Notice of 2021 Annual Meeting of Stockholders

 

 

Time and Date:		9:30 a.m., Eastern Time, on Thursday, April 22, 2021
Virtual Meeting:		www.virtualshareholdermeeting.com/HUM2021
Agenda:		1.  Elect the thirteen (13) director nominees named in the proxy statement.   2.  Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2021.   3.  Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.   4.  Consider any other business properly brought before the meeting.
Record Date:		February 22, 2021. 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   See instructions on your proxy card or at the voting site (www.proxyvote.com).

By Order of the Board of Directors,

 

 

Joseph M. Ruschell

Associate Vice President, Assistant General Counsel & Corporate Secretary

March 10, 2021

Table of Contents

 

Frequently Referenced Information
Role of the Board and Board Leadership			10
Human Capital Management			13
Board Oversight of Environmental, Social and Governance Matters			16
Qualifications and Process for Nominating Directors			22
Board Composition and Refreshment			23
Director Independence			24
Commitee Membership and Attendance			26
Corporate Governance Policies			29
Director Compensation			40
Stockholder Engagement			52
Peer Group			54
Stock Ownership Guidelines			61

Proxy Summary			i
Frequently Asked Questions			1
Company Overview			7
Corporate Governance			10
Proposal One: Election of Directors			32
Director Compensation			40
Stock Ownership Information			43
Compensation Discussion and Analysis			46
Organization & Compensation Committee Report			62
Executive Compensation			63
Certain Transactions with Management and Others			75
Audit Committee Report			76
Proposal Two: Ratification of Appointment of Independent Registered  Public Accounting Firm			78
Proposal Three: Non-Binding Advisory Vote with Respect to the Compensation of the Company’s Named Executive Officers			79
Incorporation by Reference			80
Additional Information			80

 

Proxy Summary

 

General Information

 

Meeting:		2021 Annual Meeting of Stockholders		Place:		www.virtualshareholdermeeting.com/HUM2021
Date:		Thursday, April 22, 2021
Time:		9:30 a.m., Eastern Time
Record Date:		February 22, 2021

 

How to Vote Your Shares

You may vote if you were a stockholder as of the close of business on February 22, 2021.

 

		Online www.proxyvote.com				By Mail Complete, sign, date, and return your proxy card in the envelope provided
		By Phone Call the phone number located on the top of your proxy card				During the Meeting Attend our virtual annual meeting and cast your vote using the webcast voting options

Voting Overview

 

Items of Business				Board Recommendation		Page   Reference
1.		Elect the thirteen (13) director nominees named in the proxy statement.		FOR		32
2.		Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2021.		FOR		78
3.		Non-binding advisory vote to approve the compensation of the Company’s Named Executive Officers.		FOR		79
4.		Consider any other business properly brought before the meeting.

 

Board Nominees

 

Name		Position		Age		First Elected Director
Kurt J. Hilzinger		Chairman of the Board, Independent Director		60		07/2003
Bruce D. Broussard		Director, President and Chief Executive Officer		58		01/2013
Raquel C. Bono, M.D.		Independent Director		64		09/2020
Frank A. D’Amelio		Independent Director		63		09/2003
Wayne A.I. Frederick, M.D.		Independent Director		49		02/2020
John W. Garratt		Independent Director		52		02/2020
David A. Jones, Jr.		Independent Director		63		05/1993
Karen W. Katz		Independent Director		64		09/2019
Marcy S. Klevorn		Independent Director		61		02/2021
William J. McDonald		Independent Director		64		10/2007
Jorge S. Mesquita		Independent Director		59		02/2021
James J. O’Brien		Independent Director		66		04/2006
Marissa T. Peterson		Independent Director		59		08/2008

 

 

i		Humana  |  2021 Proxy Statement  •  Proxy Summary

Frequently Asked Questions

 

Why am I receiving this Proxy Statement?

You are receiving a proxy statement because you owned Humana Inc. common stock, which we refer to as Shares, as of Monday, February 22, 2021, which we refer to as the Record Date, and that entitles you to vote at the Annual Meeting. Our Board of Directors has made these materials available to you on the Internet or, upon your request, has delivered printed versions of these materials to you by mail, in connection with the Board’s solicitation of proxies on behalf of the Company for use at our 2021 Annual Meeting of Stockholders. Your proxy will authorize specified people (proxies) to vote on your behalf at the Annual Meeting. By use of a proxy, you can vote, whether or not you attend the meeting.

This proxy statement describes the matters on which the Company would like you to vote, provides information on those matters, and provides information about the Company that we must disclose when we solicit your proxy.

Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials over the Internet. We 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. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials, which we refer to as the Notice, to our stockholders and beneficial owners as of the Record Date. All stockholders will have the ability to access the proxy materials on a website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found on the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis by calling Broadridge Financial Solutions, Inc., or Broadridge, at 1-800-579-1639.

How can I get electronic access to the proxy materials?

The Notice provides you with instructions regarding how to:

 

•

View our proxy materials for the Annual Meeting on the Internet; and

 

•

Instruct us to send our future proxy materials to you electronically by e-mail.

Choosing to receive your future proxy materials by e-mail will save us the cost of printing and mailing documents to you and will reduce the impact of our Annual Meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.

When and where is the Annual Meeting?

The Annual Meeting will be held on Thursday, April 22, 2021, at 9:30 a.m., Eastern Time, via live audio webcast and will be accessible at www.virtualshareholdermeeting.com/HUM2021.

Who is entitled to vote?

