of our Board committees engages in an annual performance evaluation and a general charter adequacy review. Each committee is responsible for determining the manner of evaluation and for carrying out the evaluation. Further, the Board evaluation questionnaire includes a section specifically concerning Board committee structure and the performance and effectiveness of each committee, which is an opportunity for board members to provide feedback on each committee, regardless of their individual committee membership.

 

 
    

Director Independence

The Guidelines contain standards to assist the Board in its determination of director independence. In addition, to qualify as independent under the Guidelines, the Board of Directors must affirmatively determine that a director has no material relationship with the Company, other than as a director.

Pursuant to the Guidelines, the Board undertakes an annual review of director independence. During this review, the Board considers transactions and relationships between each director or any member of his or her immediate family and the Company and its subsidiaries and affiliates, including transactions or relationships that are reported under “Certain Transactions with Management and Others” in this proxy statement. As provided in the Guidelines, the purpose of this review is to determine whether any such transactions or relationships are inconsistent with a determination that a director is independent.

In the course of this review for the current year, the Board specifically analyzed and discussed several matters:

 

(1)

a relationship between the Company and Pfizer Inc., or Pfizer, for which Frank A. D’Amelio, one of our current directors, served as an executive officer during part of 2022;

 

(2)

a relationship between the Company and Oracle Health (formerly Cerner Corporation, or Cerner), for which David T. Feinberg, M.D., one of our current directors, serves as an executive officer (and formerly served during 2022 as both a director and executive officer at Cerner until Oracle Corporation’s acquisition of Cerner which closed in June 2022 resulting in Cerner/Oracle Health becoming a privately held entity);

 

(3)

a relationship between the Company and Howard University and the Howard University Healthcare system, or Howard, for which Wayne A. I. Frederick, M.D., one of our current directors, serves as an executive officer;

 

     

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(4)

a relationship between the Company and Chrysalis Ventures, LLC, or Chrysalis, for which David A. Jones, Jr., one of our current directors, serves as Chairman and Managing Partner and in which Mr. Jones, Jr. has a financial interest;

 

(5)

a relationship between the Company and Warren Barr Liberman, at which a family member of William J. McDonald, one of our current directors, is an employee; and

 

(6)

financing arrangements between the Company and companies that are affiliated with certain of our directors.

Pfizer. The relationship between the Company and Pfizer includes a negotiated rebate based on the volume of prescriptions of Pfizer drugs obtained by Humana members, which volume includes claims paid by Humana for our members and the co-payments paid by our members. Payments to Humana from Pfizer result from activity with many intermediaries over whom Humana exercises no control (i.e., the providers who prescribe these medications, the distributors who sell to the retailers, and the retailers from which our members get prescriptions). In 2022, the Pfizer rebates amounted to approximately $61.1 million, substantially all of which were passed through to our members in the form of lower premiums and/or higher benefits. The relationship described herein did not represent a direct or indirect material interest for Mr. D’Amelio.

Oracle Health/Cerner. Oracle Health/Cerner has a license subscription contract with our subsidiary, Humana Digital Health and Analytics Platform Services, Inc., or HDH&A. In 2022, Oracle Health/Cerner paid HDH&A approximately $5.8 million in associated licensing, professional service and maintenance fees, which is comparable to other non-affiliated customers for the provision of similar services. Our various CenterWell Home Health companies have certain service arrangements with Oracle Health/Cerner for which it paid approximately $11,320 in associated fees during 2022, which is comparable to other non-affiliated customers for the provision of similar services. The relationships described herein are not material to the Company and do not represent a direct or indirect material interest for Dr. Feinberg.

Howard. The relationship between the Company and Howard includes arrangements between the Howard University healthcare system in which the Company paid approximately $469,013 in medical claims during 2022. The relationships described herein did not represent a direct or indirect material interest for Dr. Frederick.

Chrysalis. In 2022, we contracted for services to be provided by certain companies in Chrysalis’ investment portfolio. In each case, the amounts paid under these arrangements were comparable to those for other non-affiliated vendors, were not material to the Company, and did not represent a direct or indirect material interest for Mr. Jones, Jr.

Warren Barr Liberman. The relationship between the Company and Warren Barr Lieberman includes a provider arrangement in which the Company paid approximately $151,652 in medical claims during 2022. The relationship described herein did not represent a direct or indirect material interest for Mr. McDonald.

Financing Arrangements. Certain of our non-employee directors are partners, shareholders and/or officers of companies that have commercial paper programs or other financing arrangements in which we participate in the ordinary course of business. Payments to or from such companies constituted less than the greater of $200,000 or 1% of each of Humana’s and the recipient’s annual revenue, respectively, in each of the past three years.

At the conclusion of its review for the current year, the Board affirmatively determined that in each case the relationship between the Company or its affiliate and each director-related entity was not material, was below the thresholds for independence prescribed by the NYSE, and did not impact the independence of any of our directors. Directors recused themselves from the independence assessment as the matter was relative to himself or herself. Consistent with these considerations, and based on its review of director independence in light of the standards contained in the Guidelines, the Board determined that each member of the Board of Directors (except Mr. Broussard, as a current employee of the Company) is independent.

 

     
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Committee Membership and Meetings

The Board of Directors has the following standing committees: Audit; Organization & Compensation; Nominating, Governance & Sustainability; Executive; Technology and Investment. Only directors meeting the applicable SEC and NYSE director independence standards and Internal Revenue Code “outside director” criteria may serve on the Audit Committee, the Organization & Compensation Committee, and the Nominating, Governance & Sustainability Committee. Each standing Board committee operates pursuant to a charter, which may be viewed on our website at www.humana.com. From the www.humana.com website, click on “Investor Relations,” then click on “Corporate Governance,” then click on the “Committee Charters” subcategory. The number of Board committee meetings (virtual and in-person) held in 2022 and membership as of March 1, 2023, were as follows:

 

Director

 

 

Audit      

 

 

 

 

Organization      

&      

Compensation      

 

 

 

 

Nominating,      

Governance &       

Sustainability      

 

 

Executive      

 

 

Technology      

 

 

Investment      

 

Kurt J. Hilzinger

     

 

    

 

     

 

LOGO       

 

 

      

   

Bruce D. Broussard

             

 

LOGO       

       

Raquel C. Bono, M.D.

 

 

LOGO       

 

     

 

      

     

 

LOGO       

   

Frank A. D’Amelio

 

 

LOGO       

 

 

      

 

 

 

       LOGO

     

 

      

   

David T. Feinberg, M.D.

 

 

      

 

     

 

      

           

Wayne A. I. Frederick, M.D.

     

 

LOGO       

         

 

LOGO       

   
           

John W. Garratt

 

 

LOGO       

                      

 

LOGO       

 

David A. Jones, Jr.

     

 

LOGO       

 

 

 

LOGO       

 

 

 

LOGO       

       

Karen W. Katz

          LOGO             

 

LOGO       

   

Marcy S. Klevorn

 

 

      

 

              LOGO         

 

      

 

William J. McDonald

 

 

LOGO       

 

                 

 

LOGO       

 

Jorge S. Mesquita

   

 

LOGO       

         

 

      

   

James J. O’Brien

     

 

LOGO       

 

             

 

LOGO       

 

Brad D. Smith1

                 

 

      

        

 

Number of Meetings in 2022

 

  9       8         13         0         5         4      

LOGO  = Chair         LOGO  = Member

 

1

Elected to the Board effective September 15, 2022.

Audit Committee

Committee Responsibilities

Pursuant to its charter, the Audit Committee:

 

   

assists the Board of Directors with the oversight of the integrity of our financial statements and disclosures and internal controls, our compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications and independence and the performance of our internal audit function and the independent registered public accounting firm;

 

   

bears responsibility for the appointment, compensation, retention and oversight of the work of the independent registered public accounting firm engaged to prepare the audit report or perform other audit, review or attest services;

 

   

reviews with the independent registered public accounting firm, our internal audit department, and our financial and accounting personnel, the effectiveness of our accounting and financial controls and, where appropriate, makes recommendations for the improvement of these internal control procedures;

 

   

reviews the scope, funding and results of our internal audit function, including the independence and authority of our reporting obligations, the proposed audit plans for the year, and the coordination of these plans with the independent registered public accounting firm;

 

   

reviews the scope, funding and results of our Enterprise Risk Management program and compliance program, including receiving, at least quarterly, an update from our Chief Risk Office and internal compliance department regarding any significant matters regarding our risk management and compliance with regulatory requirements and contracts with government entities, respectively;

 

   

collaborates with the Technology Committee to regularly receive updates on risks, and risk mitigation measures, related to Company’s information technology, internal controls, information security, cyber security, business continuity and disaster recovery programs;

 

     

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reviews the financial statements and other information contained in our Annual Report and other reports to stockholders with management and the independent registered public accounting firm to determine that the independent registered public accounting firm is satisfied with the disclosure and content of the financial statements to be presented to the stockholders and reviews any changes in accounting principles;

 

   

confers independently with our internal auditors, Chief Risk Officer, internal compliance department, key members of management, and the independent registered public accounting firm;

 

   

determines and approves the appropriateness of the fees for audit and permissible non-audit services performed by the independent registered public accounting firm;

 

   

discusses with management our compliance with applicable legal requirements and with our internal policies regarding related party transactions and conflicts of interest;

 

   

discusses our policies with respect to risk assessment and risk management;

 

   

maintains free and open means of communication between the members of our Board of Directors, the independent registered public accounting firm, our internal audit department, our Chief Risk Officer, our internal compliance department, and our financial management; and

 

   

annually evaluates its performance.

Corporate Governance Determinations

The Board of Directors has determined that each of the members of the Audit Committee at February 15, 2023 is independent according to SEC and NYSE requirements, and each is financially literate, as defined in the NYSE listing standards. The Board of Directors has determined further that Messrs. D’Amelio and Garratt and Dr. Bono each meet the definition of “audit committee financial expert.” PricewaterhouseCoopers LLP, our independent registered public accounting firm, reports directly to the Audit Committee. No member of the Board’s Audit Committee serves on the audit committees of more than three publicly traded companies. The Report of the Audit Committee for the year ended December 31, 2022, is set forth in this proxy statement under the caption “Audit Committee Report.”

