Document:

EX-10.1

EX-10.1

Universal Technical Institute, Inc.

2003 Incentive Compensation Plan, as amended

ARTICLE 1

PURPOSE

1.1 GENERAL. The purpose of the Universal Technical Institute, Inc. 2003 Incentive
Compensation Plan (the “Plan”) is to promote the success and enhance the value of Universal
Technical Institute, Inc. (the “Company”) by linking the personal interests of its Board
members, employees, officers, and executives of, and consultants and advisors to, the Company to
those of Company shareholders and by providing such individuals with an incentive for outstanding
performance to generate superior returns to shareholders of the Company. The Plan is also intended
to provide flexibility to the Company in its ability to motivate, attract, and retain the services
of Board members, employees, officers, and executives of, and consultants and advisors to, the
Company upon whose judgment, interest, and special effort the successful conduct of the Company’s
operation is largely dependent.

ARTICLE 2

EFFECTIVE DATE

2.1 EFFECTIVE DATE. The Plan is effective as of the date the Plan is approved by the Board
(the “Effective Date”). The Plan must be approved by the Company’s shareholders within 12
months after the Effective Date. The Plan will be considered approved by the Company’s shareholders
if it receives the affirmative vote of the holders of a majority of the shares of Company’s stock
present or represented and entitled to vote at a meeting duly held in accordance with the Company’s
Bylaws or by written consent of a majority of the Company’s shareholders in lieu of a meeting. Any
Awards granted under the Plan prior to shareholder approval are effective when made (unless the
Committee specifies otherwise at the time of grant), but no Award may be exercised or settled and
no restrictions relating to any Award may lapse before the Plan is approved by the Company’s
shareholders. If the Company’s shareholders do not approve the Plan within 12 months after the
Effective Date, any Award previously made is automatically canceled without any further act.

ARTICLE 3

DEFINITIONS

3.1 DEFINITIONS. When a word or phrase appears in this Plan with the initial letter
capitalized, and the word or phrase does not begin a sentence, the word or phrase will be given the
meaning in this Section or in Sections 1.1 or 2.1 unless otherwise indicated. The following words
and phrases will have the following meanings:

(a) “Award” means any Option, Stock Appreciation Right, Restricted Stock Award,
Performance Share Award, Performance-Based Award, or IPO Award granted to a Participant under the
Plan.

(b) “Award Agreement” means any written agreement, contract, or other instrument or
document evidencing an Award.

(c) “Board” means the Board of Directors of the Company.

(d) “Cause” means (except as otherwise provided in an Award Agreement) any of the
following: (i) Participant’s conviction of, or plea of guilty or nolo contendere to, a felony or a
crime involving embezzlement, conversion of property or moral turpitude; (ii) a finding by a
majority of the Board of Directors of Participant’s fraud, embezzlement or conversion of the
Company’s property; (iii) Participant’s conviction of, or plea of guilty or nolo contendere to, a
crime involving the acquisition, use or expenditure of federal, state or local government funds or
the unlawful use, possession or sale of illegal substances; (iv) an administrative or judicial
determination that Participant committed fraud or any other violation of law involving federal,
state or local government funds; (v) a finding by a majority of the Board of Directors of
Participant’s knowing breach of any of Participant’s fiduciary duties to the Company or the
Company’s stockholders or making of a misrepresentation or omission which breach, misrepresentation
or omission would reasonably be expected to materially adversely affect the business, properties,
assets, condition (financial or other) or prospects of the Company; (vi) Participant’s alcohol or
substance abuse, which materially interferes with Participant’s ability to discharge the duties,
responsibilities and obligations to or for the Company; provided, that Participant has been
given notice and 30 days from such notice fails to cure such abuse; and (vii) Participant’s
personal (as opposed to the Company’s) material and knowing failure, to observe or comply with
applicable laws whether as an officer, stockholder or otherwise, in any material respect or in any
manner which would reasonably be expected to have a material adverse effect in respect of the
Company’s ongoing business, operations, conditions, other business relationship or properties.

Any rights the Company or any of its Subsidiaries has to determine the existence of events
giving rise to Cause are in addition to the rights the Company or any of its Subsidiaries may have
under any other agreement with the Participant or at law or in equity. If, after a Participant’s
termination of employment or services, the Company discovers that the Participant’s employment or
services could have been terminated for Cause, the Participant’s employment or services will, in
the Board’s sole discretion, be deemed to have been terminated for Cause retroactively to the date
the events giving rise to Cause occurred.

(e) “Change of Control” means: (i) any sale, lease, exchange, or other transfer (in
one transaction or series of related transactions) of all or substantially all the Company’s assets
to any person or group of related persons under Section 13(d) of the Exchange Act
(“Group”); (ii) the Company’s shareholders approve and complete any plan or proposal for
the liquidation or dissolution of the Company; (iii) any person or Group becomes the beneficial
owner, directly or indirectly, of shares representing more than 50% of the aggregate voting power
of the issued and outstanding stock entitled to vote in the election of directors of the Company
(“Voting Stock”) and such person or Group has the power and authority to vote such shares;
(iv) any person or Group acquires sufficient shares of Voting Stock to elect a majority of the
members of the Board; or (v) the completion of a merger or consolidation of the Company with
another entity in which holders of the Stock immediately before the completion of the transaction
hold, directly or indirectly, immediately after the transaction, 50% or less of the common equity
interest in the surviving corporation in the transaction. Notwithstanding the foregoing, in no
event will a Change of Control be deemed to have occurred as a result of an initial public offering
of the Stock.

(f) “Code” means the Internal Revenue Code of 1986, as amended.

(g) “Committee” means the committee of the Board described in Article 4.

(h) “Covered Employee” means an employee who is a “covered employee” within the
meaning of Section 162(m) of the Code.

(i) “Disability” means (unless otherwise defined in an employment agreement between
the Company or any of its Subsidiaries and the Participant or in the Participant’s Award Agreement)
any illness or other physical or mental condition of a Participant that renders the Participant
incapable of performing his customary and usual duties for the Company or Subsidiary, or any
medically determinable illness or other physical or mental condition resulting from a bodily
injury, disease or mental disorder, which in the Committee’s sole judgment is permanent and
continuous in nature. The Committee may require such medical or other evidence as it deems
necessary to judge the nature and permanency of the Participant’s condition.

(j) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(k) “Fair Market Value” means, as of any given date, the fair market value of Stock on
a particular date determined by such methods or procedures established by the Committee. Unless
otherwise determined by the Committee the Fair Market Value of Stock as of any date is the closing
price for the Stock as reported on the New York Stock Exchange (or on any national securities
exchange on which the Stock is then listed) for that date or, if no closing price is reported for
that date, the closing price on the next preceding date for which a closing price was reported. For
purposes of IPO Awards and Awards effective as of the effective date of the Company’s initial
public offering, fair market value of Stock shall be the price at which the Company’s Stock is
offered to the public in its initial public offering.

(l) “Good Reason” means when used with reference to a voluntary termination by
Participant of Participant’s employment or service with the Company, shall mean (i) a material
reduction in Participant’s authority, perquisites, position or responsibilities (other than such a
reduction which affects all of the Company’s senior executives on a substantially equal or
proportionate basis), or (ii) a requirement that Participant relocate greater than 50 miles from
Participant’s primary work location.

(m) “Incentive Stock Option” means an Option that is intended to meet the requirements
of Section 422 of the Code or any successor provision.

(n) “IPO Award” means the Option granted to each eligible Participant pursuant to
Article 12.

(o) “Non-Employee Director” means a member of the Board who qualifies as a
“Non-Employee Director” as defined in Rule 16b-3(b)(3) of the Exchange Act, or any successor
provision.

(p) “Non-Qualified Stock Option” means an Option that is not intended to be an
Incentive Stock Option.

(q) “Option” means a right granted to a Participant under Article 7 or Article 12 of
the Plan to purchase Stock at a specified price during specified time periods. An Option may be
either an Incentive Stock Option or a Non-Qualified Stock Option.