Anyone who owns Shares, as of the close of business on February 22, 2021, the Record Date, is entitled to vote at the Annual Meeting or at any later meeting should the scheduled Annual Meeting be adjourned or postponed for any reason. As of the Record Date, 129,010,557 Shares were outstanding and entitled to vote. Each Share is entitled to one vote on each of the matters to be considered at the Annual Meeting.

 

Frequently Asked Questions  •  2021 Proxy Statement  |  Humana			1

What will I be voting on?

 

•

Election of the thirteen (13) director nominees named in this proxy statement to serve on the Board of Directors of the Company;

 

•

Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2021; and

 

•

A non-binding, advisory vote to approve the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement.

The Board of Directors is not aware of any other matters to be presented for action at the Annual Meeting. However, if other matters are properly presented for a vote, the proxies will be voted for these matters in accordance with the judgment of the persons acting under the proxies.

How does the Board recommend I vote on each proposal?

The Board recommends that you vote your Shares as follows:

 

•

FOR the election of each of the thirteen (13) director nominees named in this proxy statement;

 

•

FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2021; and

 

•

FOR the approval of the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement.

All Shares that are represented at the Annual Meeting by properly executed proxies received before or at the Annual Meeting and not revoked will be voted at the Annual Meeting in accordance with the instructions indicated in the proxies.

How do I participate in the Annual Meeting?

This year’s Annual Meeting will be held in a virtual format through a live audio webcast. You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on the Record Date, or hold a valid proxy for the meeting. Stockholders who attend virtually will be afforded the same rights and opportunities to participate as they would at an in-person meeting. Accordingly, as stockholders, you will be able to listen, submit your questions and vote your shares online regardless of location. The Company will provide Rules of Conduct which can be obtained at www.proxyvote.com after logging in with your unique 16-digit control number provided on your Notice of Internet Availability of Proxy Materials, your proxy card or your voting instruction form that accompanied your proxy materials (your “Control Number”). The Rules of Conduct will be strictly adhered to during the Annual Meeting.

To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/HUM2021, you must enter your Control Number. If you are a beneficial stockholder, you may contact the bank, broker or other institution where you hold your account if you have questions about obtaining your Control Number. Non-stockholders are welcome to attend the Annual Meeting through the guest log-in at www.virtualshareholdermeeting.com/HUM2021, however guests will not be allowed to participate during the Annual Meeting except as listeners.

A question and answer session will be available to stockholders during the Annual Meeting and will include questions submitted in advance of, and questions submitted live during, the Annual Meeting. You may submit a question in advance of the meeting at www.proxyvote.com after logging in with your Control Number. Questions may be submitted during the Annual Meeting through www.virtualshareholdermeeting.com/HUM2021. The Company’s Corporate Secretary will review all questions to ensure that those presented for response are in accordance with the Rules of Conduct.

We encourage you to access the Annual Meeting before it begins. Online check-in will begin approximately thirty minutes before the Annual Meeting. Technicians will be available to assist you during that time if you have difficulty accessing the Annual Meeting.

How do I vote?

There are four ways that you can vote your Shares. Voting by any of these methods will supersede any prior vote you made regardless of how that vote was made. PLEASE CHOOSE ONLY ONE OF THE FOLLOWING:

 

1)

By Internet.  The website for voting is www.proxyvote.com. In order to vote on the Internet, you need the Control Number on your proxy card. Each stockholder has a unique control number so we can ensure all voting instructions are genuine and prevent duplicate voting. The Internet voting system is available 24 hours a day, seven days a week, until 11:59 p.m., Eastern Time, on

 

2		Humana  |  2021 Proxy Statement  •  Frequently Asked Questions

Wednesday, April 21, 2021, the day before the Annual Meeting. Once you are logged on the Internet voting system, you can record and confirm (or change) your voting instructions. If you use the Internet voting system, you do not need to return your proxy card.

 

2)

By Telephone.  If you are a registered holder in the United States or Canada, you may call 1-800-690-6903. The telephone voting system is available 24 hours a day, seven days a week, until 11:59 p.m., Eastern Time, on Wednesday, April 21, 2021, the day before the Annual Meeting. In order to vote by telephone, you need the Control Number on your proxy card. Each stockholder has a unique Control Number so we can ensure all voting instructions are genuine and prevent duplicate voting. Once you are logged on the telephone voting system, a series of prompts will tell you how to record and confirm (or change) your voting instructions. If you use the telephone voting system, you do not need to return your proxy card.

 

3)

By Mail.  Mark your voting instructions, sign and date the proxy card and then return it in the postage-paid envelope provided. If you mail your proxy card, we must receive it before 12:00 p.m., Eastern Time, on Friday, April 16, 2021. If you are returning your proxy card to Broadridge, they must receive it before 10:00 a.m., Eastern Time, on Wednesday, April 21, 2021, the day before the Annual Meeting.

 

4)

By Virtual Webcast.  Attend the virtual Annual Meeting at www.virtualshareholdermeeting.com/HUM2021 and cast your vote using the webcast voting options. Be aware that you can vote by methods 1, 2 or 3 above prior to the meeting and still attend the Annual Meeting. In all cases, a vote at the Annual Meeting will revoke any prior votes. Please note that if your Shares are held through a bank, broker or other nominee, you will need to obtain your Control Number in order to vote.

How will my Shares be voted if I do not specify how they should be voted?

If you sign and return your proxy card without indicating how you want your Shares to be voted, the persons acting under the proxies will vote your Shares as follows:

 

•

FOR the election of each of the thirteen (13) director nominees named in this proxy statement;

 

•

FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2021; and

 

•

FOR the approval of the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement.

What if my Shares are not registered in my name?