Organization & Compensation Committee

Committee Responsibilities

Pursuant to its charter, the Organization & Compensation Committee:

 

   

reviews and approves our goals and objectives relevant to the compensation of our CEO, evaluates the CEO’s performance in light of those goals and objectives, and, either as a Committee or together with the other independent directors, determines and approves the CEO’s compensation level based on this evaluation;

 

   

reviews and approves all elements of compensation paid to our current or prospective executive officers, including without limitation, base compensation, incentive-compensation plans and equity-based plans, employment, change in control or severance programs and agreements, and any special compensation or benefits, including supplemental retirement benefits and any perquisites;

 

   

approves equity-based grants to our executive officers and other associates;

 

   

reviews and discusses with management the Company’s compensation plans and policies for all employees (including the Named Executive Officers) with respect to risk management and risk-inducing incentives;

 

   

ensures preparation of the Compensation Discussion and Analysis and the Compensation Committee Report as required by SEC regulations;

 

   

monitors compliance of executive officers and non-employee directors with relevant stock ownership guidelines;

 

   

reviews with management periodically, as it deems appropriate, management succession and inclusion and diversity practices;

 

   

administers our Executive Management Incentive Compensation Plan and other substantially similar or successor incentive compensation plans; and

 

   

annually evaluates its performance.

Scope of Authority, Processes and Procedures

The Organization & Compensation Committee acts on behalf of the Board of Directors to establish the compensation of our executive officers and provides oversight of our compensation philosophy, as described in this proxy statement under the caption “Compensation Discussion and Analysis.” The role of the executive officers and the outside compensation consultant in establishing executive compensation is discussed in this proxy statement under the caption “Compensation Discussion and Analysis.” Other than routine administrative matters and the ability of our CEO to approve grants of equity awards subject to certain individual and annual thresholds, no executive compensation decisions are delegated to management.

 

     
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Compensation Committee Interlocks and Insider Participation

No member of the Organization & Compensation Committee: (i) is or has ever been an officer or employee of the Company; or (ii) is or was, during the last fiscal year, a participant in a “related person” transaction requiring disclosure under Item 404 of the SEC’s regulations (see discussion in this proxy statement under the caption “Certain Transactions with Management and Others”); or (iii) is an executive officer of another entity at which one of our executive officers serves either as a director or on its compensation committee.

Corporate Governance Determinations

During 2022, James J. O’Brien (Chair), Wayne A. I. Frederick, M.D., David A. Jones, Jr. and Jorge S. Mesquita served as members of our Organization & Compensation Committee. Considering (i) the source of each director’s compensation, including any consulting, advisory or other compensatory fees paid by the Company; and (ii) whether each director has an affiliate relationship with the Company, a subsidiary of the Company or an affiliate of a subsidiary of the Company, the Board has determined that each member of the Organization & Compensation Committee at February 15, 2023, is independent, as defined by the SEC and the NYSE, and is considered to be an “outside director” under Section 162(m) of the Internal Revenue Code.

Compensation Risk Determination

In early 2023, the Organization & Compensation Committee reviewed management’s assessment of the risks associated with the Company’s compensation practices and policies for employees, including a consideration of the counterbalance of risk-taking incentives and risk-mitigating factors in Company practices and policies. Following a review of this assessment, the Organization & Compensation Committee determined that the risks arising from the Company’s compensation practices and policies are not reasonably likely to have a material adverse effect on the Company.

Nominating, Governance & Sustainability Committee

Committee Responsibilities

Pursuant to its charter, the Nominating, Governance & Sustainability Committee:

 

   

recommends to the full Board criteria for the selection and qualification of the members of the Board;

 

   

evaluates and recommends for nomination by the Board candidates to be proposed for election by the stockholders at each annual meeting;

 

   

seeks out and assists in the recruitment of highly qualified candidates to serve on the Board;

 

   

recommends for Board approval candidates to fill vacancies on the Board which occur between annual meetings;

 

   

develops, periodically reviews and recommends to the Board revisions to the Guidelines;

 

   

studies and reviews with management the overall effectiveness of the organization of the Board and the conduct of its business, and makes appropriate recommendations to the Board;

 

   

reviews the overall relationship of the Board and management;

 

   

reviews issues and developments pertaining to corporate governance;

 

   

reviews our public policy and political spending practices through regular reviews of our policy on political expenditures, expenditures and payments made with corporate funds, and overall political activity, including review of our Political Contributions and Related Activity Report;

 

   

reviews the Company’s programs and policies relating to significant ESG and sustainability matters, and periodically receive updates from the Company’s management regarding significant ESG and sustainability undertakings; and

 

   

annually evaluates its performance.

Executive Committee

Pursuant to its charter, the Executive Committee possesses the authority to exercise all the powers of the Board of Directors except as otherwise provided by Delaware law and our Bylaws during intervals between meetings of the Board. The Executive Committee does not have the power, to, among other things, declare a dividend, issue stock, adopt a certificate of merger or sell substantially all of the Company’s business.

 

     

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Investment Committee

Pursuant to its charter, the Investment Committee establishes investment objectives and policies for our various investment portfolios and investment options available under various employee benefit plans, reviews investment results, and annually evaluates its performance.

Technology Committee

Pursuant to its charter, the Technology Committee represents and assists the Board of Directors with the oversight of:

 

   

our process, awareness, evaluation and perspective on potentially disruptive technologies and convergences that may represent threats or opportunities for our business operations;

 

   

our process and perspective on strategic technology capabilities that enable transformational business capabilities;

 

   

our process, execution roadmaps, requisite capital, progress in delivering technology-enabled transformational capabilities and their related outcomes; and

 

   

management’s focus on organizational, talent and cultural enablers required to ensure achievement of those outcomes.

Senior leadership also briefs the Technology Committee and board members on matters relating to the Company’s strategic technology capabilities, including information security capabilities. The Technology Committee may also assist the Audit Committee in its oversight of our information technology internal controls, cybersecurity, business continuity and disaster recovery programs. Senior leadership provides briefings to the Audit Committee and Technology Committee on information technology controls and risk as least once per year, and separately updates the full Board of Directors on cybersecurity matters at least once per year. Briefings are also provided as-needed in response to industry or company specific developments or material events.

Corporate Governance Policies

Majority Vote Policy

Under our Bylaws, a director nominee will be elected if the number of votes cast for the nominee exceeds the number of votes cast against the nominee. In contested elections, those in which a stockholder has nominated a person for election to the Board, the voting standard is a plurality of votes cast. The Board has also adopted a policy to require the Board to nominate for election only nominees who agree that, if they are elected to the Board, they will tender an irrevocable resignation conditioned on, first, the failure to achieve the required vote for re-election at any future meeting at which they face re-election, and second, the Board’s acceptance of their resignation following that election. In addition, the Board may fill director vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other directors, as described above. The Nominating, Governance & Sustainability Committee will submit a recommendation for prompt consideration by the Board whether to accept the resignation. Any director whose resignation is under consideration will abstain from participating in any decision regarding that resignation. The Bylaws also require stockholder nominees for director election to notify the Company whether or not such nominees intend to tender the same type of resignation required of the Board’s director nominees.

Change in Director’s Primary Position

The Board has adopted a policy requiring that a director whose primary position or affiliation changes must promptly notify the Board and the Nominating, Governance & Sustainability Committee of the change so that a determination may be made as to the value of his or her continued service on the Board.

Director Stock Ownership Policy

Our Board believes that directors should be stockholders and have a significant personal financial stake in the Company. Consequently, the Board has adopted the following stock ownership guidelines:

 

   

Each non-employee director must maintain a minimum equity ownership level of five times the annual cash retainer.

 

   

Shares deferred at the election of the director are considered owned for purposes of the calculation of the ownership requirement.

 

   

Any Shares owned by a non-employee director (or Shares received upon the exercise of options or vesting of restricted stock or restricted stock units, less an amount to cover the exercise price and/or current tax liabilities) must be held by the director until the minimum equity ownership level is reached and thereafter maintained.

 

   

Once the minimum equity ownership level has been achieved, any Shares received upon the vesting of restricted stock or restricted stock units, less an amount to cover current tax liabilities, must be held by the director until one year following the vesting date.

 

     
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Compliance with these guidelines is monitored by the Organization & Compensation Committee.

Director Attendance

The Board has developed a number of specific expectations of directors to define their responsibilities and to promote the efficient conduct of the Board’s business. With respect to the level of commitment expected of directors and related attendance protocols, as part of the Guidelines, the Board formally adopted a policy that all directors should make every effort to attend all meetings of the Board and the Committees of which they are members, and the Company’s Annual Meeting of Stockholders. Attendance by telephone or video conference may be used to facilitate a Director’s attendance.

During 2022, apart from Committee meetings, the Board of Directors met 24 times. All directors attended at least 75% of the scheduled Board of Directors’ meetings and meetings held by Committees of which they were members. All director nominees serving as directors at that time attended the Annual Meeting of Stockholders held on April 21, 2022.

Executive Sessions of Non-Management Directors

In 2022, our non-management directors held regularly scheduled, formal executive meetings, separate from management and were led by our Chairman. Additional executive sessions of the Board are held as necessary or appropriate or upon the request of the Chairman, the Nominating, Governance & Sustainability Committee or any two other non-management directors. In addition, our non-management directors who qualify as independent within the meaning of our director independence guidelines meet in executive session at least once annually, and, in fact, met in 2022 in connection with each regularly scheduled Board of Directors meeting.

Code of Ethics and Code of Business Conduct

The Company has adopted the “Code of Conduct for the Chief Executive Officer and Senior Financial Officers,” which we refer to as the Executive Code of Ethics, violations of which are reported to the Audit Committee. In addition, we operate under the omnibus Humana Inc. Ethics Every Day, which we refer to as the Code of Ethics, which applies to all associates (including executive officers) and directors. The Humana Ethics Office is responsible for the design and enforcement of our ethics policies, the goal of which is to create a workplace climate in which ethics is so integral to day-to-day operations that ethical behavior is self-enforcing. All employees are required annually to review and affirm in writing their acceptance of the Code of Ethics. The Code of Ethics and the Executive Code of Ethics may be viewed on our website at www.humana.com. Any waiver for directors or executive officers from the provisions of the Code of Ethics or the Executive Code of Ethics must be made by the Board of Directors and will be disclosed within four days of the waiver on our website at www.humana.com. To see either the Code of Ethics or the Executive Code of Ethics or any waivers to either policy, go to www.humana.com, then click on “Investor Relations,” then click on “Corporate Governance,” and then click on the relevant link.