(r) “Participant” means a person who, as a Board member, employee, officer, or
executive of, or consultant or advisor providing services to, the Company or any Subsidiary, has
been granted an Award under the Plan.

(s) “Performance-Based Awards” means Awards subject to the terms and conditions of
Article 11. All Performance-Based Awards are intended to qualify as “performance-based
compensation” under Section 162(m) of the Code. To the extent that the Committee desires to have an
Award granted under any provision of the Plan to qualify as “performance-based compensation” under
Section 162(m) of the Code, such Award shall comply with the terms of Article 11.

(t) “Performance Criteria” means the criteria that the Committee selects for purposes
of establishing the Performance Goal or Performance Goals for a Participant for a Performance
Period. One or more of the following business criteria for the Company, on a consolidated basis,
and/or for Subsidiaries, divisions or for business or geographical units of the Company and/or a
Subsidiary shall be used by the Committee in establishing Performance Goals for Performance-Based
Awards: (1) earnings per share; (2) revenues or gross margins; (3) cash flow; (4) operating margin;
(5) return on net assets, investment, capital, or equity; (6) economic value added; (7) direct
contribution; (8) net income; pretax earnings; earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; earnings after interest expense and before
extraordinary or special items; operating income; income before interest income or expense, unusual
items and income taxes, local, state or federal and excluding budgeted and actual bonuses which
might be paid under any ongoing bonus plans of the Company (as a group, for purposes of this
definition, these are referred to as “Profit Measures”); (9) working capital; (10)
management of fixed costs or variable costs; (11) identification or consummation of investment
opportunities or completion of specified projects in accordance with corporate business plans,
including strategic mergers, acquisitions or divestitures; (12) total stockholder return; (13) debt
reduction; (14) capacity utilization; (15) contract and/or applicant growth; (16) average number of
students; (17) number of students enrolled; (18) Profit Measures per training hour; (19) Profit
Measures per student (20) Retention/persistence of students; (21) Graduation rates; (22)
Course/program length; (23) Reduction on cycle time for funding; (24) Profit Measures per square
foot of facility; (25) Number of students per instructor; (26) Revenue for on-line training; (27)
Revenue for international training; (28) Revenue for new business; (29) Number of seats available
and utilized; (30) Number of training hours provided; (31) Reduction in total salaries per student;
(32) Reduction in semi-variable costs; (33) Placement rates; (34) Full time equivalents employed
per student; (35) Full time equivalents per training hour provided; (36) Employee retention; (37)
Student show rates. Any of the above goals may be determined on an absolute or relative basis or,
if applicable, as compared to the performance of a published or special index deemed relevant by
the Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of
companies that are comparable to the Company.

(u) “Performance Goals” means, for a Performance Period, the written goals established
by the Committee for the Performance Period based upon the Performance Criteria. Performance Goals
shall be objective and shall otherwise meet the requirements of Section 162(m) of the Code and
regulations thereunder including the requirement that the Performance Goals being “substantially
uncertain” at the time such Performance Goals are set. The Committee will, within the time
prescribed by Section 162(m) of the Code, objectively define the Performance Goals it determines to
use for a Performance Period for a Participant. The Committee shall adjust either the Performance
Goals or the actual results to exclude the impact of an event or occurrence which the Committee
determines should appropriately be excluded, including without limitation (i) restructurings,
discontinued operations, extraordinary items, and other unusual or non-recurring charges, (ii) an
event either not directly related to the operations of the Company or not within the reasonable
control of the Company’s management, (iii) a change in accounting standards required by generally
accepted accounting principles or (iv) in response to, or in anticipation of, changes in applicable
laws or regulations affecting the Company or the Performance Goal.

(v) “Performance Period” means the one or more periods of time, which may be of
varying and overlapping durations, selected by the Committee, over which the attainment of one or
more Performance Goals will be measured for purposes of determining a Participant’s right to, and
the payment of, a Performance-Based Award.

(w) “Performance Share” means a right granted to a Participant under Article 9 and
denominated in shares of Stock, to receive cash, Stock, or other Awards, the payment of which is
contingent on achieving certain Performance Goals established by the Committee.

(x) “Performance Unit” means a right granted to a Participant under Article 9 and
denominated in cash, to receive cash, Stock, other Awards or other property, the payment of which
is contingent on achieving certain Performance Goals established by the Committee.

(y) “Plan” means the Universal Technical Institute, Inc. 2003 Incentive Compensation
Plan, as amended.

(z) “Restricted Stock Award” means Stock granted to a Participant under Article 10
that is subject to certain restrictions and to risk of forfeiture.

(aa) “Stock” means the common stock of the Company and such other securities of the
Company that may be substituted for Stock pursuant to Article 14.

(bb) “Stock Appreciation Right” or “SAR” means a right granted to a
Participant under Article 8 to receive cash, Stock, or other Awards, all as determined pursuant to
Article 8.

(cc) “Stock Unit” means a right granted to a Participant under Article 10 to receive
cash, Stock, or other Awards, pursuant to the terms of Article 10.2.

(dd) “Subsidiary” means any corporation or other entity of which the Company owns,
directly or indirectly, a majority of the outstanding voting stock or voting power.

ARTICLE 4

ADMINISTRATION

4.1 COMMITTEE. The Plan will be administered by the Board or a Committee appointed by, and
which serves at the discretion of, the Board. If the Board appoints a Committee, the Committee will
consist of at least two individuals, each of whom qualifies as (i) a Non-Employee Director, and
(ii) an “outside director” under Code Section 162(m) and the regulations issued thereunder.
Reference to the Committee in this Plan will refer to the Board if the Board does not appoint a
Committee.

4.2 ACTION BY THE COMMITTEE. A majority of the Committee will constitute a quorum. The
acts of a majority of the members present at any meeting at which a quorum is present, and acts
approved in writing by a majority of the Committee in lieu of a meeting, will be deemed the acts of
the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other employee of the
Company or any Subsidiary, the Company’s independent certified public accountants, any executive
compensation consultant or other professional retained by the Company to assist in the Plan’s
administration.

4.3 AUTHORITY OF COMMITTEE. Subject to any specific designation in the Plan, the Committee
has the exclusive power, authority and discretion to:

(a) Designate Participants to receive Awards;

(b) Determine the type of Awards granted to each Participant;

(c) Determine the number of Awards granted and the number of shares of Stock to which an Award
will relate;

(d) Except as otherwise provided in the Plan, determine the terms and conditions of any Award
granted under the Plan including but not limited to, the exercise price, grant price, or purchase
price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture
restrictions or restrictions on the exercisability of an Award, and accelerations or waivers
thereof, based in each case on such considerations as the Committee in its sole discretion
determines; provided, however, that the Committee will not have the authority to accelerate the
vesting or waive the forfeiture of any Performance-Based Awards;

(e) Amend, modify, or terminate any outstanding Award, with the Participant’s consent unless
the Committee has the authority to amend, modify, or terminate an Award without the Participant’s
consent under any other provision of the Plan;

(f) Determine whether, to what extent, and under what circumstances an Award may be settled
in, or the exercise price of an Award may be paid in, cash, Stock, other Awards, or other property,
or an Award may be canceled, forfeited, or surrendered;

(g) Prescribe the form of each Award Agreement, which need not be identical for each
Participant;

(h) Decide all other matters that must be determined in connection with an Award;

(i) Establish, adopt, or revise any rules and regulations as it may deem necessary or
advisable to administer the Plan;

(j) Interpret the terms of, and any matter arising under, the Plan or any Award Agreement; and

(k) Make all other decisions and determinations that may be required under the Plan or as the
Committee deems necessary or advisable to administer the Plan.

4.4 DECISIONS BINDING. The Committee’s interpretation of the Plan, any Awards granted
under the Plan, any Award Agreement and all decisions and determinations by the Committee with
respect to the Plan are final, binding, and conclusive on all parties.

ARTICLE 5

SHARES SUBJECT TO THE PLAN

5.1 NUMBER OF SHARES. Subject to adjustment provided in Section 14.1, the aggregate number
of shares of Stock reserved and available for grant under the Plan will be 5,280,972.