If you own your Shares in “street name,” meaning that your bank, broker or other nominee is actually the record owner, you should receive the Notice and voting instruction card from your bank, broker or other nominee. In addition, stockholders may request, by calling Broadridge at 1-800-579-1639, to receive proxy materials in printed form, by mail or electronically by e-mail, on an ongoing basis. When you own your Shares in street name, you are deemed a beneficial owner or holder for voting purposes and you may not vote your Shares at the Annual Meeting unless you receive a valid proxy from your brokerage, firm, bank, broker-dealer or other nominee holder.

If you hold Shares through an account with a bank, broker or other nominee and you do not provide voting instructions on your instruction form, your Shares may not be voted by the nominee with respect to certain proposals, including:

 

•

the election of directors;

 

•

the approval of the compensation of the Company’s Named Executive Officers as disclosed in this proxy statement; and

 

•

the frequency with which future non-binding advisory stockholder votes on the compensation of the Company’s Named Executive Officers will be held.

Banks, brokers and other nominees have the authority under the regulations of the New York Stock Exchange, or the NYSE, to vote Shares for which their customers do not provide voting instructions only on certain “routine” matters, including the ratification of the appointment of the Company’s independent registered public accounting firm. However, the proposals listed above are not considered “routine” matters for this purpose, and therefore your Shares will not be voted with respect to such proposals if you do not provide voting instructions on your instruction form.

 

Frequently Asked Questions  •  2021 Proxy Statement  |  Humana			3

How many votes are required to approve each proposal, what are the effects of abstentions and unmarked proxy cards, and is broker discretionary voting allowed?

 

Proposal		Vote Required for Approval		Effect of     Abstentions		Broker     Discretionary     Voting Allowed(2)		Unmarked/Signed     Proxy Cards
Election of directors		The number of votes cast for a nominee exceeds the number of votes cast against that nominee.(1)		No effect		No		Voted “For” All Directors
Ratification of the appointment of the independent registered public accounting firm		Majority of shares present and entitled to vote		Counted as “Against”		Yes		Voted “For”
Non-binding advisory vote to approve executive compensation		Majority of shares present and entitled to vote		Counted as “Against”		No		Voted “For”

 

(1)

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 (a) the director not achieving the requisite stockholder vote at any future meeting at which he or she faces re-election, and (b) acceptance of the resignation by the Board of Directors following that election. The Board of Directors has 90 days after a director fails to achieve the requisite stockholder votes to determine whether or not to accept the director’s resignation and to report this information to our stockholders.

(2)

If you are a beneficial owner whose Shares are held of record by a broker or other NYSE member organization, you must instruct the broker how to vote your Shares. If you do not provide voting instructions, your Shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. This is called a “broker non-vote.” A broker non-vote will not affect the outcome of the vote for the matters being presented for action at the Annual Meeting, because they are not considered to be votes cast.

What is a “broker non-vote”?

A broker non-vote occurs when a broker or other NYSE member organization holding Shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner, but does have discretionary voting power over other items and submits votes for those matters. As discussed above, if you hold Shares through a broker or other NYSE member organization and do not provide voting instructions to your broker or other NYSE member organization, your Shares may not be voted with respect to certain proposals, including the proposals listed above that are not considered routine.

What is a “quorum”?

A “quorum” is the presence at the Annual Meeting, virtually or by proxy, of a majority of the issued and outstanding Shares entitled to vote at the Annual Meeting. Shares may be voted at the Annual Meeting by a signed proxy card, by telephone instruction, or electronically on the Internet. There must be a quorum for the Annual Meeting to be held. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining whether a quorum exists.

 

4		Humana  |  2021 Proxy Statement  •  Frequently Asked Questions

How do I vote the share equivalent units held in the Humana Common Stock Fund of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan?

If you have an interest in the Humana Common Stock Fund of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan on the Record Date, you may vote. Under the Humana Retirement Savings Plan and the Humana Puerto Rico Retirement Savings Plan, your voting rights are based on your interest, or the amount of money you and the Company have invested in your Humana Common Stock Fund.

You may exercise these voting rights in almost the same way that stockholders may vote their Shares, but you have an earlier deadline, and you should provide your voting instructions to Broadridge. Broadridge will aggregate the votes of all participants and provide voting information to the Trustee for the applicable plan. If your voting instructions are received by 11:59 p.m., Eastern Time, on Wednesday, April 14, 2021, the Trustee will submit a proxy that reflects your instructions. If you do not give voting instructions (or give them later than that time), the Trustee will vote your interest in the Humana Common Stock Fund in the same proportion as the Shares attributed to the Humana Retirement Savings Plan, or the Humana Puerto Rico Retirement Savings Plan, as applicable, are actually voted by the other participants in the applicable plan.

You must provide your instructions to Broadridge by using the Internet, registered holder telephone number (1-800-690-6903) or mail methods described above. Please note that you cannot vote during the Annual Meeting. Your voting instructions will be kept confidential under the terms of the Humana Retirement Savings Plan or the Humana Puerto Rico Retirement Savings Plan, as applicable.

Who will count the votes?

Broadridge will tabulate the votes cast by proxy, whether by proxy card, Internet or telephone. Additionally, the Company’s Inspectors of Election will tabulate the votes cast at the Annual Meeting together with the votes cast by proxy.

How do I change my vote or revoke my proxy?

You have the right to revoke your proxy at any time before the Annual Meeting.

Your method of doing so will depend upon how you originally voted (a later vote will supersede any prior vote you made regardless of how that vote was made):

 

1)

By Internet — simply log in and resubmit your vote — Broadridge will only count the last instructions;

 

2)

By Telephone — simply sign in and resubmit your vote — Broadridge will only count the last instructions;

 

3)

By Mail — you must give written notice of revocation to Broadridge, 51 Mercedes Way, Edgewood, NY 11717 or by fax at 1-515-254-7733, submit another properly signed proxy with a more recent date. For written and fax notices, you must include the Control Number that is printed on the upper portion of your proxy card;

 

4)

Virtually — you may attend the virtual webcast of the Annual Meeting and submit your vote.