Policy Regarding Employee, Officer and Director Hedging

The Company has a policy prohibiting all associates (including executive officers and independent directors) from hedging or pledging transactions using Company stock, including: (1) engaging in short sales of Company securities; (2) engaging in transactions in puts, calls or other derivative securities designed to hedge or offset any decrease in the market value of the Company’s equity securities, on an exchange or in any other organized market; or (3) engaging in certain monetization transactions, including holding Company securities in margin accounts or pledging Company securities as collateral.

Advocacy and Public Policy

With a focus on improving clinical outcomes and advancing affordability and access, our Company’s approach to advocacy and public policy is built around people (that is, the members, patients, providers, and communities we serve). To that end, our day to day efforts are centered around supporting policies that strengthen Medicare Advantage, accelerate value-based care in the home, expand opportunities to serve patients through primary and home-based care, integrate clinical solutions, create affordability for prescription drugs, and address barriers to care by addressing the root causes of poor health, as well as leveraging our capabilities to remove barriers to access and partnering with clinicians to improve quality. This focus raises the bar for the care we provide to help move toward a future in which everyone has a fair and just opportunity to be as healthy as possible.

The Company has also established and sponsors a Political Action Committee (PAC), for which Company associates may voluntarily contribute. The PAC is registered with the Federal Election Commission (FEC) and certain states nationwide as required by applicable law. As a matter of policy, all Company political activities must promote the interests of the Company and must be made without regard for the private political preferences of Company officers or executives. Furthermore, Humana does not make independent expenditures, nor does it contribute to ballot measure committees. Distributions from the PAC are made to federal and state office candidates (and related election committees) or to other PACs on a non-partisan basis when, like the Company, such persons are solution-oriented and believe in building a high-quality, accessible and affordable health care system. The PAC is also committed to supporting diverse candidates at the state and federal level. While the PAC has its own separate board of directors to oversee its operations, the Company’s Board—through its

 

     

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Nominating, Governance & Sustainability Committee—has responsibility for (i) reviewing the political contributions and political activities of the Company and the PAC and (ii) overseeing compliance with the overall policy, process and contribution criteria with respect to such contributions and activities. The Board reviews occur semi-annually, along with semi-annual publication of a Contributions and Related Activity Report (PAC Report). To learn more about our public policy and to review the most recent PAC Report, visit our website at www.humana.com, then click on “About Humana,” then click on “Public Policy.”

Communication with Directors

Stockholders and other interested parties may communicate directly with our Chairman, non-management directors as a group, or any other individual director by writing to the special e-mail address published on our website. Specifically, interested parties may visit our website at www.humana.com then click on “About Humana,” then click on “Board of Directors,” where instructions for contacting these persons are available. All directors have access to this e-mail address. We use the staff of our Corporate Secretary to review correspondence received in this manner and will filter advertisements, solicitations, spam, and other such items. Concerns related to accounting, internal controls or auditing matters are required to be brought immediately to the attention of our Chief Legal Officer and the Board and handled in accordance with procedures established by the Audit Committee with respect to such matters.

 

     
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Environmental, Social and Governance (ESG)

 

Board Oversight of Environmental, Social and Governance Matters

The Nominating, Governance & Sustainability Committee has responsibility for Board-level oversight of the Company’s ESG strategy, practices and reporting. The Nominating, Governance & Sustainability Committee receives formal ESG reports from management at least twice annually regarding the Company’s ESG initiatives, metrics and progress on established goals, as well as ad hoc ESG communications as necessary. The full Board is invited to attend and participate during these meetings and receives access to all ESG reporting. In addition, we have an internal ESG Steering Committee, overseen by our Chief Administrative Officer and Chief Legal Officer, to guide the integration of our ESG efforts with our long-term business strategy. This ESG governance structure complements the long-standing responsibility of our Board and each of our Board committees in overseeing various aspects of the Company’s ESG-related risks and practices, as illustrated below:

 

 

BOARD OF DIRECTORS

 

              

 

Nominating, Governance & Sustainability Committee

 

              

Audit     

Committee     

     Organization &   Compensation Committee        Technology
Committee
    

Investment

Committee

  Risk Management

  Cybersecurity

    

  Human Capital Management

  Inclusion & Diversity Practices

  Company Compensation Plans

& Policies

    

  Privacy & Data Protection

  Information Security

    

  Investment Portfolio

  Investment Guidelines

              

Chief Administrative Officer and Chief Legal Officer

(In collaboration with members of the executive management team)

              

 

ESG Steering Committee

 

              
Oversight      Management      Implementation

Strategic Focus on ESG

We realize that the future of our business is linked with the well-being of our associates, members and patients, the communities we serve, the healthcare system, and the environment. It’s with our stakeholders in mind that we’ve established five key metrics categories (the “Categories”) of our ESG program that align to our strategic business goals, supporting our commitments to sustainable business and improving health outcomes. These Categories are the driving force behind our impact platform and guide our ESG program.

 

     

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LOGO

We’ve developed quantitative and/or qualitative metrics within each Category to track, monitor, measure and report our performance. Transparent disclosures are a top priority, as such, we’ve mapped our ESG disclosures to frameworks established by the Sustainability Accounting Standards Board (SASB) Managed Care Standard, the Task Force on Climate-Related Financial Disclosures (TCFD), and the Global Reporting Initiative (GRI).

Our Impact Platform

We’ve set our intentions to have a positive well-being impact among all of our stakeholder groups and have developed a platform where we believe we can make the most difference. Our impact platform sets the direction for how we will advance health equity, address needs in our communities and drive sustainable change with shared value. The Categories may connect to one or more areas within the impact platform, reinforcing the interconnectedness of our holistic approach to ESG. We’ve highlighted below key elements of our ESG program along with some of our notable Category metrics.

 

LOGO

 

  

LOGO

 

  

LOGO

 

  

LOGO

 

For each person, we make it simpler for people to reach their best health.    For each community, we work to advance health equity and population health.    For the healthcare system, we help build more equitable business, governance and healthcare practices.    For the environment, we invest in the health and sustainability of our environment.
We are all on a unique journey to our own best health, so through empathy and a personalized approach, we not only address medical needs, but meet people where they are by helping our customers, employees – everyone – address human needs, too.    Where people live, work and play are inextricable from their health outcomes, so we’re passionate about taking on the social determinants of health that impact their communities on a local level.    The future of health depends on the health of the collective system, so alongside our partners, we’re striving to create a more equitable health ecosystem that incorporates sustainable business practices, to better serve all of us, and the next generation.    The health of individuals is deeply tied to the health of their environments, so we do our part to invest in, protect and care for the places and planet all people depend on.

 

     
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For Each Person

 

LOGO  

Human Capital Management

 

For each person starts with each of our associates, approximately 67,100 as of December 31, 2022, and our approach to human capital management. Not only are our associates intrinsically connected

under each dimension of ESG, they’re also essential to our Company’s success in delivering on our core strategy, creating positive healthcare experiences and providing human care for our members. We are committed to recruiting, developing, and retaining strong, diverse teams, and actively promoting a culture of inclusion and diversity within our workforce.

These efforts are overseen by our Board of Directors through the Organization & Compensation Committee, whose functions include oversight of the Company’s human capital management and inclusion and diversity policies and practices, which are implemented under the direction of our Chief Administrative Officer.

Our Culture, Engagement and Approach to Work

We believe that our members’ experience is linked to our associates’ experience—engaged, productive associates are the key to building a healthy company and caring environment where our associates go above and beyond for our members, driving innovation, and offering fulfilling experiences that incentivizes them to stay with us over the long-term. We provide opportunities for our associates to add to their personal well-being experiences that go beyond health to enhance their individual need for purpose, belonging and security. On average, our associates spend 7.5 years at our Company—a tenure testament to the culture of well-being we’re building.

Still, like many companies, we experienced lower engagement and higher turnover in 2021 and 2022 than in prior years. Our associate voluntary turnover rate (VTR) for 2022 was 17%, up from 15.1% in 2021. We measure VTR using data generated via Workday and include any full or part-time, regular associates who left voluntarily during each year; contractors and variable staffing pool (VSP) are excluded, as are associates resulting from 2022 acquisitions not yet transitioned to Humana’s Workday system at yearend (i.e. CenterWell Home Health).

However, associate engagement and well-being rates remained higher than average, despite challenges posed by the Great Resignation, COVID-19 and workforce optimization efforts to fulfill the Company’s commitment to execute on its $1 billion value creation initiative to allow for increased investment in our Medicare Advantage benefits and healthcare services capabilities.

 

  

 

87%

 

Of associates would recommend Humana
as a great place to work

 

    

 

87%

 

Of associates believe their leader really
cares about their well-being

 

    

 

84%

 

Of associates believe Humana is
committed to creating a work environment
that contributes to their health and well
-being

 

We regularly measure our success and opportunities to advance engagement through methods like a third-party administered Associate Experience Survey and continuous listening campaigns. Continuous listening involves our proactive solicitation, analysis and response to associate feedback. Pulse surveys are sent to associates throughout the year to get feedback on how we’re doing, allowing us to assess our approach to work and act when needed. We believe this helps to strengthen our culture and support associate engagement. We also provide survey results to our entire associate population and encourage leaders to use the information to create open, honest action plans with their teams to build upon and further deepen our collective engagement.

We believe strong Company culture starts with leadership at the top. Our CEO inspires Company culture by sending a weekly Company-wide email where he engages with associates on a variety of topics including business matters, current events, health and well-being, family and personal interests. A survey link is included within these communications encouraging associates to speak up and share their own experiences directly with our CEO, with assurance that their opinions will be held confidential and treated with respect.