5.2 LAPSED AWARDS. To the extent that an Award terminates, expires, or lapses for any
reason, any shares of Stock subject to the Award will again be available to the Committee to grant
Awards under the Plan.

5.3 STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may consist, in whole or
in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open market.

5.4 LIMITATION ON NUMBER OF SHARES AND CASH SUBJECT TO AWARDS. Notwithstanding any
provision in the Plan to the contrary, and subject to the adjustment in Section 14.1, the maximum
number of shares of Stock with respect to one or more Awards that may be granted to any one
Participant during any fiscal year of the Company is 1,000,000. For Performance-Based Awards that
are payable in cash, the maximum amount payable to any one Participant for any fiscal year of the
Company equals the product of 1,000,000 and the Fair Market Value of the Stock as of the first day
of the Company’s fiscal year.

ARTICLE 6

ELIGIBILITY AND PARTICIPATION

6.1 ELIGIBILITY

(a) GENERAL. Persons eligible to participate in this Plan include all Board members,
employees, officers, and executives of, and consultants and advisors to, the Company or a
Subsidiary, as determined by the Committee.

(b) FOREIGN PARTICIPANTS. To assure the viability of Awards granted to Participants
employed in foreign countries, the Committee is authorized to provide for any special terms it
considers necessary or appropriate to accommodate differences in local law, tax policy, or custom.
Moreover, the Committee may approve any supplements to, or amendments, restatements, or alternative
versions of the Plan as it considers necessary or appropriate for such purposes without affecting
the terms of the Plan as in effect for any other purpose; provided, however, that no such
supplements, amendments, restatements, or alternative versions may increase the share limitations
contained in Section 5.1 of the Plan.

6.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the Committee may, from
time to time, select from among all eligible individuals, those to whom Awards will be granted and
will determine the nature and amount of each Award. No individual will have any right to be granted
an Award under this Plan.

ARTICLE 7

STOCK OPTIONS

7.1 GENERAL. The Committee is authorized to grant Options to Participants on the following
terms and conditions:

(a) EXERCISE PRICE. The exercise price per share of Stock under an Option will be
determined by the Committee and set forth in the Award Agreement; provided, however, that the
Option’s exercise price per share of Stock may not be less than the Fair Market Value per share of
Stock on the date of grant.

(b) TIME AND CONDITIONS OF EXERCISE. The Committee will determine the time or times
at which an Option may be exercised in whole or in part. The Committee will also determine the
performance or other conditions, if any, that must be satisfied before all or part of an Option may
be exercised. Unless otherwise provided in an Award Agreement, an Option will lapse immediately if
a Participant’s employment or services are terminated for Cause.

(c) PAYMENT. The Committee will determine the methods by which the exercise price of
an Option may be paid, the form of payment, including, without limitation, cash, promissory note,
shares of Stock (through actual tender or by attestation), or other property (including
broker-assisted “cashless exercise” arrangements), and the methods by which shares of Stock will be
delivered or deemed to be delivered to Participants

(d) EVIDENCE OF GRANT. All Options will be evidenced by a written Award Agreement,
which Agreement will include such provisions as determined by the Committee.

7.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options will be granted only to employees and
the terms of any Incentive Stock Options granted under the Plan must comply with the following
additional rules:

(a) EXERCISE PRICE. The per share exercise price for any Incentive Stock Option may
not be less than the Fair Market Value as of the date of the grant.

(b) EXERCISE. No Incentive Stock Option may be exercisable for more than ten years
after the date of its grant.

(c) LAPSE OF OPTION. An Incentive Stock Option will lapse under the following
circumstances.

(1) The Incentive Stock Option will lapse ten years from the date it is granted, unless it
lapses earlier under the Award Agreement.

(2) Unless otherwise provided in the Award Agreement, an Incentive Stock Option will lapse
upon a Participant’s termination of employment for Cause or for any other reason (other than the
death or Disability).

(3) If the Participant terminates employment because of Disability or death before the Option
lapses pursuant to paragraph (1) or (2) above, the Incentive Stock Option will lapse, unless it is
sooner exercised, on the earlier of (i) the date on which the Option would have lapsed had the
Participant not become Disabled or lived and had remain employed; or (ii) 12 months after the date
of the Participant’s termination of employment because of Disability or death. Upon the
Participant’s Disability or death, any Incentive Stock Option exercisable at the Participant’s
Disability or death may be exercised by the Participant’s legal representative, by the person or
persons entitled to do so under the Participant’s last will and testament, or, if the Participant
fails to make testamentary disposition of such Incentive Stock Option or dies intestate, by the
person or persons entitled to receive the Incentive Stock Option under the applicable laws of
descent and distribution.

(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value (determined as of
the grant date) of all shares of Stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed $100,000.00 or such other
limitation as imposed by Section 422(d) of the Code, or any successor provision. To the extent that
Incentive Stock Options are first exercisable by a Participant in excess of such limitation, the
excess will be considered Non-Qualified Stock Options.

(e) TEN PERCENT OWNERS. An Incentive Stock Option will be granted to any individual
who, at the date of grant, owns stock possessing more than ten percent of the total combined voting
power of all classes of Stock only if such Option is granted at a price that is not less than 110%
of Fair Market Value on the grant date and the Option is exercisable for no more than five years
from the grant date.

(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an Incentive Stock Option may
be made pursuant to this Plan after the tenth anniversary of the Effective Date.

(g) RIGHT TO EXERCISE. An Incentive Stock Option may be exercised only by the
Participant during his or her lifetime.

ARTICLE 8

STOCK APPRECIATION RIGHTS

8.1 GRANT OF SARs. The Committee is authorized to grant SARs to Participants on the
following terms and conditions:

(a) RIGHT TO PAYMENT. Upon the exercise of a SAR, the Participant to whom it is
granted has the right to receive the excess, if any, of:

(1) The Fair Market Value of a share of Stock on the date of exercise; over

(2) The grant price of the SAR as determined by the Committee, which will not be less than the
Fair Market Value of a share of Stock on the date of grant.

(b) OTHER TERMS. All SARs grants will be evidenced by an Award Agreement. The terms,
methods of exercise, methods of settlement, form of consideration payable in settlement, and any
other terms and conditions of any SAR will be determined by the Committee at the time of the grant
of the Award and as set forth in the Award Agreement.

ARTICLE 9

PERFORMANCE AWARDS

9.1 GRANT OF PERFORMANCE SHARES AND UNITS. The Committee is authorized to grant
Performance Shares and Performance Units to Participants on such terms and conditions as determined
by the Committee. The Committee has the discretion to determine the number of Performance Shares
and /or Performance Units granted to each Participant and such other terms and conditions of such
grant, all as set forth in the Award Agreement. A Performance Share Award shall list in the Award
Agreement the maximum number of shares of Stock subject to the Award. A Performance Unit Award
shall list in the Award Agreement the maximum amount of cash subject to the Award and each
Performance Unit shall equal a maximum payment of one U.S. Dollar.

9.2 RIGHT TO PAYMENT. A grant of Performance Shares gives the Participant rights, valued
as determined by the Committee, and payable to, or exercisable by, the Participant to whom the
Performance Shares are granted, in whole or in part, as the Committee will establishes at grant or
thereafter. Subject to the terms of the Plan, the Committee will set performance goals and other
terms or conditions to payment of the Performance Shares and Performance Units, in its discretion,
which, depending on the extent to which they are met, will determine the number and value of
Performance Shares and the Performance Units that will be paid to the Participant.

9.3 OTHER TERMS. Performance Shares and Performance Units may be payable in cash, Stock,
or other property, and have such other terms and conditions as determined by the Committee and as
set forth in the Award Agreement.

9.4 CASH BONUSES. The Committee is authorized to grant cash bonuses to Participants on
such terms and conditions as determined by the Committee subject to the terms of the Plan. The
purpose of granting cash bonuses under the Plan is to qualify such cash bonuses as
“performance-based compensation” under Section 162(m) of the Code pursuant to Article 11 below.