What is the due date for stockholder proposals, including stockholder nominees for director, for inclusion in the Company’s proxy materials for the 2022 Annual Meeting?

Stockholder proposals, or stockholder nominees for director at the 2022 Annual Meeting, as permitted by SEC regulations for inclusion in our proxy materials relating to the 2022 Annual Meeting, must be submitted to the Corporate Secretary in writing no later than November 10, 2021. Proposals should be submitted to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21st Floor, Louisville, Kentucky 40202.

 

Frequently Asked Questions  •  2021 Proxy Statement  |  Humana			5

May a stockholder present a proposal not included in our Proxy Statement at the April 22, 2021, Annual Meeting?

A stockholder can present a proposal at the Annual Meeting (a so-called “floor resolution”) only if certain notice requirements are met. The SEC does not directly regulate meeting conduct. State law imposes only limited requirements, so meetings are governed by procedures set forth in our Amended and Restated Bylaws (the “Bylaws”). Humana’s Bylaws require that a stockholder provide written notice of intent to bring a proposal no less than 60 days or more than 90 days prior to the scheduled date of the Annual Meeting of stockholders. If less than 70 days’ notice of the Annual Meeting is given, written notice by a stockholder would be deemed timely if made no later than the 10th day following such notice of the Annual Meeting. A proposal must also meet other requirements as to form and content set forth in our Bylaws. Stockholder proposals should be sent to the attention of the Corporate Secretary, Humana Inc., 500 West Main Street, 21^st Floor, Louisville, Kentucky 40202. A copy of our Bylaws is available on our website. From the www.humana.com website, click on “Investor Relations,” and then click on “Corporate Governance,” and then click on the link entitled, “Bylaws.”

How will Humana solicit votes and who pays for the solicitation?

We have engaged D. F. King & Co., Inc. to assist in the distribution of proxy materials and solicitation of votes for approximately $12,000 plus expenses. We have also engaged Broadridge to assist in the distribution of proxy materials and the accumulation of votes through the Internet, telephone and coordination of mail votes for approximately $275,600 plus expenses. We will reimburse banks, brokers and other nominees for their reasonable out-of-pocket expenses for forwarding proxy and solicitation material to our stockholders.

How can I obtain additional information about the Company?

Included with this proxy statement (either in printed form or on the Internet) is a copy of our Annual Report on Form 10-K for the year ended December 31, 2020, which also contains the information required in our Annual Report to Stockholders. Our Annual Report on Form 10-K and all our other filings with the SEC also may be accessed via the Investor Relations section on our website at www.humana.com. We encourage you to visit our website. From the www.humana.com website, click on “Investor Relations,” and then click on the report you wish to review under the “SEC Filings and Financial Reports” subcategory.

Where can I find voting results for this Annual Meeting?

The voting results will be published in a current report on Form 8-K which will be filed with the SEC no later than four business days after the Annual Meeting. The Form 8-K will also be available on our website. From the www.humana.com website, click on “Investor Relations,” and then click on “SEC Filings and Financial Reports.”

What is “householding”?

“Householding” occurs when a single copy of our Annual Report, proxy statement and Notice is sent to any household at which two or more stockholders reside if they appear to be members of the same family. Although we do not “household” for registered stockholders, a number of brokerage firms have instituted householding for Shares held in street name. This procedure reduces our printing and mailing costs and fees. Stockholders who participate in householding will continue to receive separate proxy cards, and householding will not affect the mailing of account statements or special notices in any way. If you wish to receive separate copies of our Annual Report, proxy statement or Notice in the future, please contact the bank, broker or other nominee through which you hold your Shares.

 

6		Humana  |  2021 Proxy Statement  •  Frequently Asked Questions

Company Overview

 

Headquartered in Louisville, Kentucky, Humana Inc. is a leading (2020 Fortune #52 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, 2020, we had approximately 16.8 million members in our medical benefit plans, as well as approximately 5.3 million members in our specialty products.

Our Strategy

We are committed to addressing the most important health needs of our millions of medical and specialty insurance members and health care services customers to simplify achieving better health and give our customers back healthy days. We offer insurance and non-insurance products to consumers through our various subsidiaries. Our medical and specialty insurance products allow members to access health care services primarily through our networks of health care providers with whom we have contracted. In addition, we offer services to our health plan members as well as to third parties, including pharmacy solutions, provider services, and clinical programs, such as home health and other services and capabilities to promote wellness and advance population health.

Our successful history in care delivery and health plan administration is helping us create a new kind of integrated care delivery system with the power to address our customers’ most significant needs that stand in the way of 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. Our efforts are leading to a better quality of life for people with Medicare, families, individuals, military service personnel, and communities at large. Humana’s innovative strategy continues to capitalize on industry changes by positioning ourselves as a partner in health and aging to our consumers. We understand that health care is complicated, and dealing with multiple physicians and other health care professionals can be a confusing and daunting task. 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 are focusing on the unmet needs that matter the most to our customers, aligning our actions and behaviors to go above and beyond to solve those needs and deliver on a “more human” experience, so people get more than they expect, ultimately helping members achieve their best health. We call this delivering “human care.” Human care separates Humana from other traditional insurance companies, demonstrating that our approach is more caring, personalized, and easier. 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 to improve how they engage and interact with us by personalizing the experience for how they want to interact with Humana.