Our culture is further strengthened by optimizing the well-being and effectiveness of our workforce. Through alternative work styles — home, hybrid home, office, hybrid office, and field — we help associates work more productively, communicate more easily and collaborate more freely. We encourage collaboration between leaders and their associates to identify and leverage the appropriate work style that both supports the achievement of business goals and personal work preferences. Alternate work styles enable associates to work from a job-appropriate location of their choice for all or some portion of their work schedule and to create a work schedule that better fits the diverse demands of today’s work environment. When managed effectively, alternate work styles can enhance a company’s employment brand, foster the development and effective delivery of innovative and diverse business solutions, right-size a company’s energy-consumption footprint, and increase associate engagement and well-being.

 

     

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Inclusion and Diversity

 

The Company’s Office of Inclusion & Diversity (our “I&D Office”) efforts are led by our Chief Inclusion   and Diversity Officer, who reports directly to the Chief Administrative Officer. The I&D Office connects to business groups across the enterprise to cultivate a diverse and inclusive culture that is representative of the communities we serve. By prioritizing I&D across our business, we enable associates to bring their whole selves to work,
while also driving the innovation and insights needed to better serve our diverse members and communities. Together with key partners like our Chief Health Equity Officer, our Director of Diverse Talent Strategy, our Executive Inclusion & Diversity Council (the “Council”), our Network Resource Groups (NRGs), local Inclusion
and Diversity Councils, and Culture & Engagement professionals we strive to accelerate our culture of inclusion
to build deep relationships   and create simple, personalized experiences for all of our stakeholders.

  

 

80%

 

Of associates have a strong sense
that they belong at Humana

 

       
  

 

30%

 

Of associates participated in at least
1 of our 10 associate-led NRGs
during 2022.

 

With nearly 9,200 members, the
Women’s NRG is the largest.

 

To help integrate inclusion and diversity into the fabric of the organization from the top down, the Council is led by our President and CEO, with top priorities consisting of (i) leading and informing the strategy to drive the hiring, development, promotion and retention of our full diverse workforce; (ii) creating and maintaining an inclusive culture; (iii) reviewing our supply base and spend for diversification opportunities; and (iv) improving transparency and accountability to sustain outcomes. The Council sets company-wide inclusion and diversity goals and objectives that complement our Talent & Diversity ESG Category metrics.

At our Company, we are committed to having balanced diversity at all levels and have developed a pathway for diverse talent within our recruiting initiatives. To achieve our recruiting and hiring goals we proudly partner with local and national advocacy groups, including the CEO Action for Diversity and Inclusion, the Catalyst CEO Champions for Change, and the OneTen Coalition, to provide information about open roles, assistance with resume preparation and application submission, and to design and execute other talent acquisition and development initiatives. We’re proud to be recognized as a Military Friendly employer. Under our Veterans Hiring Initiative, we partner with dozens of organizations for veteran recruitment, including the Wounded Warrior Project, United States Army Reserve, and Paralyzed Veterans of America, and have hired thousands of veterans and military spouses. We have also designed and implemented programs that enhance our hiring initiatives aimed toward women in technology, retiree/mature worker populations, and closing the hiring gap of persons with disabilities versus those without disabilities.

We’ve also incorporated balanced interview panels into our interview process, through which we strategically engage a broad spectrum of interviewers that bring greater diversity and perspective. This proven best practice strengthens the candidate experience and hiring of diverse talent, ensuring we get the right talent for any given role, and minimizes the potential for personal blind spots when evaluating candidates.

 

Our inclusion and diversity objectives also aim to build an awareness of biases and beliefs, identify differences and similarities of our multi-generational workforce and enable associates to leverage differences to drive innovation and create value. We are committed to growing our associates’ inclusion skills and diversity knowledge and provide a variety of associate training programs and workshop opportunities in areas of unconscious bias, disability awareness, cultural competency, racial equity, and social justice, among others. It is also our fundamental belief that every person has the right to a safe workplace. This includes having freedom of gender identity and expression, which we have included within our non-discrimination and anti-harassment policies.

  

 

81%

 

Of associates believe that in their organization, everyone has an equal chance to be successful regardless of individual differences (age, gender, ethnicity/race, religion, etc.).

 

Building balanced diversity within our workforce is a priority that’s demonstrated in our leadership goals – hiring and promotion of diverse talent, retention of diverse senior leadership (VP and above), inclusion, mentoring and leaders participating in cultural competency training – with shared accountability focused on driving inclusion and diversity throughout the enterprise. We’ve employed an approach to address areas of improvement and goal achievement that is linked to executive compensation (refer to section entitled “Compensation Discussion and Analysis – Associate Incentive Plan” within this proxy statement for more information on executive compensation). We receive workforce demographic data within our Workday system through self-disclosure by our associates, allowing us to provide transparent disclosures. The charts below represent our workforce demographics as of December 31, 2022.

 

     
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Associate Demographics

 

 

LOGO

I&D isn’t a program or a leadership initiative, or just a business imperative. It is the way we work, each and every day to deliver on our purpose. It is who we are as an organization – and it is the responsibility of all of us. I&D is how we sustain human care. Our associates’ vast experiences and perceptions—their unique characteristics, backgrounds and beliefs—drive the groundbreaking, strategic thinking that gives our Company its competitive edge in a diverse marketplace. Our approach fosters innovative thinking and creativity, expands insights and generates better business outcomes.

 

  

 

Talent & Diversity Category Metric

 

Representative Turnover Goal

Equitable Exits Within Leadership Representation

 

We’re working to ensure equitable exits among women and BIPOC in leadership levels of Director equivalent and above, as well as Associate Director/Lead positions and have set a goal of 0% difference within each demographic.

 

2022 Women Director Equivalent +: 6%

2022 Women Assoc. Director/Lead: 6%

 

2022 BIPOC Director Equivalent +: - 4%

2022 BIPOC Assoc. Director/Lead:    0%

 

    

 

Talent & Diversity Category Metric

 

Representation in Requisition Hiring

Leadership Representation in Requisition-based Hires

 

We’re monitoring the percent of requisition-based hires reflecting representation among women and BIPOC in leadership levels of Director equivalent and above, as well as Associate Director/Lead positions.

 

2022 Women Director Equivalent +: 54%  h 7% since 2021

2022 Women Assoc. Director/Lead:  54%  i 1% since 2021

 

2022 BIPOC Director Equivalent +:    27%  i 2% since 2021

2022 BIPOC Assoc. Director/Lead:     36%  h 5% since 2021

 

 

     

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Pay and Benefits Philosophy, Compensation and Financial Security

We believe all of our associates have the right to receive a fair living wage and we are committed to maintaining a pay and benefits philosophy that is market-based and recognizes an associate’s contributions so that we can attract and retain an engaged, talented team. Our Company’s pay and benefits structure is designed to motivate, incentivize and reward our associates—at all levels of the organization—for their skill development, demonstration of our values and performance. While our programs vary by location, associate type and business, they generally include:

 

LOGO          LOGO          LOGO

  Competitive Base Pay

 

  Associate Incentive Plan (Annual Bonus)

 

  Supplemental Pay (Including Overtime)

 

  Recognition Pay and Service Awards

 

  401(k) Retirement Savings Plan with

Company Match Program

 

  Life Insurance

 

  Short- and Long-Term Disability Insurance

 

  Tuition Assistance Program

 

 

 

  Medical, Dental and Vision Benefits

 

  Supplemental Health Benefits

 

  Long-Term Care Insurance

 

  Go365® Wellness and Rewards Program

 

  Health Plan Incentives

 

  On-site Health and Fitness Centers

 

  On-site Health Screenings and Vaccinations

 

 

 

  Paid Time Off, Paid Holidays, Paid Volunteer

Time Off and Jury Duty Pay

 

  Adoption Assistance

 

  Paid Parental Leave Program (6 Weeks)

 

  Paid Caregiver Time Off Program (2 Weeks)

 

  Employee Assistance Program

 

  Associate Discount Programs and Services

 

  Helping Hands Program

 

  Transit Services

Talent Development and Growth Opportunities

We champion the individual goals and development of our associates and provide a number of programs and resources to support their efforts. The Humana Learning Center gives our associates the opportunity to earn professional certifications through continued education programs and to participate in instructor-led and online courses designed to strengthen soft and hard-skills and enhance leadership development. Our Career Cultivation team sponsors workshops and events to promote associate accountability within their personal and professional growth as part of overall career development. In 2022, our associates averaged approximately 35 learning and development hours per active full-time associate. In addition, people leaders collectively spent over 145,000 total hours in learning and development; of which, over 25,000 hours (17%) were related to content specific to leadership development.

Our associates are also encouraged to participate in mentoring programs with people of various backgrounds and cultures. We view mentoring as an essential development tool for sharing skills and knowledge so we can all succeed. Our commitment to mentoring feeds the successful future of our Company and through our efforts 7,818 of associates engaged in mentoring relationships during 2022. We also utilize development programs to enhance talent within our business segments through targeted internal initiatives, where we aim to upskill and reskill existing associates for opportunities in new career pathways.

 

  

 

80%

 

Of associates believe Humana provides them with opportunity for growth and development

 

    

 

255,184

 

Volunteer hours tracked by 20,173 of our
associates in 2022

 

    

 

$2.2 Million

 

Total associate matching gift dollars made by The Humana Foundation in 2022 to 4,400 unique organizations

 

A Workplace With Purpose

Having a purpose and a connection to a community improves well-being. That’s why we strive to make it easy for our associates to give back, either as individuals or a team, to causes that ignite their passion and sense of purpose. Volunteerism is a tangible way to impact the health and well-being of the communities we serve and enrich our workplace.

We’ve created programs and practices to make volunteering easier and more vibrant for associates.

 

   

Our full-time associates annually receive eight hours of paid Volunteer Time Off (VTO).

 

   

We help associates discover and track volunteer opportunities through our Humana Together volunteer portal.

 

   

We integrate volunteerism in our leadership development and team-building.

 

     
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We offer a matching charitable gift program through The Humana Foundation.

 

   

We feature associates sharing their volunteerism stories on our Intranet and social media sites to inspire others.

 

   

We help our associates by reducing barriers in taking time away from work to get vaccinated, which in turn supports healthy communities.

Addressing the Needs of Our Members and Patients

Helping each of our members and patients achieve their optimal whole-person health has long been a strategic imperative for Humana. Whether it’s by focusing on preventive and primary care, managing health conditions, setting and achieving health-related goals, or finding the right care in the right place – at home, in the community, or through telehealth – we help make the journey toward health simpler for our members.