ARTICLE 10

STOCK AWARDS

10.1 RESTRICTED STOCK AWARDS

(a) GRANT OF RESTRICTED STOCK. The Committee is authorized to make Awards of
Restricted Stock to Participants in such amounts and subject to such terms and conditions as
determined by the Committee, all as set forth in the Award Agreement.

(b) ISSUANCE AND RESTRICTIONS. Restricted Stock will be subject to such restrictions
on transferability and other restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on
the Restricted Stock). These restrictions may lapse separately or in combination at such times,
under such circumstances, in such installments, or otherwise, as the Committee determines at the
time of the grant of the Award or thereafter.

(c) FORFEITURE. Except as otherwise determined by the Committee at the time of the
grant of the Award or thereafter, upon termination of employment or service during the applicable
restriction period, Restricted Stock that is at that time subject to restrictions will be
forfeited, provided, however, that the Committee may provide in any Restricted Stock Award
Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in
whole or in part in the event of terminations resulting from specified causes, and the Committee
may in other cases waive in whole or in part restrictions or forfeiture conditions relating to
Restricted Stock.

(d) CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted under the Plan may be
evidenced as determined by the Committee. If certificates representing shares of Restricted Stock
are registered in the name of the Participant, the certificates must bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Restricted Stock, and the
Company may, at its discretion, retain physical possession of the certificate until such time as
all applicable restrictions lapse.

10.2 STOCK UNIT AWARDS

(a) GRANT OF STOCK UNITS. The Committee is authorized to make Awards of Stock Units to
Participants in such amounts and subject to such terms and conditions as determined by the
Committee, all as set forth in the Award Agreement.

(b) ISSUANCE AND RESTRICTIONS. Stock Units will be subject to such restrictions on
transferability and other restrictions as the Committee may impose. These restrictions may lapse
separately or in combination, at such times, under such circumstances, in such installments, or
otherwise, as the Committee determines at the time of the grant of the Award or thereafter.

(c) FORFEITURE. Except as otherwise determined by the Committee at the time of the
grant of the Award or thereafter, upon termination of employment or service during the applicable
restriction period, a Stock Unit that is at that time is unvested or otherwise subject to
restrictions will be forfeited, provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Stock Units will be waived in
whole or in part in the event of terminations resulting from specified causes, and the Committee
may in any case waive, in whole or in part, restrictions or forfeiture conditions relating to Stock
Units.

(d) DELIVERY AND PAYMENT. The Committee may determine, in its discretion, the timing
of the delivery of any payment for Stock Units and the form such payment shall take. Delivery may
be promptly after vesting or the restrictions with respect to the Stock Units have lapsed or at
such later time, as determined by the Committee. Payment may be made in cash, Stock, other Awards,
other property or any combination of the foregoing, as determined by the Committee, either at the
time of grant and memorialized in the Award Agreement or at any time prior to delivery.

ARTICLE 11

PERFORMANCE-BASED AWARDS

11.1 PURPOSE. The purpose of this Article 11 is to provide the Committee the ability to
qualify Awards granted under the Plan as “performance-based compensation” under Section 162(m) of
the Code. If the Committee, in its discretion, decides to grant a Performance-Based Award, the
provisions of this Article 11 will control notwithstanding any contrary provision in the Plan.

11.2 APPLICABILITY. This Article 11 will apply only to those employees selected by the
Committee to receive Performance-Based Awards who, the Committee believes, are, or are likely to
be, as of the end of the tax year in which the Company would claim a tax deduction in connection
with such Award, Covered Employees. The Committee may, in its discretion, grant Awards to employees
who are or may become Covered Employees that do not satisfy the requirements of this Article 11.
The designation of a Covered Employee or any other employee as a Participant for a Performance
Period does not entitle the Participant to receive an Award for the period. Moreover, the
designation of a Covered Employee or other employee as a Participant for a particular Performance
Period will not require designation of such Covered Employee or other employee as a Participant in
any subsequent Performance Period and designation of one Covered Employee or other employee as a
Participant will not require designation of any other Covered Employees or other employees as
Participants in such period or in any other Performance Period.

11.3 GRANT OF PERFORMANCE-BASED AWARDS. Subject to the requirements of Section 162(m) of
the Code, the Committee is authorized to grant to Participants Awards that also qualify as
Performance-Based Awards in such amounts and subject to such terms and conditions as determined by
the Committee, all as set forth in the applicable Award Agreements. The Award Agreement for each
Performance-Based Award shall state the Performance Goals to be achieved, the length of the
Performance Period and all other material terms necessary to comply with Section 162(m) of the
Code.

11.4 PAYMENT OF PERFORMANCE AWARDS. A Participant will be eligible to receive payment
under a Performance-Based Award for a Performance Period only if the Performance Goals for such
period are achieved. In determining the actual payment of an individual Performance-Based Award,
the Committee may reduce or eliminate the amount of the Performance-Based Award earned for the
Performance Period, if in its sole and absolute discretion, such reduction or elimination is
appropriate.

ARTICLE 12

IPO AWARDS

12.1 IPO AWARDS. IPO Awards will be awarded to Participants selected by the Committee and
will be subject to the following terms and conditions:

(a) EFFECTIVE DATE OF AWARDS. The effective date of the IPO Awards will be the date of
the Company’s initial public offering of Stock.

(b) EXERCISE PRICE FOR AWARDS. Notwithstanding anything in the Plan to the contrary,
the exercise price per share of Stock under the IPO Awards will be the price at which the Company’s
Stock is offered to the public in its initial public offering of Stock (“IPO Price”).

(c) AMOUNT OF THE IPO AWARDS. Each Participant selected to receive an IPO Award and
who became an employee by the Company on or after October 21, 2001, will be entitled to receive an
Option to purchase 50 shares of Stock. Each Participant selected to receive an IPO Award and who
became an employee by the Company before October 21, 2001, will be entitled to receive an Option to
purchase 100 shares of Stock. Such Option will be designated as a Non-Qualified Stock Option.

(d) TIME AND CONDITIONS OF EXERCISE. The IPO Awards will become fully exercisable on
the first anniversary of the date of grant. Unless otherwise provided in the Award Agreement, the
IPO Award will lapse upon a Participant’s termination of employment or service with the Company or
a Subsidiary for any reason, and will include such other provisions as may be specified by the
Committee.

(e) PAYMENT. The Committee will determine the methods by which the exercise price of
the IPO Awards may be paid, the form of payment, including, without limitation, cash, promissory
note, shares of Stock (through actual tender or by attestation), or other property (including
broker-assisted “cashless exercise” arrangements), and the methods by which shares of Stock will be
delivered or deemed to be delivered to Participants.

(f) EVIDENCE OF GRANT. All IPO Awards will be evidenced by an Award Agreement.

ARTICLE 13

PROVISIONS APPLICABLE TO AWARDS

13.1 STAND-ALONE AND TANDEM AWARDS. Awards granted under the Plan may, in the discretion
of the Committee, be granted either alone, in addition to, or in tandem with, any other Award
granted under the Plan. Awards granted in addition to or in tandem with other Awards may be granted
either at the same time as or at a different time from the grant of such other Awards.

13.2 EXCHANGE PROVISIONS. Subject to Section 16.14 and the other terms set forth herein,
the Committee may at any time offer to exchange or buy out any previously granted Award for a
payment in cash, Stock, or another Award, based on the terms and conditions the Committee
determines and communicates to the Participant at the time the offer is made.

13.3 TERM OF AWARD. The term of each Award will be for the period as determined by the
Committee, provided that in no event will the term of any Incentive Stock Option or a Stock
Appreciation Right granted in tandem with the Incentive Stock Option exceed a period of ten years
from the date of its grant.

13.4 FORM OF PAYMENT FOR AWARDS. Subject to the terms of the Plan and any applicable law
or Award Agreement, payments or transfers to be made by the Company or a Subsidiary on the grant or
exercise of an Award may be made in such forms as the Committee determines at or after the time of
grant, including without limitation, cash, promissory note, Stock, other Awards, or other property,
or any combination, and may be made in a single payment or transfer, in installments, or on a
deferred basis, in each case determined in accordance with rules adopted by, and at the discretion
of, the Committee.

