EXHIBIT 10.12



 



Exhibit 10.12

	 	 	 
		 	
151 Farmington Avenue

Hartford, CT 06156-3124 
	 	 	
John W. Rowe, M.D.

Chairman, President and CEO

(860) 273-4455



September 28, 2001


Alan M. Bennett




Dear Alan:


On behalf of Aetna Inc. and its affiliates (the “Company”), I am pleased to
offer you this special retention arrangement. As we discussed, given your
current position with the Company, this arrangement is subject to review and
approval by the Board of Directors of Aetna Inc. I plan to present this
arrangement to the Board at its next regularly scheduled meeting. The terms of
the arrangement are as follows:



	1.	 	Base Salary: Your base salary will increase to $425,000. (If approved
by the Board of Directors, this increase will be effective retroactive to
April 1, 2001).
	 
	2.	 	Bonus Target: Your bonus target will increase to 65%. All bonus awards
are subject to review and approval by the Board of Director Committee on
Compensation and Organization.
	 
	3.	 	Severance: In the event your employment is terminated by the Company
other than for cause, you will be entitled to received 78 weeks of
severance (calculated as base and target bonus) in lieu of any other
severance or salary continuation benefit to which you might have been
entitled under Company plans or programs then in effect, upon delivery to
the Company of a release of any employment-related claims in the Company’s
customary form.
	 
	4.	 	Change in job duties: If during the 6 month period following the
commencement of employment of a new Executive Vice President of
Administration and Finance (or equivalent position) to which you will
report, you believe your duties as Senior Vice President and Chief
Financial Officer have been significantly diminished you will be free to
seek my review of the situation. If I (or my successor if I am no longer
the Chief Executive Officer of the Company) agree that your duties have
been significantly diminished and you choose to leave the Company as a
result of the change in duties, you will be entitled to receive the
severance outlined in item 3 above. If you wish to exercise your right to
have your duties reviewed, you must notify me in writing prior to the
expiration of the 6 month period. We have agreed that I (or my successor
if applicable) shall have sole authority to make the determination as to
whether your duties have been significantly reduced.



 






 




Exhibit 10.12


Page 2

Alan M. Bennett

September 28, 2001




	 	 	During the period you receive severance payments under item 3 or 4 above,
you will be eligible for the same employee benefits, if any, as are
provided under the severance plan or program in which you otherwise would
have been eligible to participate but for this special arrangement.
	 
	5.	 	Retention Bonus: You will be eligible to receive a retention bonus in
the amount of $100,000, less applicable withholding and taxes (“Bonus”).
The Bonus will be paid on the later of 60 days after the commencement of
employment of a new Executive Vice President of Finance, Strategy and
Administration (or equivalent position) and May 1 2002, if




	 	     (i)	 	on the scheduled payment date you remain actively employed by the
Company; or
	 
	 	     (ii)	 	before the scheduled payment date, your employment has been
involuntarily terminated by the Company other than for misconduct in
which case, the Bonus payment will not be accelerated but shall be
paid to you on the scheduled payment date.




	 	 	You will not be entitled to receive the Bonus if you voluntarily terminate
your employment or if your employment has been involuntarily terminated by
the Company for misconduct. Notwithstanding, if you voluntarily terminate
your employment due to a change in job duties as described in item 4 above,
the Bonus will be paid to you on the scheduled payment date.
	 
	 	 	The Bonus will not count for any benefit plan purposes.
	 
	6.	 	Long-Term Incentive Program: We will recommend to the Board Committee on
Compensation and Organization that you be granted 2,500 Performance Stock
Units and 15,000 stock options. The option price will be based on the
closing price of Aetna Common Stock on the effective date of the grant.
This option grant will not be exercisable for the first year after the
effective date of the grant and will vest in three annual installments.
	 
	7.	 	Stock Option Vesting: If you are eligible to receive severance benefits
pursuant to item 3 or 4 above, any stock options you hold will continue to
vest and are exercisable during the severance period. Vested options may
be exercised for the 90 day period following the end of severance. If at
the end of the severance period the Company notifies you that you are
unable to sell the underlying stock in an open market transaction due to
your access to material nonpublic information pertaining to the Company,
you shall have an additional 90 days to exercise your options from the
date the Company notifies you that you are no longer precluded from
selling such shares (but in no event may options be exercised beyond the
original term of the option).



 






 




Exhibit 10.12


Page 3

Alan M. Bennett

September 28, 2001


I look forward to continue working with you in the future.


This letter will supercede the letters from the Company dated July 20, 2000 and
August 8, 2001. This letter is not intended to constitute an employment
contract and shall not limit the Company’s right to terminate your at-will
employment at any time.



	 	 	 
	Very truly yours,	 	
Agreed and Accepted
	 	 	 
	/s/ John W. Rowe

John W. Rowe, M.D.	 	
/s/ Alan M. Bennett



Alan M. Bennett