We’re also continuously working to ensure that our health plan products and services are as affordable as possible, while also creating pathways for access to healthcare, addressing social determinants of health (SDoH) and health-related social needs. Our work in these areas is essential to advancing health equity and improving health outcomes so that all of our members can receive the care they need. Thanks to processes such as integrated care delivery and using health screenings that consider SDoH and health literacy, we have a clearer view of each member’s very personal barriers to their best health. Please refer to our Value-Based Care Report for more information on these efforts.

 

  

 

Access to Healthcare Category Metric

 

Value-Based Primary Care Goal

Expand Geographic Presence

 

We’re working to grow and expand our geographic presence in value-based primary care to provide more access and high-quality care to patients, including those in underserved areas. We ended 2022 with 235 primary care centers, representing a 14% increase over the prior year.

 

    

 

Access to Healthcare Category Metric

 

State Medicaid Goal

Increase Medicaid Footprint

 

We’re working to expand the number of our state-based Medicaid contracts to deliver care to more individuals of this vulnerable population. As of January 1, 2023 we have Medicaid contracts in seven states: FL, IL, KY, LA, OH, SC, and WI.

 

For Each Community

 

 

LOGO

 

We engage and partner with city-, state-, and nationwide organizations that are making a daily impact in the communities we serve. Through volunteering, monetary investment and strategic collaboration, we’re able to multiply the impact of those on the ground and transform care through our commitment to reducing health disparities and advancing health equity for our members and communities.

Our Health Equity & Social Impact team is leading the way in addressing social needs and reducing health disparities to improve health outcomes for our members and communities. As part of their mission to establish health equity as a key business and culture driver, they offer insights to embed healthy living opportunities in our products and services, train employees and providers to help them offer more meaningful care and enable new insights through data-driven innovations. Their work centers on creating an equitable healthcare ecosystem so that every person has a fair, just and dignified opportunity to reach their full health potential. Additionally, this team continues to transform how our members are identified for and receive health need interventions. Through screenings during the new member onboarding process, we can identify what members need—and then connect them with resources and services to address those needs. Throughout these screenings, we leverage de-identified, population-level data analytics to measure our progress in offering meaningful interventions.

For over 41 years, The Humana Foundation has served as the philanthropic arm of Humana Inc. The Foundation is focused on health equity, which is the elimination of unjust, avoidable and unnecessary barriers in health and healthcare. The Foundation fosters evidence-based collaborations and investments that support seniors, Veterans, underrepresented populations and school-aged children in living connected, healthy lives.

 

  

 

$5.5 Million

 

Invested by The Humana Foundation supporting 9 community-based projects aimed to address SDoH in our hometown Louisville, KY in 2022.

 

    

 

$7.5 Million

 

Invested by The Humana Foundation to launch the Health Equity Innovation Fund, which will scale innovative solutions to disparities in mental health and nutrition.

 

    

 

1.24 Million

 

Medicare Advantage, Medicaid and Commercial members were screened for social health needs.

 

 

     

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For the Healthcare System

 

 

LOGO

 

Throughout our operations, we are dedicated to ensuring that every business decision we make reflects our commitment to improving the health and well-being of our members and patients, our associates, the communities we serve, and our environment. Our holistic, integrated approach to care and longstanding commitment to caring for vulnerable populations also afford us a unique opportunity to promote health equity

and address the effects of health disparities in the U.S. healthcare system. We have established policies and programs that illustrate our commitment to responsible business practices that lead to a more efficient, equitable and sustainable healthcare system.

Supplier Diversity

Diversity, Equity, and Inclusion is integral to how we practice, deliver and sustain human care to the communities we proudly serve, which is why we incorporate ESG principles into our procurement strategy—ensuring a fair and equitable approach to procurement. We understand that partnering with diverse suppliers and small businesses, and engaging with them to support common ESG goals, can lead to future sustainability and a reduction in environmental costs. We also understand that inclusive procurement practices deliver broad societal benefits by creating economic opportunities for traditionally underserved or underrepresented groups. That’s why we’ve made it a priority and strive to attract qualified, certified suppliers who reflect our members, patients, associates and the communities we serve. Leveraging these suppliers now and in the future is a win-win for everyone.

Our Supplier Diversity Program promotes an inclusive approach to procurement that ensures we invest our dollars with a balance of partnerships with historically underutilized businesses. We also support the growth of small and diverse-owned businesses by being a resource partner for them, through initiatives like our Supplier Diversity Mentor-Protégé program. The program offers half-day, onsite seminars featuring leadership from across our organization exploring topics impacting business growth and operations of small and diverse businesses. The program is designed to identify and overcome barriers that typically inhibit or restrict the success of small and diverse businesses and better position them for growth, sustainability and inclusion.

We also survey suppliers annually through a sustainability scorecard that addresses sustainability, diversity practices and supplier performance. The scorecard is distributed at year-end to our top 50 Prime Suppliers (top spend suppliers) and we typically receive a 25-30% overall spend response rate. We also hold our suppliers accountable for complying with our Company’s Standard of Excellence and Ethics Every Day policy – to the same degree as our associates.

Governance and Accountability

Throughout our operations, we are dedicated to ensuring that every business decision we make reflects our Standards of Excellence, commitment to accountability, health equity and improving health and well-being. Our governance practices and policies reflect strong controls that provide a solid foundation for our continued success.

Quality Assurance. We are committed to supporting the delivery of consistent high-quality care, promoting efficient outcomes in the healthcare system and ensuring that healthcare remains affordable for all members and patients. Further, in a healthcare industry increasingly driven by quality, we have a corporate Quality Improvement (QI) program – with practicing network physicians as members of various quality subcommittees – to monitor, evaluate and facilitate improvement in the quality of health care services provided to our members. The QI program is overseen by our Corporate Quality Improvement Committee (CQIC), which among other things, promotes alignment to the third dimension of quality (experience and outcomes) through collaboration with stakeholders, personal accountability and speaking up when quality does not meet our standards.

Ethics and Compliance. Our associates are integral to responsibly running our company and key to our ethics and compliance practices. That’s why we require Humana’s independent directors, executive officers and all other associates, and contractors to complete an annual ethics and compliance training course, which includes detailed training in cybersecurity, whistleblowers, conflicts of interest and more. In addition to required annual training, our Enterprise Compliance team regularly communicates and engages with associates on ethics and compliance topics throughout the year. We also enforce Standards of Conduct and a separate Compliance Policy, which are specifically designed for our contracted healthcare providers and third parties in effort to deter fraud, waste and abuse.

Responsible Data Use and Data Privacy. As we evolve to deliver more services and goods through digital operations, we recognize our responsibility to protect member data and patient privacy, as well as use enterprise-level analytics to continue to equitably innovate for those we serve. Integrating digital capabilities across the organization will further accelerate our Company’s move toward differentiated experiences for our customers at the intersection of healthcare and lifestyle, tailored especially to the needs of seniors. We recognize that our emphasis on technology comes with great responsibility as our customers trust us with keeping their information safe. To that end, we are proud to be an industry leader in the adoption of principles and governance to guide our implementation of emerging technologies through interdisciplinary committees that establish governance over the deployment and quality of Artificial and Augmented Intelligence models. We have also signed the EqualAI pledge committing to ensuring our Artificial and Augmented Intelligence tools do not incorporate unintentional bias, and we require all of our Artificial or Augmented Intelligence models that inform decisions about individuals to be reviewed to detect inadvertent bias. We further ask our vendors who utilize Artificial and Augmented Intelligence tools to sign the EqualAI pledge or another similar pledge.

 

     
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Cybersecurity. We are committed to continuously enhancing and strengthening our technology infrastructure and security protocols to protect against security breaches. We employ best-practice precautions to safeguard information and protect our members’ data by deploying defensive practices against the ever-evolving cyber threat landscape. This involves routine measuring and maturing of our cybersecurity capabilities and actively monitoring risks posed by threat actors. Additionally, we have established formal data governance, which includes accountability, oversight, processes and controls to ensure our data usage transparency and non-repudiation and we refresh our data privacy and security policies at least annually. Our associates are provided annual cybersecurity training led by our Enterprise Information Protection team, on how to avoid security vulnerabilities and equip them with the necessary tools to protect sensitive data and to reduce risk. We also test our associates’ knowledge through internal phishing campaigns – tracking and reporting aggregated outcomes to leadership. To further reinforce our accountability in this area, we engage an independent third-party audit firm to perform an Annual Service Organizational Controls (SOC) 2 audit of enterprise claims platforms within the following Trust Services Criteria: availability, confidentiality, security and processing integrity. We report data breaches, as required by law, to the U.S. Department of Health and Human Services (HHS), Office for Civil Rights (OCR); our reports are publicly available, free of charge, and can be obtained through the OCR Portal at https://ocrportal.hhs.gov/ocr/breach.

 

Associate Physical Safety and Security. We integrate a culture of safety and security into all aspects of our business to provide our associates, members, patients, contractor a safe and secure facility. We are committed to protecting people and safeguarding key assets, properties and information. We have an Enterprise Safety and Security Policy that applies to our associates, facilities (owned or leased), and anyone requesting facility admittance regardless of relationship. We also maintain and utilize Company established resources such as the Environmental Health and Safety Manual, Incident Reporting System, Associate Safety Handbook and Associate Emergency Preparedness Training to manage/mitigate occupational health and safety. Our safety and security team periodically performs on-site compliance audits to ensure safety plans and practices are implemented, in addition to providing training tools and information.

     

 

92%

 

Of associates trust Humana would take appropriate action if a physical safety or security concern/incident was reported

 

     
     

 

93%

 

Of associates feel safe and protected from physical risks while working

 

 

  

 

Talent & Diversity Category Metric

 

Diverse Supplier Spend Goal

Increase Supplier Diversity

 

We’re working to increase our diverse supplier base through an inclusive and equitable approach to procurement and set yearly goals to increase total diverse supplier spend among our Prime Suppliers.

Our 2022 target increase was 9%.

 

2022 Total Diverse Spend: $408 million, or 8.85% of total supplier spend

 

    

 

Product Quality & Safety Category Metric

 

Star Ratings Goal

Continue Leadership of Members in MA Plans with 4+ Star Rating

 

Our commitment to quality of care, patient-centered clinical outcomes and customer service is reflected in the consistent strength of our MA plan’s Star Ratings.