13.5 LIMITS ON TRANSFER. No right or interest of a Participant in any Award may be
pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a
Subsidiary, or will be subject to any lien, obligation, or liability of such Participant to any
other party other than the Company or a Subsidiary. Except as otherwise provided by the Committee,
no Award will be assignable or transferable by a Participant other than by will or the laws of
descent and distribution. Notwithstanding the foregoing, no Participant may transfer any Option or
SAR awarded to such Participant under the Plan to third parties for consideration without the
receipt of the affirmative vote of the holders of a majority of the shares of the Company’s stock
present or represented and entitled to vote at a meeting held in accordance with the Company’s
Bylaws or by written consent of a majority of the Company’s shareholders in lieu of a meeting.

13.6 BENEFICIARIES. Notwithstanding Section 13.5, a Participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of the Participant and
to receive any distribution with respect to any Award upon the Participant’s death.

A beneficiary, legal guardian, legal representative, or other person claiming any rights under the
Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee. If the Participant is
married, a designation of a person other than the Participant’s spouse as his beneficiary with
respect to more than 50% of the Participant’s interest in the Award will not be effective without
the written consent of the Participant’s spouse. If no beneficiary has been designated or survives
the Participant, payment will be made to the person entitled thereto under the Participant’s will
or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be
changed or revoked by a Participant at any time provided the change or revocation is filed with the
Committee.

13.7 STOCK CERTIFICATES. Notwithstanding anything herein to the contrary, the Company will
not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the
exercise of any Awards, unless and until the Board has determined, with advice of counsel, that the
issuance and delivery of such certificates is in compliance with all applicable laws, regulations
of governmental authorities and, if applicable, the requirements of any exchange on which the
shares of Stock are listed or traded. All Stock certificates delivered under the Plan are subject
to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to
comply with Federal, state, or foreign jurisdiction, securities or other laws, rules and
regulations and the rules of any national securities exchange or automated quotation system on
which the Stock is listed, quoted, or traded. The Committee may place legends on any Stock
certificate to reference restrictions applicable to the Stock. In addition to the terms and
conditions provided herein, the Board may require that a Participant make such reasonable
covenants, agreements, and representations as the Board, in its discretion, deems advisable in
order to comply with any such laws, regulations, or requirements.

13.8 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of Control occurs and, within one
year after the Change of Control, a Participant’s employment or service with the Company is
terminated without Cause or, a Participant terminates employment or services with the Company for
Good Reason, all outstanding Options, Stock Appreciation Rights, and other Awards will become fully
exercisable and all restrictions on outstanding Awards will lapse. To the extent that this
provision causes Incentive Stock Options to exceed the dollar limitation set forth in Section
7.2(d), the excess Options will be deemed to be Non-Qualified Stock Options. Upon, or in
anticipation of, such an event, the Committee may cause every Award outstanding hereunder to
terminate at a specific time in the future and will give each Participant the right to exercise
Awards during a period of time as the Committee, in its sole and absolute discretion, will
determine.

ARTICLE 14

CHANGES IN CAPITAL STRUCTURE

14.1 GENERAL

(a) SHARES AVAILABLE FOR GRANT AND LIMITS. If there is any change in the number of
shares of Stock outstanding by reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or similar corporate change, the maximum aggregate
number of shares of Stock with respect to which the Committee may grant Awards pursuant to Section
5.1 and the maximum number of shares of Stock which may be granted to any one person in a single
calendar year pursuant to Section 5.4 will be appropriately adjusted by the Committee. If there is
any change in the number of shares of Stock outstanding by reason of any other event or
transaction, the Committee may, but need not, make such adjustments in the number and class of
shares of Stock with respect to which Awards may be granted pursuant to Section 5.1 and the maximum
number of shares of Stock which may be granted to any one person in a single calendar year pursuant
to Section 5.4, as the Committee may deem appropriate.

(b) OUTSTANDING AWARDS — INCREASE OR DECREASE IN ISSUED SHARES WITHOUT CONSIDERATION.
Subject to any required action by the shareholders of the Company, if there is any increase or
decrease in the number of issued shares of Stock resulting from a subdivision or consolidation of
shares of Stock or the payment of a stock dividend (but only on the shares of Stock), or any other
increase or decrease in the number of such shares effected without receipt or payment of
consideration by the Company, the Committee will proportionally adjust the number of shares of
Stock subject to each outstanding Award and the exercise price per share of Stock of each such
Award.

(c) OUTSTANDING AWARDS — CERTAIN MERGERS. Subject to any required action by the
shareholders of the Company, if the Company is the surviving corporation in any merger or
consolidation (except a merger or consolidation as a result of which the holders of shares of Stock
receive securities of another corporation), each Award outstanding on the date of such merger or
consolidation will pertain to and apply to the securities which a holder of the number of shares of
Stock subject to such Award would have received in such merger or consolidation.

(d) OUTSTANDING AWARDS — OTHER CHANGES. If any other change in the capitalization of
the Company or corporate change other than those specifically referred to in Article 14, the
Committee may, in its absolute discretion, make such adjustments in the number and class of shares
subject to Awards outstanding on the date on which such change occurs and in the per share exercise
price of each Award as the Committee may consider appropriate to prevent dilution or enlargement of
rights.

(e) NO OTHER RIGHTS. Except as expressly provided in the Plan, no Participant will
have any rights by reason of any subdivision or consolidation of shares of stock of any class, the
payment of any dividend, any increase or decrease in the number of shares of stock of any class or
any dissolution, liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, will affect, and no adjustment
by reason thereof will be made with respect to, the number of shares of Stock subject to an Award
or the exercise price of any Award.

ARTICLE 15

AMENDMENT, MODIFICATION, AND TERMINATION

15.1 AMENDMENT, MODIFICATION, AND TERMINATION. With the approval of the Board, at any time
and from time to time, the Committee may terminate, amend or modify the Plan; provided, however,
that to the extent necessary and desirable to comply with any applicable law, regulation, or stock
exchange rule, the Company will obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.

15.2 AWARDS PREVIOUSLY GRANTED. Except as otherwise provided in the Plan, including
without limitation, the provisions of Article 14, no termination, amendment, or modification of the
Plan will adversely affect in any material way any Award previously granted under the Plan, without
the written consent of the Participant.

ARTICLE 16

GENERAL PROVISIONS

16.1 NO RIGHTS TO AWARDS. No Participant, employee, or other person will have any claim to
be granted any Award under the Plan, and neither the Company nor the Committee is obligated to
treat Participants, employees, and other persons uniformly.

16.2 NO STOCKHOLDERS RIGHTS. No Award gives the Participant any of the rights of a
stockholder of the Company unless and until shares of Stock are in fact issued to such person in
connection with such Award.

16.3 WITHHOLDING. The Company or any Subsidiary has the authority and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy
Federal, state, and local taxes (including the Participant’s FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of this Plan. With the Committee’s
consent, a Participant may elect to have the Company withhold from those shares of Stock that would
otherwise be received upon the exercise of any Option, a number of shares having a Fair Market
Value equal to the minimum statutory amount necessary to satisfy the Company’s applicable federal,
state, local and foreign income and employment tax withholding obligations. Any shares of Stock
withheld by the Company hereunder shall not be deemed to have been issued by the Company for any
purpose under the Plan and shall remain available for issuance hereunder.

16.4 NO RIGHT TO EMPLOYMENT OR SERVICES. Nothing in the Plan or any Award Agreement will
interfere with or limit in any way the right of the Company or any Subsidiary to terminate any
Participant’s employment or services at any time, nor confer upon any Participant any right to
continue in the employ or service of the Company or any Subsidiary.

16.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an “unfunded” plan for
incentive compensation. With respect to any payments not yet made to a Participant pursuant to an
Award, nothing contained in the Plan or any Award Agreement will give the Participant any rights
that are greater than those of a general creditor of the Company or any Subsidiary.