Our ecosystem of value-based care delivery capabilities engages our customers clinically by focusing on the physical, mental, and preventative aspects of their health, and delivering better health outcomes. We activate a network of proprietary and partnered solutions, focusing specifically on the highest influence touchpoints of the health care delivery system, including primary care, home health, pharmacy, behavioral health, and social determinants of health. We support the integration of these touchpoints through robust data, analytics, and digital health capabilities that help us engage our customers in their health and get them the right care, in the right place, at the right time. This approach allows us to deliver better quality and health outcomes while making the health care experience simpler for our members and patients.

Our COVID-19 Response

Defined by the COVID-19 pandemic, 2020 was a unique and challenging year that highlighted the strengths of the Medicare Advantage (MA) program and the value that this enduring public-private partnership brings to our nation’s seniors, the disabled and the healthcare system as a whole. From the outset of the pandemic, Humana has taken decisive action to support our members, provider partners, associates, and the communities we serve to ease some of the difficulties presented by the pandemic.

We quickly implemented changes for our members to (i) remove financial barriers to care, (ii) improve access to care and pivot to telephonic and in-home care, (iii) provide resources to help them safely access in-person care, (iv) address social determinants of health needs that were exacerbated by the pandemic, and (v) leverage our data and analytics capabilities to establish a clinical outreach team to proactively engage with our most vulnerable members. In response to the unprecedented strain faced by our provider partners early in the pandemic, we took actions intended to provide financial and administrative relief to ease liquidity concerns and enable them to devote as much time and resources as possible to unencumbered frontline patient care.

 

Company Overview   •  2021 Proxy Statement  |  Humana			7

Our response to the pandemic and performance throughout 2020 would not have been possible without the extraordinary, resilient efforts of our associates — who went above and beyond to continually meet the needs of our stakeholders while facing their own daily challenges as a result of COVID-19. To support them, we quickly transitioned nearly all of our workforce to a remote work environment. We also made certain that our frontline care providers, clinicians, and pharmacists – who continued to care for our members and patients in our clinics and in the home – had the proper protective equipment and space to safely do so. At our physical locations we implemented wellness checks, social distancing practices and enhanced cleaning protocols, among other things, to support the health and safety of our associates whose roles are not conducive to a remote work environment. We also expanded our benefits to assist our associates who faced financial hardship and to address the difficulties that the pandemic presented to daily life.

Our COVID-19 response initiatives include:    

 

 

8		Humana  |  2021 Proxy Statement  •  Company Overview

Our Performance

Our 2020 full year financial results reflect continued strong core performance across the Company, combined with the impact of the ongoing COVID-19 pandemic, including the Company’s relentless efforts to ease the burdens for all of its stakeholders by proactively addressing the physical, mental and financial well-being of our members, communities including the underserved, providers, and employer groups:

 

•

We reported EPS of $25.31 on a Generally Accepted Accounting Principles (GAAP) basis and Adjusted EPS of $18.75*, in-line with the Company’s initial FY 2020 Adjusted EPS guidance as communicated throughout the year.

 

•

We returned approximately $2.1 billion to our stockholders, including $1.75 billion of share repurchases and $323 million in dividends.

 

*

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, 2020 contained in our Annual Report on Form 10-K, filed with the SEC on February 18, 2021.

 

Company Overview  •  2021 Proxy Statement  |  Humana			9

Corporate Governance

 

 

Care for the whole person – emotionally, physically, and spiritually, building inspired communities where health and well-being prosper.		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. At the heart of these efforts lie our Company values, the guiding forces behind all our actions — Inspire Health, Cultivate Uniqueness, Rethink Routine, Pioneer Simplicity, and Thrive Together. 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,” 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 focus 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.
Appreciate individual uniqueness, creating an environment where everyone can fully be themselves, reflecting all of us and the communities we serve.
Work and learn together, transforming the norm to strengthen operational excellence and outcomes.
Take personal accountability, working together to create simple, personalized, quality experiences.
Collaborate openly, building positive relationships to achieve strong, sustainable results for us and the people we serve.

 

10		Humana  |  2021 Proxy Statement  •  Corporate Governance

BOARD OF DIRECTORS   Oversees Management of Major Risks

• Legal/Regulatory • Financial

• Succession Planning • Strategic

• Legal/Policy • Reputation

• Cyber Security

• Investment Objectives

Audit Committee

Organization & Compensation Committee

Nominating, Governance & Sustainability Committee

Technology Committee

Investment Committee

• Financial Statement integrity and reporting • Legal, regulatory and compliance • Internal controls • Cyber security 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.

The goal of these processes is to achieve serious 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.

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 and our lead independent director, Mr. Kurt J. Hilzinger assumes key duties to ensure effectiveness and collaboration in all aspects of the Board’s role.

 

Duties of Our Chairman
Serves as Chair of regular sessions of the Board and manages the overall Board process.      Leads the Board in anticipating and responding to crises.      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.      Supports the Nominating, Governance & Sustainability Committee with director on-boarding and orientation programs.      Models culture, philosophy, inclusivity and values expected of all directors.      Conducts individual meetings with other directors, including the CEO, and management team to encourage open communication, collaboration and differences in perspective.		Evaluates overall Board effectiveness, with emphasis on identifying areas of enhancement, development and/or furtherance and communicating these observances to the Board for discussion.      Represents the Board on occasions where it is important for the Board to respond on matters independently from the Company’s management team.      Provides guidance and direction to the CEO and management team.      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.      Works with the Organization & Compensation Committee to develop the process for CEO compensation evaluations.