 

Membership in MA plans with 4+ Star Rating***: 4.9 million members (2023); 100,000-member increase over 2022.

 

 

*** 

Membership totals in MA plans with 4+ Star Rating reflect membership as of October 2022 when Star Ratings were released by the Centers for Medicare & Medicaid Services (CMS).

For the Environment

 

 

LOGO

 

We know that transforming healthcare requires transforming the way we address environmental risks to health. Our commitment to the health of our planet is stronger than ever. We recognize there is an undeniable link between our physical and emotional well-being and the health of the environment. To that end, we are continuing to invest our time and resources where it matters most—not just because it’s good business practice, but because we believe in a bright future.

We also understand that health is local, so we are engaged at a state and community level to address the health-related social needs of our members and communities, especially communities that have been historically underserved. Those same communities are often disproportionately affected by climate change, as evidenced in health outcomes and disaster recovery data, so we know our focus on these areas can have a significant impact.

As a services company, our direct environmental impacts are concentrated within our internal operations. As such, our focus is on areas where we feel we can make the most impact: reducing our greenhouse gas emissions (GHG) and waste from our operations; deploying water conservation efforts; and adopting renewable energy solutions. We understand that climate change impacts pose risks and opportunities for our business and seek to manage such impacts in several ways, including: continuous strengthening of our already robust business continuity program, investing in energy management and efficiency projects and applying financial incentives to support efforts toward reducing our environmental footprint. We also set challenging environmental targets, as shown below, that promote collaboration with vendors and associates to achieve them. These efforts mitigate risks and demonstrate our commitment by validating the intrinsic link between environment and health.

 

     

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Our Workplace Solutions Environmental Sustainability (WSES) team, overseen by our Chief Administrative Officer, aims to support Humana’s lifelong well-being strategy by ensuring that we are doing our part to take on climate change, pollution and other environmental factors that impact our health. This team is responsible for day-to-day planning, coordination and implementation of the Company’s operational environmental sustainability policies, including those around energy management and climate-change mitigation/adaptation.

We provide a full report of our GHG emissions, energy consumption and water usage within our Impact Report, available on www.humana.com, refer to the “Environmental Year-over-year Data Inventory Table.” We also align our environmental reporting to the framework established by the Task Force on Climate-Related Disclosures (TCFD). We encourage you to review our Environmental Sustainability Policy Statement and our 2022 CDP Report to learn more about our sustainability efforts and areas of concentration.

Science-based Target

In 2021, we announced our intention to create a more robust next generation environmental goal to address climate change that would align with criteria established by the Science Based Targets initiative (SBTi). Since then, we’ve been developing a science-based target (SBT) that includes Scopes 1, 2 and 3 and have presented our proposal to SBTi for official validation. Among other strategies, our SBT will include continued investment and improvement in our facilities, which we know is critical to achieve energy-efficient buildings, to reduce the amount of energy we use, and the amount of waste generated.

This work is an expansion of goals that we set in 2018, to uphold our pledge to make the planet healthier. At that time, we introduced innovative programs and proven practices, such as centralizing office waste and recycling bins, reducing printers, and donating office furniture. Three years later, keeping in line with best practices around goal setting, we expanded our goal boundary to include certain additional Humana-owned and leased properties and recalculated our goal progression over the last five years. Now that we’ve surpassed our five-year objectives, we’re looking at the decade ahead. We will continue to invest in the health and sustainability of the environment around by tackling ambitious new goals that continue to reduce waste and pollution and mitigate other environmental factors that impact our health. Our SBT will expand on our efforts to reduce emissions and waste through Scope 1 and Scope 2 initiatives and it is designed to spur innovation and efficiency, boost investor confidence and align with national benchmarking. We understand that a path forward to net zero emissions is important to our collective future and we’re analyzing tactics, appropriate to our business, that allow us to utilize our SBT to contribute to future net zero goals.

Components of our near-term SBT—designed using climate science, SBTi’s methodology and SBTi’s official target setting tool—are illustrated below. We anticipate receiving SBTi’s validation of our SBT during Summer 2023 and will communicate accordingly.

 

 

Scope 1 and Scope 2

      

 

Scope 3

Humana commits to reduce absolute Scope 1 and Scope 2 GHG emissions 54.6% by 2032 from a 2019 base year.

    

Humana commits to a 30% absolute reduction in Scope 3 GHG emissions covering purchased goods and services (PG&S) and upstream transportation by 2032 from a 2021 base year.

Paper Reduction and Water Conservation

We are working to reduce waste in the materials we send to our customers, including focusing on paper reduction. When and where possible, we are recycling paper, cardboard, metals, plastics, glass and other types of materials and products. For many of our workspaces, we have adopted the use of centralized shared recycle and waste bins, replacing the need for desk-side bins.

We’re also maximizing technology to save paper. In our facilities, we have reduced the number of printers in our offices to adjust to the shift from paper printing to using the Cloud to store documents. In addition, we have implemented Cloud and access card printing and have defaulted our printers to do double-sided printing. Leveraging digital collaboration tools to house and share documents, which eliminates unnecessary printing and increases collaboration.

This focus on paper reduction is also helping to reduce the amount of paper mail received by our customers. We’re making it easier for them to sign-up for and receive paperless communications through our website, which has the added benefit of reducing print and postage costs.

We are also in the process of assessing water conservation efforts, beginning with our newer locations with future plans to roll these efforts out to all locations. At our facilities we offer water bottle filling stations to encourage the use of refillable water bottles and reduce single-use bottles. We also use low-flow and water-efficient fixtures as part of our design standards.

 

     
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Environmental Impact Category Metric

 

Paper Reduction Goal

Print and Postage Savings

 

We’re working to reduce print and postage costs by making it easier to sign-up for and receive paperless communications in addition to transitioning more communications to digital channels. Our cumulative print and postage savings goal is $5MM by the end of 2023.

 

2022 Identified Savings: $2.4 million

 

    

 

Environmental Impact Category Metric

 

Digital Adoption Rate Goal

Increase Paperless Communications

 

We are working to increase the digital adoption rate (DAR) of members who enroll for paperless communications by 15% by the end of 2025.

 

DAR as of November 2022: 23% opt-in increase, or 106% of goal

 

Renewable Energy

Much of our renewable energy effort has gone toward making Humana’s buildings more efficient, including making repairs and replacing equipment, resulting in a better associate experience and more energy-efficient buildings. Our headquarters in downtown Louisville, Kentucky has been retrofitted with solar panels on the rooftop, and we’re in the process evaluating the best sites to install renewable energy. As part of our efficiency work, we use certifications to benchmark how well our buildings are performing. Some certifications we are pursuing include:

 

   

ENERGY STAR Certification for Buildings. We’re continuing to replace all lights in all of our owned and leased facilities with LEDs and pursuing the goal of reaching ENERGY STAR certification in all eligible Humana locations. ENERGY STAR certified sites on average use 35% less energy than comparable sites, and Humana will continue to leverage ENERGY STAR as a key measuring stick to help achieve our science-based target.

 

   

TRUE Zero Waste Certification. Last year we reported that our West Chester, Ohio, pharmacy distribution site was pursuing a subset goal of zero waste certification. The facility achieved designation as a TRUE certified facility in January 2023.

We’re also working toward energy efficiencies within our mobile vehicles and aircrafts. For the past few years, we’ve been making our fleet of mobile marketing offices greener. These mobile marketing offices offer potential members the opportunity to talk 1-on-1 with a marketing agent and enroll in a plan by bringing the office to them. We’re pleased to report that all of our mobile marketing offices are now fitted with solar panels, which has allowed us to reduce the cost to power as well as the amount of times the battery needed to be recharged. Our Business Aviation team now seeks to measure their environmental footprint and has pursued the National Business Aviation Association (NBAA) Sustainable Flight Department Accreditation in four categories: Flight; Operations; Ground Support and Infrastructure.

 

    Additional ESG Resources
 

LOGO

 

 

 

Humana Impact Report

 

https://www.humana
.com/about/impact

 

Policy Statements

 

https://humana.gcs-web.com

 

-   Environmental Sustainability Policy & Standard

 

-   Supplier Diversity Statement

 

-   Statement of AI Principles

 

Ethics

 

https://humana.gcs-web.com
/corporate-governance

 

-   Ethics Every Day

 

-   Anti-Corruption Statement

 

Supplier Diversity Program

 

https://www.humana
.com/supplier-information/supplier-diversity

 

   

 

Value-Based Care Report

 

https://www.humana
.com/provider/news/value-based-care

 

Population Health

 

https://populationhealth
.humana.com

 

Data Privacy and Cybersecurity

 

https://www.humana
.com/legal/privacy

 

Standards of Excellence

 

https://www.humana
.com/about/standards-of-excellence

 

Public Policy

 

https://policy.humana.com

 

   

 

Humana Healthcare Research

 

https://research.humana
.com/

 

The Humana Foundation

 

https://www.humanafoun
dation.org

 

Fraud, Waste, and Abuse

 

https://www.humana.com
/legal/fraud-waste-and-abuse

 

-  Ethics Every Day for Contracted Healthcare Providers & Third Parties

 

-  Compliance Policy for Contracted Healthcare Providers & Third Parties

 

 

 

     

Environmental, Social and Governance (ESG)    2023 Proxy Statement  |  Humana

 

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Awards and Recognition

We are pleased to have received recognition for our 2022 ESG efforts and we appreciate the acknowledgement of our commitment to inspiring health and well-being. Highlighted below are just a few of our valued achievements, however a complete list of awards and recognition is available on our website at www.humana.com – from there click “Corporate Responsibility” and then click “See Our Awards.”