16.6 INDEMNIFICATION. To the extent allowable under applicable law, each member of the
Committee or the Board will be indemnified and held harmless by the Company from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by such member in connection
with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or
in which he or she may be involved by reason of any action or failure to act under the Plan and
against and from any and all amounts paid by him or her in satisfaction of judgment in such action,
suit, or proceeding against him or her provided he or she gives the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to handle and defend it on
his or her own behalf. The foregoing right of indemnification is in addition to any other rights of
indemnification to which such persons may be entitled under the Company’s Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.

16.7 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan will be taken into account
in determining any benefits under any pension, retirement, savings, profit sharing, group
insurance, welfare or other benefit plan of the Company or any Subsidiary.

16.8 EXPENSES. The Company and its Subsidiaries will pay the expenses of administering the
Plan.

16.9 TITLES AND HEADINGS. The titles and headings of the Sections in the Plan are for
convenience of reference only, and if there is any conflict, the text of the Plan, rather than such
titles or headings, will control.

16.10 FRACTIONAL SHARES. No fractional shares of stock will be issued and the Committee
will determine, in its discretion, whether cash will be given in lieu of fractional shares or
whether such fractional shares will be eliminated by rounding up or down as appropriate.

16.11 SECURITIES LAW COMPLIANCE. With respect to any person who is, on the relevant date,
obligated to file reports under Section 16 of the Exchange Act, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so
comply, it will be void to the extent permitted by law and voidable as deemed advisable by the
Committee.

16.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to make payment of
awards in Stock or otherwise will be subject to all applicable laws, rules, and regulations, and to
such approvals by government agencies as may be required. The Company will be under no obligation
to register under the Securities Act of 1933, as amended, any of the shares of Stock paid under the
Plan. If the shares paid under the Plan may in certain circumstances be exempt from registration
under the Securities Act of 1933, as amended, the Company may restrict the transfer of such shares
in such manner as it deems advisable to ensure the availability of any such exemption.

16.13 GOVERNING LAW. The Plan and all Award Agreements will be construed in accordance
with and governed by the laws of the State of Arizona.

16.14 NO AUTHORITY TO REPRICE. Other than in connection with a change in the Company’s
capital structure (as described in Article 14 of this Plan), neither the Committee nor the Board
shall have the authority to reprice any outstanding Option or SAR without the prior approval of the
Company’s shareholders. “Repricing” means any of the following or any other action that has the
same effect: (i) lowering the exercise price of an Option or the grant price of a SAR after it is
granted; (ii) repurchasing an Option or SAR for cash; (iii) any other action that is treated as a
repricing under generally accepted accounting principles; or (iv) canceling an Option or SAR at a
time when its exercise price exceeds the fair market value of the underlying stock, in exchange for
another Option or SAR, a Restricted Stock Award or other equity, unless the cancellation and
exchange occurs in connection with a change in the Company’s capital structure (as described in
Article 14 of this Plan).Exhibit 10.1

EXHIBIT 10.1    Deferred Compensation Plan for Directors of CIGNA Corporation 

(Amended and Restated As Of January 1, 1997) 

Article I.	Definitions 

The following are defined terms wherever they appear in the Plan. 

1.1

“Administrator” shall mean the person, or committee, appointed by the Chief Executive Officer of CIGNA Corporation, and charged with responsibility for administration of the Plan. 

1.2

“Annual Credit Amount” shall mean an amount set from time to time by resolution of the Board of Directors. 

1.3

“Board of Directors” or “Board” shall mean the Board of Directors of CIGNA Corporation. 

1.4

“Change of Control” shall mean that: 

(a)

	A corporation, person or group acting in concert as described in Section 14(d)(2) of the Securities Exchange Act of 1934 as amended (“Exchange Act”), holds or acquires beneficial ownership, within the meaning of Rule 13d-3 promulgated under the Exchange Act, of a number of preferred or common shares of CIGNA Corporation having voting power which is either: (l) more than 50 percent of the voting power of the shares which voted in the election of directors of CIGNA Corporation at the shareholders’ meeting immediately preceding such determination; or, (2) more than 25 percent of the voting power of common shares outstanding of CIGNA Corporation; or, 

(b)

	As a result of a merger or consolidation to which CIGNA Corporation is a party, either: (l) CIGNA Corporation is not the surviving corporation; or, (2) Directors of CIGNA Corporation immediately prior to the merger or consolidation constitute less than a majority of the Board of Directors of the surviving corporation; or, 

(c)

	A change occurs in the composition of the Board at any time during any consecutive 24-month period such that the “Continuity Directors” cease for any reason to constitute a majority of the Board. For purposes of the preceding sentence, “Continuity Directors” shall mean those members of the Board who either: (1) were directors at the beginning of such consecutive 24-month period, or, (2) were elected by, or upon nomination or recommendation of, at least a majority (consisting of at least nine directors) of the Board. 

1.5

“CIGNA Common Stock” or “Common Stock” or “Stock” shall mean the common stock of CIGNA Corporation, par value of one dollar ($1.00) per share. 

1.6

“Committee” shall mean the Corporate Governance Committee of the Board of Directors of CIGNA Corporation, or the successor to such committee. 

1.7

“Deferral Election” shall mean the instrument executed by a Participant which specifies amounts and items of compensation to be deferred into the Deferred Compensation Account. 

1.8

“Deferred Compensation Account” shall mean the separate account established under the Plan for each Participant, as described in Section 3.1. 

1.9

“Participant” shall mean each individual who as a Director of CIGNA Corporation participates in the Plan in accordance with the terms and conditions of the Plan. 

1.10

“Payment Election” shall mean the instrument executed by a Participant which specifies the method of payment of compensation deferred. 

1.11

“Plan” shall mean the Deferred Compensation Plan for Directors of CIGNA Corporation, as it may be amended or restated from time to time by the Board of Directors. 

1.12

“Restatement Date” shall mean January 1, 1997, the effective date of the Plan, as amended and restated. 

1.13

“Restricted Deferred Compensation Account” shall mean the separate account established under the Plan for each Participant participating pursuant to Section 5.1. 

1.14

“Termination of Service” shall mean termination of services as a director of CIGNA Corporation, including but not limited to termination by retirement, death or disability. 

1.15

“Valuation Date” shall mean the close of business on the last business day of each month. 

Article II.	Participation 

2.1	Eligibility to Participate in the Plan 

The individuals who are eligible to participate in the Plan are those persons who serve as directors of CIGNA Corporation. 

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2.2	Participation in the Plan 

(a)

	A Participant may elect to defer receipt of all or a portion of those items of compensation for services as a director as are specified by the Administrator. 

(b)

	The election to defer is made by delivering a properly executed Deferral Election to the Administrator. The Deferral Election shall specify the item or items of compensation to be deferred, and the amount of such compensation to be deferred. The election for payment of compensation deferred is made by delivering a properly executed Payment Election to the Administrator. The Payment Election shall specify the method by which such deferred compensation is to be paid, and the date or dates for payment of such deferred compensation. 

(c)

	An election to defer compensation must be filed by the Participant prior to the commencement of a calendar year during which such compensation will be paid. 

(d)

	Notwithstanding Section 2.2(c), an election to defer compensation made by an individual who subsequently begins active service as a director of CIGNA Corporation, is filed prior to the date upon which such active service begins, shall be effective according to Section 2.2(e)(2), below. 

(e)

	An election to defer compensation is effective: (l) for the year beginning after the election, and for subsequent years, unless modified or revoked; or, (2) if Section 2.2(d) applies, for the remainder of the first year of active service, as of the first day of active service, and for subsequent years, unless modified or revoked. 

2.3	Elections Pertaining to Payments 

In executing a Payment Election, the Participant shall elect among the methods of payment as are specified by the Committee. 

(a)

	If a method of payment provides for periodic payments, the payments shall be made at least annually, over a period not to exceed 15 (fifteen) years. 

(b)

	If the payments are to commence after Termination of Service, no payments may be made before the first day of January following the calendar year during which the Participant terminates service. 

(c)

	The balance of a Participant’s Deferred Compensation Account and Restricted Deferred Compensation Account shall be paid, in all events, no later than January of the fifteenth year following Termination of Service. 