 

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The Board believes that 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, in light of the challenges and circumstances facing the Company, which may change over time. 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. Despite COVID-19 restrictions and the Company’s workforce having primarily transitioned to work-from-home, the Board maintained its commitment to engagement and continued to meet with stakeholders virtually, by videoconference and teleconference.

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. In addition, the Organization & Compensation Committee regularly reviews associate engagement scores, which maintained momentum during 2020. Commitment to our associates only strengthened during the pandemic, with 90% of our associates saying that Humana is committed to their health and well-being.

 

•

Hosts an annual succession dinner with rising leaders in the Company, whose leadership position is below management team level, to personally engage with them and allow an opportunity for those leaders to offer feedback directly to the Board.

 

•

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 2020, included, (i) a formal education session with external consultants; (ii) guest speaker attendance during select meetings; and (iii) routine briefings on regulatory developments.

 

		2020 Notable Board Actions   •  Appointed 3 new directors to the Board   •  Designated Board-level oversight of ESG   •  Expanded the scope and responsibilities of our Nominating, Governance & Sustainability Committee   •  Reconstituted Board Committees   •  Approved COVID-19 Relief Funds				2020 Board and Committee Meetings   48 Videoconference / Teleconference Meetings 5 In-person Meetings 1 Annual Stockholder Meeting (Virtual)				2020 Director Attendance Average   96%   (Based on aggregated Board and Committee meeting attendance; includes all directors having served during 2020.)

 

12		Humana  |  2021 Proxy Statement  •  Corporate Governance

Human Capital Management

Our associates are 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, actively promoting a culture of inclusion and diversity to foster a workplace where all associates feel they can be authentic and bring their whole selves to work every day – cultivating uniqueness and thriving together.

These efforts are overseen by our Board of Directors – which has designated to our Organization & Compensation Committee the responsibility for Board-level oversight of the Company’s human capital management and inclusion and diversity policies and practices – and implemented under the direction of our Chief Administrative Officer. As of December 31, 2020, we had approximately 48,700 associates and approximately 900 additional medical professionals working under management agreements primarily between us and affiliated physician-owned associations.

 

Our Culture 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, a caring environment where our associates go above and beyond for our members, driving innovation, and allowing for fulfilling experiences that incentivizes them to stay with us over the long-term. Each year, we measure our success and opportunities to advance through our annual, third-party administered Associate Experience Survey – results of the 2020 survey showed that 93% of associates are highly engaged, which is world-class level. We provide the 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.				7.3 Years   Average Associate Tenure
				87%   Of associates have a strong sense that they belong at Humana

Inclusion and Diversity

We understand that inclusion enables a meaningful work environment where everyone feels welcome and performs their best. 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. Celebrating diverse backgrounds and creating an environment of inclusion is at the heart of what we do. Our commitment is to ensure we foster a work environment in which every associate can bring their whole self to do their best work.

We are committed to having balanced diversity at all levels of the Company and have developed a pathway for top, diverse talent within our recruiting initiatives. To achieve our recruiting and hiring goals we proudly partner with local and national advocacy groups to provide information about open roles, assistance with resume preparation and application submission. 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. Balanced interview panels enhance the experience of interviewees and demonstrate our Values in action.

 

		2017   Signed the CEO Action for Diversity & Inclusion Pledge   The largest CEO-driven business commitment to advance diversity and inclusion in the workplace.				2019   Joined Catalyst CEO Champions For Change   A transformational diversity and inclusion initiative launched by Catalyst—a global thought leader and partner in accelerating the progress of women at work.				2020   Founding Member of OneTen Coalition   Leaders across industries collectively committed to upskilling, hiring and promoting one million Black Americans over the next 10 years.

 

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We track and evaluate our workforce representation through self-disclosure by our associates, and are committed to transparent disclosure of our demographic data. The charts below represent our workforce demographics as of December 31, 2020. More information on our inclusion and diversity efforts, along with detailed demographic data, can be found within our Inclusion & Diversity Report located on our website, www.humana.com then click on “Investor Relations,” and then click on “Inclusion and Diversity.”

 

Associate Demographics

 

 

 

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 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 and business, they may include:
				90%   Of associates believe Humana is committed to their health and well-being

 

•  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				•  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   •  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

 

14		Humana  |  2021 Proxy Statement  •  Corporate Governance

Talent Development / Growth Opportunities

 

		We champion the individual goals and development of our associates, and provide a number of programs to ensure that our associates have the resources and support they need to deliver on their passion. 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.
84%   Of associates believe Humana provides them with opportunity for growth and 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.

Additionally, we 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.

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   •  We offer a matching charitable gift program through The Humana Foundation   •  We feature associates sharing their volunteerism stories on our Intranet to inspire others				90%   Of associates are inspired by our Bold Goal and commitment to the communities we serve

 

•

We offer our associates paid time off to get vaccinated for COVID-19, helping to reduce barriers associates may have in taking time away from work to get vaccinated and supporting healthy communities

 

Corporate Governance  •  2021 Proxy Statement  |  Humana			15

Board Oversight of Environmental, Social and Governance Matters

Over the past year, we continued to advance our strong corporate governance framework to more formally align our environmental, social and governance (ESG) efforts with our long-standing commitment to operating our business in a socially responsible and sustainable manner that takes into account the interests of all our stakeholders. Our Board of Directors has formally designated our reconstituted Nominating, Governance & Sustainability Committee with the responsibility for Board-level oversight of the Company’s ESG strategy, practices and reporting. In addition, our executive management team established an 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 will, in turn, complement 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 •  Cyber Security

•  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

Sustainability Highlights

At Humana, our ESG efforts are focused on inspiring health and well-being for each person and the communities we serve, and building our sustainable future. We clearly demonstrate our dedication – from our Bold Goal, to our spirit of volunteerism and philanthropic partnerships, to our commitment to environmental sustainability, inclusion, diversity, and ethics – by empowering our associates to be a positive influence in the workplace and in their communities. We strive to make living healthy easier for everyone and are proud to share a few highlights of our efforts below.