 

LOGO

 

     
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Director Compensation

 

2022 Director Compensation Program

During 2022, our directors were compensated pursuant to the following schedule:

 

   

Annual Retainer (1)

  

$120,000

 

Non-Employee Chairman of the Board

Additional Annual Retainer

  

$240,000

 

Committee Chairman fee per year:

1. Audit Committee Chair

2. Organization & Compensation Committee Chair

3. All other Committee Chairs

  

$25,000

$20,000

$15,000

 

Executive Committee Member fee per year

  

$12,000

 

Common Stock per year

(1st Business Day of January)(2)(4)(5)

  

$190,000 in common stock

(variable # of shares)

 

Charitable Contributions Annual Match

  

up to $40,000

 

Group Life and Accidental Death Insurance —

(except Chairman)(6)

  

$150,000 of coverage

 

Group Life and Accidental Death Insurance — Chairman

  

$400,000 of coverage

 

Business Travel Accident Insurance

  

$250,000 of coverage

 

Restricted Stock Units

Granted Initial Date of Election(3)

  

Restricted Stock Unit grant equal to the dollar value

of the then current annual stock grant for directors

 

 

(1)

The annual cash retainer for each non-employee director is paid in equal amounts on a monthly basis during the service year. If a director ceases service on the Company’s Board of Directors during a year, the final cash retainer payment will be for the final month during any portion of which the director serves on the Company’s Board of Directors. A non-employee director will receive the full annual cash retainer amount for the initial year in which the director serves on the Company’s Board of Directors, regardless of the director’s initial date of election.

(2)

The annual common stock retainer is paid in the form of restricted stock units, vests at the end of the year of service related to the retainer, and will be pro-rated for any service of less than the full year in respect of which the award is granted.

(3)

The initial award of restricted stock units is forfeited if the director serves less than one year on the Company’s Board of Directors. This initial award is in lieu of the annual common stock retainer for the year in which the director was first elected to the Board, but the director would receive the annual common stock retainer commencing in January of the year following election.

(4)

Pursuant to our revised Directors Stock Retention Policy, each non-employee director must maintain a minimum equity ownership level of five times the annual cash retainer. For additional information, please refer to “Corporate Governance — Corporate Governance Policies — Director Stock Ownership Guidelines” in this proxy statement.

(5)

Pursuant to the Company’s 2019 Amended and Restated Stock Incentive Plan, in no event shall any non-employee director of the Company be granted Awards that would result in total compensation for such director in connection with their service on the Company’s Board of Directors in excess of (a) with respect to a non-employee director, $1,000,000, and (b) with respect to a non-employee Chairman of the Board, $1,500,000, in each case, in any calendar year.

(6)

Coverage amount decreases 50% at age 70.

 

     

Director Compensation    2023 Proxy Statement  |  Humana

 

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2022 Compensation of Our Directors

The following table shows the compensation earned by our non-employee directors in connection with their service on our Board of Directors during all or a portion of the 2022 fiscal year:

 

Name(1)(2)

(a)

 

Fees
Earned
or

Paid in

Cash

($)(3)

(b)

 

Stock

Awards

($)(3)(4)(5)
(c)

 

Option

  Awards  

($)

(d)

 

Non-Equity

Incentive Plan

 Compensation 

($)

(e)

 

 

Change in
Pension

Value and
Nonqualified
Deferred

 Compensation 

Earnings($)(7)

(f)

 

All Other

 Compensation 

($)(8)

(g)

 

Total

($)

(h)

 

Raquel C. Bono, M.D.

 

120,000

 

189,969

 

—  

 

—  

 

—  

 

2,982

 

312,951

Frank A. D’Amelio

 

145,000

 

189,969

 

—  

 

—  

 

—  

 

33,809

 

368,778

David T. Feinberg, M.D.

 

120,000

 

189,903

 

—  

 

—  

 

—  

 

1,282

 

311,185

Wayne A. I. Frederick, M.D.

 

120,000

 

189,969

 

—  

 

—  

 

—  

 

40,705

 

350,674

John W. Garratt

 

135,000

 

189,969

 

—  

 

—  

 

—  

 

1,342

 

326,311

Kurt J. Hilzinger

 

372,000

 

189,969

 

—  

 

—  

 

—  

 

43,296

 

605,265

David A. Jones, Jr.

 

147,000

 

189,969

 

—  

 

—  

 

(94,279

)

 

42,506

 

285,196

Karen W. Katz

 

120,000

 

189,969

 

—  

 

—  

 

—  

 

34,298

 

344,267

Marcy S. Klevorn

 

130,000

 

189,969

 

—  

 

—  

 

—  

 

22,456

 

342,425

William J. McDonald

 

120,000

 

189,969

 

—  

 

—  

 

—  

 

45,877

 

355,846

Jorge S. Mesquita

 

120,000

 

189,969

 

—  

 

—  

 

—  

 

2,440

 

312,409

James J. O’Brien

 

140,000

 

189,969

 

—  

 

—  

 

—  

 

43,141

 

373,110

             

Marissa T. Peterson

  45,000   63,169 (6)    —     —     —     21,256   129,425

Brad D. Smith

 

120,000

 

190,157

 

—  

 

—  

 

—  

 

194

 

310,351

 

(1)

During 2022, Mr. Broussard served as President and Chief Executive Officer of the Company, and therefore, as an employee director, did not earn compensation in connection with his service on our Board. Mr. Broussard’s compensation as our Chief Executive Officer is discussed under “Executive Compensation” in this proxy statement.

(2)

Ms. Peterson did not stand for re-election at the April 21, 2022 Annual Meeting of Stockholders. Compensation disclosed represents amounts earned for service during 2022 prior to her departure from our Board.

(3)

Under the Humana Inc. Deferred Compensation Plan for Non-Employee Directors, which we refer to as the Deferred Compensation Plan, non-employee directors may make an irrevocable election each year to defer compensation paid to them by the Company in the form of cash or stock for services rendered as Board members. For 2022, Mmes. Katz and Klevorn, Drs. Bono and Frederick, and Messrs. D’Amelio, Hilzinger, and McDonald each deferred their stock compensation. Refer to footnote 1(c) to the section entitled “Stock Ownership Information — Security Ownership of Directors and Executive Officers” for a disclosure of the number of Shares of our common stock that have been deferred by each director. A director electing to defer cash can choose any of the investment options offered in the Deferred Compensation Plan using Charles Schwab’s Retirement Plan Services (other than the Humana Common Stock Fund) or can invest in stock units that have a value relative to that of our common stock. For 2022, Messrs. Hilzinger and McDonald and Mmes. Katz and Peterson each elected to defer a portion or all of their cash compensation under the Deferred Compensation Plan.

(4)

On January 3, 2022, when the fair market value of our common stock was $461.09, each director in office at that time, other than Mr. Broussard, was granted a restricted stock unit award of 412 Shares, representing the annual grant of approximately $190,000 in common stock. Dr. Feinberg and Mr. Smith each received a restricted stock unit award representing approximately $190,000 upon their respective election dates, using the fair market value of our common stock on that date as follows: March 1, 2022 ($430.62) to determine the 441 Shares awarded to Dr. Feinberg and September 15, 2022 ($492.6365) to determine the 386 Shares awarded to Mr. Smith. The amount shown in column (c) (“Stock Awards”) above is the grant-date fair market value times the number of Shares awarded calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718.

(5)

Vested restricted stock units with a payout deferral election made by the director accrue quarterly dividend equivalent rights that are reinvested into the director’s account as additional restricted stock units and will be included in the final restricted stock unit payment

 

     
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  when the Shares are issued in accordance with the director’s payout election. This column does not include dividend equivalent units that have accrued through December 31, 2022 nor includes dividend equivalent rights paid on any such deferred Shares.
(6)

Pursuant to equity award agreements, unvested restricted stock units will be prorated upon vesting for any portion of the year that the director did not serve. Ms. Peterson received a prorated number of restricted stock units upon vesting. The value represented above in column (c) is the prorated value of the number of Shares that vested on December 31, 2022, using the grant date fair market value of $461.09.

(7)

Non-employee directors elected subsequent to 1997 do not receive any retirement benefits. As he was first elected to the board in 1993, Mr. Jones is the only director that will have retirement benefits under this former retirement policy, including: (A) at the director’s election, either: (x) an annual retirement benefit for the life of the director in the amount of $38,000, the annual retainer fee in effect for 1997; or (y) in lieu thereof, an actuarially equivalent joint and survivor annuity payment; and (B) an annual matching charitable contribution benefit of $19,000 for the life of the director.

(8)

We pay for or reimburse our directors’ travel, lodging and other reasonable out-of-pocket expenses in connection with attendance at board, committee and stockholder meetings. From time to time, we may transport one or more directors and members of their immediate family to and from such meetings or other Company business on Company aircraft. Directors may elect to participate in the medical and dental benefit programs offered to all our employees at a rate comparable to the rate paid by employees. In 2022, Mr. McDonald and Mmes. Katz and Peterson, elected to participate. Under the terms of our director compensation policy, each non-employee director who participates in medical and dental plans provided by the Company will, for two years following the date of completion of a change in control, be eligible to participate in medical and dental plans on substantially the same terms as immediately prior to the change in control, including the requirement to pay premiums at the same rates as our associates. We also reimburse directors for other reasonable expenses related to board service, such as director education, which amounts are not included in the table above. In addition, we pay certain local occupational taxes and life and accidental death insurance premiums per outside director, in each case as disclosed below, and provide a matching charitable gift program. The “All Other Compensation” amount above includes the following amounts earned in connection with service on our Board of Directors:

 

Director

Matching
  Charitable Gift  

($)

  Occupational  

Tax

($)

Life
  Insurance  

($)

  Other  

($)

 

Total –

All Other
  Compensation  

($)

Raquel C. Bono, M.D.

 

—  

 

296

 

2,286

 

400

 

2,982

Frank A. D’Amelio

 

31,164

 

359

 

2,286

 

—  

 

33,809

David T. Feinberg, M.D.

 

—  

 

292

 

990

 

—  

 

1,282

Wayne A. I. Frederick, M.D.

 

40,000

 

291

 

414

 

—  

 

40,705

John W. Garratt

 

—  

 

838

 

414

 

90

 

1,342

Kurt J. Hilzinger

 

40,000

 

8

 

3,168

 

120

 

43,296

David A. Jones, Jr.