(d)

	If there is not in effect as of Participant’s Termination of Service a valid Payment Election, the Participant’s Deferred Compensation Account and Restricted Deferred Compensation Account shall be paid annually over a period of 15 (fifteen) years. 

2.4		Modification of Elections Pertaining to Payments 

With respect to payment of deferred compensation following Termination of Service, a Participant may request modification of his existing Payment Election, for payment under another method among those specified by the Committee. Any request for modification of such Payment Election shall be made before the Participant terminates service. The Committee shall consider any such modification request. In determining whether the request should be allowed, the Committee shall consider the Participant’s financial needs, including any changed circumstances, as well as the projected financial needs of CIGNA Corporation. If the Committee determines that the request should be allowed, the requested modifications shall be made. The Participant shall effect the modifications through execution of a new Payment Election, which shall constitute the only Payment Election which is outstanding and effective. 

2.5		Reduction or Termination of Future Deferral 

(a)

	A Participant may elect to reduce or to revoke his deferral of compensation into his Deferred Compensation Account, but such election shall have effect only prospectively. A Participant shall effect an election to reduce his deferral of compensation by execution of a new Deferral Election, which shall constitute the only Deferral Election which is outstanding and effective. A Participant shall effect an election to revoke his deferral of compensation into his Deferred Compensation Account by informing the Administrator in writing. Only one election to reduce and one election to revoke may be made under this Section 2.5 by each Participant in a calendar year. 

(b)

	An election to reduce or to revoke deferral of compensation under Section 2.5(a) above shall become effective in the second calendar month following receipt of such election by the Administrator. 

Article III.	Compensation Deferred 

3.1	Deferred Compensation Account 

A Deferred Compensation Account shall be established for each director when the director becomes a Participant. Compensation deferred by a Participant under the Plan shall be credited to the Deferred Compensation Account on the date such compensation would have been paid to the Participant. Hypothetical income on deferred compensation shall be credited to the Deferred Compensation Account as provided in Section 3.3, below. 

2

3.2	Balance of Deferred Compensation Account 

The balance of each Participant’s Deferred Compensation Account shall include compensation deferred by the Participant, plus amounts credited to the Participant’s Deferred Compensation Account pursuant to Section 5.3, plus income, hypothetical dividends and gains credited with respect to hypothetical investments. Losses from hypothetical investments shall reduce the Participant’s Deferred Compensation Account balance. The balance of each Participant’s Deferred Compensation Account shall be determined as of each Valuation Date. 

3.3	Hypothetical Investment 

(a)

	Compensation deferred under the Plan which would have been paid in cash shall be assumed to be invested, without charge, in one or more hypothetical investment vehicles as are specified from time to time by the Committee. With respect to such hypothetical investment: 

(1)

	Cash compensation deferred shall be deemed to earn income under the hypothetical investment vehicle. The Administrator shall credit such income to the Participant’s Deferred Compensation Account, pursuant to Section 3.4 below. 

(2)

	The Committee, in its sole discretion, may provide that cash compensation deferred after the Restatement date is deemed invested in a different hypothetical investment vehicle or vehicles than the investment vehicle in which cash compensation deferred before the Restatement Date is deemed invested. 

(3)

	The Committee, in its sole discretion, may provide Plan Participants with options for one or more additional hypothetical investment vehicles for investment of cash compensation deferred under the Plan, with respect to which: 

(A)

	a Participant may modify his election of hypothetical investment and may make any transfers between and among hypothetical investments, through a written request to the Administrator; provided that, 

(B)

	only one such modification or transfer shall be allowed during any calendar quarter. 

(C)

	any such modification or transfer shall be effective in the second calendar month following receipt of the request by the Plan Administrator. 

(D)

	such modifications and transfers will be in accordance with rules and procedures adopted by the Plan Administrator. 

(b)

	Compensation deferred under the Plan into the Participant’s Deferred Compensation Account as an alternative to receipt of Common Stock or credited to the Participant’s Restricted Deferred Compensation Account pursuant to Sections 5.1 or 5.2 of the Plan shall be deemed to be invested, hypothetically and without charge, in whole shares of hypothetical Common Stock. Shares of hypothetical Common Stock shall be subject to adjustment in order to reflect Common Stock dividends, splits, and reclassification. Except in the event of a Change of Control, amounts in the Participant’s Deferred Compensation Account and Restricted Deferred Compensation Account deemed invested in hypothetical Common Stock must remain so invested, and no other investment vehicle available hereunder may be substituted therefor until the January following the Participant’s Termination of Service. Thereafter, intra-Plan transfers may be made only in accordance with Section 3.3(a) above; provided that all such intra-Plan transfers occurring within six months after the Participant’s Termination of Service shall be subject to approval by the Administrator to ensure compliance shall with Section 16 of the Securities Exchange Act of 1934. 

(c)

	Amounts equal to cash dividends which would have been paid on shares of Common Stock shall be deemed paid on whole shares of hypothetical Common Stock in the Participant’s Deferred Compensation Account and Restricted Deferred Compensation Account. Such amounts shall be credited to the Participant’s Deferred Compensation Account and shall be hypothetically invested in accordance with Section 3.3(a) unless the Participant elects to have such amounts invested in one or more of the other hypothetical investment vehicles specified from time to time by the Committee. 

(d)

	In the event of a Change of Control, the Committee shall provide Participants with the option for investment in at least one hypothetical investment vehicle, the annual income earned on which must be not less than 50 basis points over the Ten-Year Constant Treasury Maturity Yield as reported by the Federal Reserve Board, based upon the November averages for the preceding year. 

3.4	Time of Hypothetical Investment 

(a)

	The balance of each Participant’s Deferred Compensation Account shall be deemed hypothetically invested on each Valuation Date, and income shall accrue on such balance upon such date, from the previous Valuation Date. 

(b)

	Compensation which would have been paid in cash shall be deemed invested in the Participant’s Deferred Compensation Account on the Valuation Date next following such hypothetical investment or credit. 

(c)

	Compensation hypothetically invested in Common Stock shall be deemed invested in whole shares of Common Stock as of the date such compensation otherwise would have been payable to the Participant. The number of whole shares of Common Stock in which compensation is deemed hypothetically invested in the Deferred Compensation Account shall be determined with respect to the last trade date in the month in which such compensation otherwise would have been payable, by reference to the closing price on the last business day of such month as reported on the Composite tape (or successor means of publishing stock prices), provided, that in absence of such information, the Stock value shall be determined by the Committee. 

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3.5	Statement of Account 

The Administrator shall provide each Participant a statement of his Deferred Compensation Account at least annually. 

Article IV.	Payment of Deferred Compensation 

4.1	Payment of Deferred Compensation 

(a)

	The Administrator shall pay amounts from the Participant’s Deferred Compensation Account, according to the Participant’s Payment Election. 

(b)

	Compensation deferred into the Deferred Compensation Account under the Plan shall be paid to the Participant in cash pursuant to Section 4.1(a). 

4.2	Financial Necessity Payment 

Notwithstanding any other provision of the Plan, if the Committee, after consideration of a Participant’s application, determines that the Participant has a financial necessity beyond the Participant’s control, and of such a substantial nature that immediate payment of compensation deferred under the Plan is warranted, the Committee in its sole and absolute discretion may direct that all or a portion of the balance of the Participant’s Deferred Compensation Account be paid to the Participant in cash. The amount of any such distribution shall be limited to the amount deemed necessary by the Committee to alleviate or remedy the hardship. The payment shall be made in a manner and at the time specified by the Committee. A Participant receiving a Financial Necessity Payment is deemed to have revoked his election for deferral of compensation under the Plan, as of the time of the Financial Necessity Payment. Any subsequent deferral of compensation under the Plan shall require that the Participant execute a new Deferral Election, subject to terms of Section 2.2(e)(1) hereof. 

4.3	Certain Accelerated Payments 

(a)

	If a Participant terminates service under circumstances which are such that the Committee deems it in the best interest of the Participant and of CIGNA Corporation that payment of the Participant’s Deferred Compensation Account and Restricted Deferred Compensation Account be accelerated, then the Committee, upon its own motion and in its sole discretion, may direct that the Participant’s Deferred Compensation Account and Restricted Deferred Compensation Account balances be paid to him immediately. 