Well-Being For Each Person

 

•

Our members’ achieving their best health is at the top of our mind. We know that health is not linear. Every member is unique as are the communities we serve. That’s why we’re continuously working to ensure that our health plan products and services are as affordable as possible, as well as, addressing access to healthcare barriers so that all of our members can receive the care they need. As we cultivate our philosophy of whole-person health care, we’re addressing the most crucial needs of our members, which means truly caring about them, understanding what is important to them and finding ways to make it easy for them to live their best life. Thanks to processes such as integrated care delivery and using health screenings that consider social determinants of health, we have a clearer view of each member’s very personal barriers to their best health. Through our integrated approach, we are building the tools to address the physical, behavioral and social factors that all play such a critical role in promoting improved health outcomes. Please refer to our Value-Based Care Report for more information on these efforts.

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. health care system. In January 2021, we announced our first Chief Health Equity Officer, who will lead work to define enterprise-wide measures of equity, create goals for improvement and coordinate efforts to achieve them—setting direction and establishing strategy to promote health equity across all Company lines of business, including our care delivery assets. Our Chief Health Equity Officer will further the Company’s focus on cultural sensitivity, ensuring that it’s fully integrated into the design and development of our clinical programs, products, services and all member interactions and communications, while working collaboratively with the broader health care community to advance health equity so health care can work better for everyone, regardless of background, age or economic status.

 

16		Humana  |  2021 Proxy Statement  •  Corporate Governance

•

Our associates are the driving force behind our Company’s well-being initiatives. We believe that when we invest in our associates they pay it forward by investing in others. In this effort we actively live out our Values, cultivating uniqueness and thriving together.

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 works with key partners like the Executive Inclusion & Diversity Council (the “Council”), our Network Resource Groups (“NRGs”), local Inclusion and Diversity Councils, and Culture & Engagement professionals across the enterprise, to maximize our vibrant diversity and inclusive culture to empower our business strategy to help the communities we serve achieve their best health.

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) hiring, developing and retaining a diverse workforce; (ii) creating an inclusive workforce; and (iii) improving transparency and accountability to sustain outcomes. The Council sets company-wide inclusion and diversity goals and objectives.

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.

Our fundamental belief that every person has the right to a safe workplace includes having freedom of gender identity and expression, which we have included within our non-discrimination and anti-harassment policies. Additionally, our Company adopted guidance to support associates who are transgender and/or identify as non-binary. Our Workplace Gender Transition Guidelines, available to all associates, outlines a collaborative process to help guide transitioning associates, their coworkers and leaders by addressing the needs and issues that may arise in the workplace, and includes alignment of workplace resources, education and coaching.

 

•

Our suppliers are essential to delivering services within our business. As such, we 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.

We want our vendors and suppliers to help drive innovation, improve quality and sustain growth. To that end, we strive to attract qualified, certified suppliers who reflect our customers, associates and communities we serve. We support the growth of diverse-owned businesses by investing in them through our Supplier Diversity program. We’ve made it a priority to obtain a diverse supplier base reflective of the overall customers, associates and communities we serve. We’re also committed to fair and equitable business practices and to social responsibility. Leveraging these suppliers now and in the future is beneficial to Humana’s profitability.

 

		Enhanced Transparency     First public release of     our Company’s Inclusion &     Diversity Annual Report;     September 2020				Chief Health Equity Officer     Established new position to   lead and advance our health   equity initiatives.				31%    Associate participation in at least   1 of our 9 employee-led (NRGs)   during 2020 With over 8,200   members, the Women’s NRG   is the largest

Well-Being For Each Community

As our Company shifts from an insurance company with elements of health to a health company with elements of insurance, we are focused on five areas of influence to help improve health and aging: primary care, home health, pharmacy, behavioral health and social determinants of health. Championing this effort is our Bold Goal – a population health strategy launched in 2015 to help the communities we serve be 20% healthier by 2020 and beyond.

Over the past five years, we’ve continued to adapt as we learned more about our communities and our members. We discovered how important it is to develop personalized solutions, determining how best to meet the needs of our members. That has meant getting to know our members better in order to connect them to people and organizations who can support them – not only in their clinical needs, but also in their individual health-related social needs, such as getting access to healthy food, helping to connect them socially and addressing their housing needs.

With community-based organizations and healthcare practices, we are creating evidence-based, scalable and financially-sustainable solutions to improve population health at a local level. We track our progress using the U.S. Centers for Disease Control and Prevention (CDC) assessment tool, Healthy Days, which measures self-reported mentally and physically unhealthy days of an individual over a 30-day period. Due to our active involvement and partnerships within Bold Goal communities, we have seen a 2.7 percent reduction in unhealthy

 

Corporate Governance  •  2021 Proxy Statement  |  Humana			17

days since 2015. We scaled social determinants of health screenings across our business, which has impacted thousands – connecting those in need to community resources and support. Please refer to our Bold Goal Progress Report for more information on these efforts.

Because we know social determinants of health play a significant role in addressing health needs, we partnered with the University of Houston to establish The Humana Integrated Health System Sciences Institute to disrupt the way healthcare leaders are trained by focusing on advancing population health, improving health outcomes and expanding the use of value-based payment models. Future clinicians will work in teams and be fluent in assessing the social determinants of health. They will be trained to understand the nuances of how patients’ home lives are affecting medication adherence and nutrition. And when those red flags go up, they will connect—not just refer—patients to resources who can help them, resulting in overall improved health outcomes and improved population health.