 

40,000

 

1,318

 

1,188

 

—  

 

42,506

Karen W. Katz

 

31,900

 

24

 

2,286

 

88

 

34,298

Marcy S. Klevorn

 

20,500

 

768

 

1,188

 

—  

 

22,456

William J. McDonald

 

40,000

 

68

 

2,286

 

3,523

 

45,877

Jorge S. Mesquita

 

—  

 

1,252

 

1,188

 

—  

 

2,440

James J. O’Brien

 

40,000

 

855

 

2,286

 

—  

 

43,141

Marissa T. Peterson

 

—  

 

20,860

 

396

 

—  

 

21,256

Brad D. Smith

 

—  

 

—  

 

194

 

—  

 

194

 

     

Director Compensation    2023 Proxy Statement  |  Humana

 

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Stock Ownership Information

 

 

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934, or the Exchange Act, requires our directors and executive officers, and persons who beneficially own more than ten percent of a registered class of our equity securities, to file with the SEC and the NYSE reports of ownership and reports of changes in ownership of our common stock and our other equity securities. These reports generally are due within two business days of the transaction. Executive officers, directors, and greater than ten percent stockholders are required to furnish us with copies of all the forms they file.

During the year ended December 31, 2022, based solely on a review of the reports furnished to the Company, or written representations by persons subject to Section 16(a), the Company believes that all executive officers, directors, and greater than ten percent beneficial owners of our common stock complied with Section 16(a) filing requirements applicable to us; except for the late filing of one report relating to four transactions by Mr. Huval that was caused by an administrative, electronic submission error through no fault of the reporting person. We have a program to oversee the compliance of our executive officers and directors in their reporting obligations, and following our becoming aware of this omission, we completed a review of our controls and procedures governing transactions in Company securities.

Security Ownership of Certain Beneficial Owners of Company Common Stock

We know of no person or entity that may be deemed to own beneficially more than 5% of our outstanding common stock except for:

 

       Number of Shares     

 

Percent of Class        
Outstanding
(1)        

 

BlackRock, Inc.

55 East 52nd Street

New York, New York 10055

 

    

 

11,628,073 Shares

 

 

 

   9.3%(2)         

 

 

FMR LLC

245 Summer Street

Boston, Massachusetts 02210

 

    

 

6,866,128 Shares

 

 

 

   5.5%(3)         

 

 

T. Rowe Price Associates, Inc.

100 E. Pratt Street

Baltimore, Maryland 21202

 

    

 

7,623,150 Shares

 

 

 

   6.1%(4)         

 

 

The Vanguard Group

100 Vanguard Boulevard

Malvern, Pennsylvania 19355

 

    

 

11,357,974 Shares

 

 

 

   9.1%(5)         

 

 

Wellington Management Group LLP

280 Congress Street

Boston, Massachusetts 02210

 

    

 

7,611,181 Shares

 

 

 

   6.1%(6)         

 

 

 

(1)

The percentage of ownership is based on 124,974,643 Shares of our common stock outstanding as of December 31, 2022.

(2)

Based upon a Schedule 13G filed with the SEC for the period ended December 31, 2022, BlackRock, Inc. reports that through various subsidiaries, it has sole power to vote 10,528,370 Shares and has sole dispositive power over 11,628,073 Shares.

(3)

Based upon a Schedule 13G filed with the SEC for the period ended December 31, 2022, FMR LLC reports that through various subsidiaries, it has sole power to dispose or to direct the disposition of 6,866,128 Shares.

(4)

Based upon a Schedule 13G filed with the SEC for the period ended December 31, 2022, T. Rowe Price Associates, Inc. reports that through various subsidiaries, it has sole power to vote 3,339,442 Shares and has sole dispositive power over 7,610,595 Shares.

(5)

Based upon a Schedule 13G filed with the SEC for the period ended December 31, 2022, The Vanguard Group reports that through various subsidiaries, it has shared power to vote 186,251 Shares, sole dispositive power over 10,829,960 Shares, and shared dispositive power over 528,014 Shares.

 

     
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Humana  |  2023 Proxy Statement    Stock Ownership Information

 


Table of Contents
(6)

Based upon a Schedule 13G jointly filed with the SEC for the period ended December 31, 2022, Wellington Management Group LLP, reports that it and each of its direct and indirect subsidiaries, Wellington Group Holdings LLP and Wellington Investment Advisors Holdings LLP, have shared power to vote 7,183,766 Shares and have shared dispositive power over 7,611,181 Shares. The filing further reports that Wellington Management Company LLP, an indirect subsidiary of Wellington Management Group LLP, has shared power to vote 6,651,090 Shares of the total reported Shares and has shared dispositive power over 6,762,602 of the total reported Shares.

Security Ownership of Directors and Executive Officers

The following table shows stock ownership as of January 15, 2023, by (i) each of our director nominees; (ii) Bruce D. Broussard, our President and Chief Executive Officer; (iii) Susan M. Diamond, our Chief Financial Officer; (iv) each of our three other highest compensated executive officers serving as of December 31, 2022, (we collectively refer to these officers in this proxy statement as our Named Executive Officers, or NEOs); and (v) by all our director nominees and executive officers as a group, including those named above.

 

   
  Company Common
Stock Beneficially
Owned as of
January 15, 2023
(1)(2)

Percent

of

Class as of
    December 31, 2022
(3)    

   

Raquel C. Bono, M.D.

  397

 

 

 

   

Frank A. D’Amelio

  20,634

 

 

 

   

David T. Feinberg, M.D.

  441

 

 

 

   

Wayne A.I. Frederick, M.D.

  440

 

 

 

   

John W. Garratt

  1,255

 

 

 

   

Kurt J. Hilzinger

  19,448

 

 

 

   

David A. Jones, Jr.

  43,240

 

 

 

   

Karen W. Katz

  590

 

 

 

   

Marcy S. Klevorn

  436

 

 

 

   

William J. McDonald

  2,276

 

 

 

   

Jorge S. Mesquita

  1,223

 

 

 

   

James J. O’Brien

  1,414

 

 

 

   

Brad D. Smith

  0

 

 

 

   

Bruce D. Broussard

  143,690

 

 

 

   

Susan M. Diamond

  18,935

 

 

 

   

T. Alan Wheatley

  20,328

 

 

 

   

Timothy S. Huval

  15,606

 

 

 

   

Joseph C. Ventura

  18,822

 

 

 

   

All directors and executive officers as a group (24 in number, including those named above)

  395,918   0.32%

 

(1)

Beneficial ownership of Shares, for purposes of this proxy statement, includes Shares as to which a person has or shares voting and/or investment power. Therefore, any restricted stock for which a person has voting power and all share equivalents in the Humana Retirement Savings Plan are included. These footnotes describe whenever an individual Shares voting and/or investment power over the Shares beneficially owned by them.

The number of Shares listed:

 

  (a)

Includes certain Share equivalents held for the benefit of the individuals in the Humana Retirement Savings Plan as of December 31, 2022, over which the employee participant has voting power and investment power. As of December 31, 2022, our Named Executive Officers held 3,396 of such Share equivalents in the Humana Retirement Savings Plan, while all of our executive officers as a group (11 in number, including our NEOs) held 3,515 of such Share equivalents.

  (b)

Does not include the initial stock retainer of 386 restricted stock units granted to Mr. Smith on his September 15, 2022 election date pursuant to our 2022 director compensation program. The restricted stock units represent approximately $190,000 and

 

     

Stock Ownership Information    2023 Proxy Statement  |  Humana

 

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  were determined using the grant date fair market value of our common stock. The restricted stock units are expected to vest in full on the first anniversary of the applicable election date, unless service on the Board is less than one year in which case the restricted stock units will be forfeited in their entirety.
  (c)

Includes unvested restricted stock unit awards of our directors and executive officers which are scheduled to vest within 60 days after January 15, 2023, as follows (performance-based restricted stock units are shown at the maximum level):

 

   

David T. Feinberg, M.D.

     441  
 

Bruce D. Broussard

     32,026  
 

Susan M. Diamond

     7,504  
 

T. Alan Wheatley

     7,246  
 

Timothy S. Huval

     5,306  
 

Joseph C. Ventura

     5,306  
 

All directors and executive officers as a group (24 in number, including our NEOs)

     80,049  

 

  (d)

Includes Shares which may be acquired by these individuals through the exercise of options, which are exercisable currently or within 60 days after January 15, 2023 under either the 2011 Stock Incentive Plan or the 2019 Amended and Restated Stock Incentive Plan. As of January 15, 2023, none of our non-employee directors held exercisable options. Exercisable options held by our NEOs and other executive officers as of January 15, 2023, or exercisable within 60 days thereof, were as follows:

 

   

Bruce D. Broussard

     41,624  
 

Susan M. Diamond

     6,487  
 

T. Alan Wheatley

     8,072  
 

Timothy S. Huval

     5,332  
 

Joseph C. Ventura

     9,031  
 

All executive officers as a group (11 in number, including our NEOs)

     115,035  

 

  (e)

Does not include stock awards to certain of our directors that have been deferred pursuant to our Deferred Compensation Plan for Non-Employee Directors. These deferred stock awards include the initial award of 7,500 restricted stock units to each of Messrs. McDonald and O’Brien when first elected as a director, which by its terms must be held until the recipient is no longer serving on our Board of Directors. As of January 15, 2023, the Shares deferred were as follows (includes accrued dividend equivalent units on deferred Shares and deferred cash that was invested in the Humana Common Stock Fund):

 

   

Raquel C. Bono, M.D.

     821  
 

Frank A. D’Amelio

     27,252  
 

Wayne A.I. Frederick, M.D.

     821  
 

Kurt J. Hilzinger

     36,340  
 

David A. Jones, Jr.

     5,987  
 

Karen W. Katz

     1,823  
 

Marcy S. Klevorn

     414  
 

William J. McDonald

     38,878  
 

James J. O’Brien

     29,662  

 

  (f)

Does not include the January 3, 2023 annual stock retainer of 380 restricted stock units granted to each of our directors (other than Mr. Broussard) pursuant to our 2022 director compensation program, which restricted stock units are expected to vest in full on December 31, 2023. The restricted stock units represent approximately $190,000 and were determined using the grant date fair market value of our common stock $500.34.

(2)

As of March 1, 2023, no Shares are pledged by any of our executive officers or directors in accordance with our policy prohibiting pledging or hedging transactions.

(3)

Based on 124,974,643 Shares outstanding as of December 31, 2022. Unless indicated, ownership is less than 1% of the class.

 

     
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