(b)

	If, as a result of substantial and unforeseen changes affecting (1) the business of CIGNA Corporation, (2) the personal or professional circumstances of a Participant, or (3) operation or administration of the Plan, the Committee determines that the interests of the Participant and of CIGNA Corporation are best served through accelerated payment of the Participant’s Deferred Compensation Account and Restricted Deferred Compensation Account, the Committee on its own motion and in its sole discretion may direct that the Participant’s Deferred Compensation Account and Restricted Deferred Compensation balances be paid to him immediately. 

(c)

	A Participant who is not entitled to payment of his Deferred Compensation Account under any other provision of Article IV may make a written request to the Committee for an accelerated payment of his entire Deferred Compensation Account balance except for that portion equal to hypothetical dividends on hypothetical Common Stock initially credited to the Participants’ Restricted Deferred Compensation Account pursuant to Section 5.1(a). If the Committee receives such a request, it shall make a final valuation of the unrestricted portion of the Participant’s Deferred Compensation Account and pay ninety per cent (90%) of the Deferred Compensation Account balance to the Participant. The Participant shall forfeit the remaining ten per cent (10%) of his Deferred Compensation Account balance to the Corporation. Payments under this Section 4.3(c) may be made only from that portion of a Participant’s Account, including hypothetical investment results, attributable to compensation deferred after 1995. 

4.4	Payments of a Deceased Participant’s Account 

(a)

	If a Participant dies before his entire Deferred Compensation Account and Restricted Deferred Compensation Account has been paid to him, the Administrator shall pay the Deferred Compensation Account balance and Restricted Deferred Compensation Account in a single lump sum payment to the person(s) or trust(s) designated in writing by the Participant as his beneficiary(ies) under the Plan. The Administrator is authorized to establish rules and procedures for designations of beneficiaries and shall have the sole discretion to make determinations regarding the existence and identity of beneficiaries and the validity of beneficiary designations. 

(b)

	Notwithstanding Section 4.4(a), the Administrator shall pay the Deferred Compensation Account balance and Restricted Deferred Compensation Account balance, as soon as administratively feasible, in a single lump sum payment to the Participant’s estate if: 

(1)

	The Participant dies without having a valid beneficiary designation in effect; 

(2)

	The Participant’s designated beneficiary has predeceased him; 

(3)

	The Participant’s designated beneficiary cannot be found after what the Administrator determines, in his sole discretion, has been a reasonably diligent search; or 

(4)

	The Administrator determines, in his sole discretion, that a payment in such form is in the best interest of the Corporation. 

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Article V.	Restricted Deferred Compensation Accounts 

5.1	Establishment of Restricted Deferred Compensation Accounts 

(a)

	A Restricted Deferred Compensation Account shall be established for each person serving as a director of CIGNA Corporation on December 31, 1996 except directors who (1) if they had retired on or before December 31, 1996, would have satisfied the eligibility requirements (“Eligibility Requirements”) under Section 1 of the Retirement and Consulting Plan for Directors of CIGNA Corporation (the “Retirement Plan”) and (2) did not waive their rights under the Retirement Plan on or before December 31, 1996. As of January 1, 1997, the present value of the accrued benefits under the Retirement Plan of each Participant for whom a Restricted Deferred Compensation Account has been established will be credited to that Participant’s Restricted Deferred Compensation Account. The credited amounts will then be deemed to be invested and remain invested thereafter, hypothetically and without charge, in whole shares of hypothetical Common Stock. The number of whole hypothetical Common Shares to be credited to the Restricted Deferred Compensation Accounts shall be determined by using the average closing price for CIGNA Common Stock as reported on the Composite tape (or successor means of publishing stock prices) for the ten (10) business days prior to January 1, 1997. 

(b)

	A Restricted Deferred Compensation Account shall be established for each person first elected to the Board of Directors of CIGNA Corporation after December 31, 1996. 

5.2	Annual Credit Amount 

Beginning in 1997 and in each year thereafter, on the last business day of the month during which the Corporation’s Annual Meeting of Shareholders is held, the Annual Credit Amount will be credited to the Restricted Deferred Compensation Account of each Participant who is then a Director of CIGNA Corporation for whom such an account has been established pursuant to Section 5.1. That amount shall be assumed to be invested and remain invested thereafter, hypothetically and without charge, in whole shares of hypothetical Common Stock. The number of whole shares shall be determined by dividing the Annual Credit Amount by the average closing price for CIGNA Common Stock (as reported on the Composite tape or successor means of publishing stock prices) for the last ten (10) business days of the month during which CIGNA Corporation’s Annual Meeting of Shareholders is held. 

5.3	Dividends and Adjustments 

Hypothetical dividends shall be credited to the Participant’s Deferred Compensation Account and be invested and adjusted as provided in Section 3.3(c). 

5.4	Time of Payment 

Payments of the balance in the Restricted Deferred Compensation Account shall: be made in cash; commence the January following the calendar year in which the Participant’s Termination of Service occurs -- except as allowed by Section 4.3(a) or (b); and be made in accordance with the Participant’s applicable Payment Election. If a Participant dies before the entire balance in his Restricted Deferred Compensation Account has been paid to him, the Administrator shall pay such balances pursuant to Section 4.4 of this Plan. 

5.5	Statement of Restricted Deferred Compensation Account 

The Administrator shall provide each Participant a statement of his Restricted Deferred Compensation Account at least annually. The balance in the Participant’s Restricted Deferred Compensation Account shall be calculated in accordance with Section 3.2 of the Plan. 

Article VI.	General Provisions 

6.1	Committee Membership 

A Participant who is also a member of the Committee shall take no part in any decision pertaining to a request by such Participant under Sections 2.4, 4.2, and 4.3 hereof. 

6.2	Participant’s Rights Unsecured 

The right of any Participant to receive payments under the provisions of the Plan represents an unsecured claim against the general assets of CIGNA Corporation, or against the general assets of any successor company which assumes the liabilities of CIGNA Corporation. 

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6.3	Assignability 

No right to receive payments hereunder shall be transferable or assignable by a Participant. Any attempted assignment or alienation of payments hereunder shall be void and of no force or effect. 

6.4	Administration 

Except as otherwise provided herein, the Plan shall be administered by the Administrator who shall have the authority to adopt rules and regulations for carrying out the Plan, and who shall interpret, construe and implement the provisions of the Plan. 

6.5	Amendment 

The Plan may be amended, restated, modified, or terminated by the Board of Directors. No amendment, restatement, modification, or termination shall reduce the dollar value of a Participant’s Deferred Compensation Account balance or Restricted Deferred Compensation Account balance as of the Valuation Date immediately preceding such action. 

6.6	Correction of Errors and Inconsistencies 

The Committee upon its own motion, or at the request of the Administrator or of a Participant, shall have the authority to effect consistency among deferral elections, payment elections, or hypothetical investment with respect to amounts deferred by a Participant under the Plan, so as to avoid or rectify difficulties in Plan administration. In no event shall such action by the Committee reduce the dollar value of a Participant’s Deferred Compensation Account balance or Restricted Deferred Compensation Account balance as of the Valuation Date immediately preceding such action, nor shall the Committee take any action inconsistent with Section 3.3(b) hereof. The Committee may take such action with respect to a Participant’s Deferred Compensation Account or Restricted Deferred Compensation Account, regardless of whether such Participant may continue as a Director of CIGNA Corporation, or whether he may have terminated service. Without limiting the foregoing, the Committee may take such action upon the request of the Administrator, in order to avoid deferral of fractional shares of Stock. 

6.7	Compliance with Section 16 

If the Administrator determines that, in order to comply with Section 16 of the Securities Exchange Act of 1934, as amended, it is necessary for the Board rather than the Committee to take any action which the Plan authorizes the Committee to take, the Administrator shall request the Board to do so. 

6.8	Construction 

The masculine gender where appearing in the Plan shall be deemed to include the feminine gender. The singular shall be deemed to include the plural; and the plural the singular. 

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