 

		$20.6 Million      Invested by The Humana      Foundation in 2020 supporting      fifteen Bold Goal communities      through grants				214,753      Hours tracked by      our associates in 2020 for      volunteerism within      their communities				5 Million Screenings      Social Determinants of      Health screenings performed      in 2020, exceeding our      3 million screening goal

Building a Sustainable Future

We know that a strategic focus on environmental sustainability is critical to fulfilling our mission of helping people achieve lifelong well-being. The better we do at protecting the health of our environments, including our operations, supply chain, and communities around us, the better we can do at positively supporting people on their health journeys. We believe that our demonstrated commitment to environmental sustainability not only positions us to offer reliable and cost-effective service to our customers, but also embodies the principle of an intrinsic link between the health of our planet, our business, and the services we provide.

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: energy, emissions, and waste. We augment these initiatives with a broader effort to conserve other resources such as water, manage our real estate footprint, and collaborate with our stakeholders – namely our associates – to proactively embrace sustainability. 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 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 well-being.

Our Workplace Experience team, overseen by our Chief Administrative Officer, 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. The Workplace Experience team also leads initiatives toward achieving environmental targets in addition to tracking/reporting progress and assessing opportunity toward setting new targets climate-change mitigation/adaptation. The Workplace Experience team also leads initiatives toward achieving environmental targets in addition to tracking/reporting progress and assessing opportunity toward setting new targets

We encourage you to review our Environmental Sustainability Policy Statement and our 2020 CDP Report – where we maintained leadership level achievement – to learn more about our sustainability efforts and areas of concentration.

 

18		Humana  |  2021 Proxy Statement  •  Corporate Governance

ENVIRONMENTAL SUSTAINABILITY INITIATIVES

 

Greenhouse Gas (GhG) Emissions Reduction

Energy Reduction

•  We achieved our goal to reduce greenhouse gases 2.1% year-over-year (from a 2017 baseline) by the end of 2022 and are now pushing to go beyond our baseline measure.   ✓We offer our associates nontraditional workstyle options and alternative transportation options, engage in partnerships and programs designed to reduce emissions.   ✓We calculate (GhG) emissions in accordance with the methodologies outlined by the (GhG) Protocol.   ✓We provide a full report of our yearly energy consumption and reduction efforts within the Global Reporting Initiative (GRI) Content Index of our CSR report. We report our (GhG) initiatives to CDP and utilize a third-party assurance contractor to provide limited assurance verification of our information.

•  We assess and make investments in renewable energy sources like geothermal or solar when and where it makes sense, environmentally and financially.   ✓We’ve installed solar panels on the rooftop of an owned facility.   ✓Our fleet is greener because our mobile marketing offices – vans equipped with WiFi, cameras and more – have been fitted with solar panels to reduce energy and power to operate the vehicles.   •  We incorporate standards from both the ENERGY STAR Program and the U.S. Green Building Council’s LEED standards (Leadership in Energy and Environmental Design) into the design of new construction projects.   ✓We proudly have six ENERGY STAR certified facilities within our portfolio sites.   ✓Our data centers now have new energy-efficient cooling units and smart flooring to distribute air more efficiently.   ✓We continue working toward 100% replacement of fluorescent lights with LED lights across our portfolio sites.

Waste Reduction

•  Absolute Target: 60% waste diversion rate of waste to landfills via reduction and recycling efforts at our portfolio sites where Humana and our vendors manage waste recycling services, by the end of 2022. We not only achieved our goal early – we exceeded it – at a rate of 63%. Now through 2022, we’ll continue seeking innovative ways to reduce our footprint.   ✓Humana Pharmacy, our mail-order pharmacy, engages in medical waste reduction efforts by donating unused prescription medication – which would otherwise be incinerated – to nonprofit organizations that provide free healthcare, dental care and prescription medication to individuals who are uninsured or underinsured.   ✓We promote and track our reduction and recycling efforts and make it convenient for our associates to recycle in our facilities. We also report our waste reduction initiatives to CDP and utilize a third-party assurance contractor to provide limited assurance verification of our information.

 

Corporate Governance  •  2021 Proxy Statement  |  Humana			19

ETHICAL SUSTAINABILITY INITIATIVES								Helpful ESG Resources
Ethics & Compliance								We invite you to review the additional materials below to learn more about our Company’s ESG related programs, policies and initiatives.   Annual Reports   https://humana.gcs-web.com   Corporate Social Responsibility Annual Report   Inclusion & Diversity Annual Report   Environmental Sustainability Policy Statement   Bold Goal Progress Report   Value-Based Core Report   Policy Statements   https://humana.gcs-web.com   Environmental Sustainability Policy Statement   Supplier Diversity Statement   Statement of AI Principles   Ethics   https://humana.gcs-web.com/corporate-governance   Ethics Every Day   Anti-Corrpution Statement   Supplier Diversity Program   https://www.humana.com/supplier-information/supplier-diversity.   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   Population Health   https://populationhealth.humana.com   Data Privacy and Cyber Security   https://www.humana.com/legal/privacy   Public Policy   https://www.humana.com/about/public-policy   Workplace Benefits   https://careers.humana.com/why-choose-humana/
•  Our associates are the key to ethics and compliance.   ✓ We have an Enterprise Compliance team that regularly communicates and engages with associates on ethics and compliance topics throughout the year.   ✓ We require all associates (including executive officers and independent directors) and contractors to complete an annual training course on ethics and compliance matters.   ✓ We enforce Standards of Conduct and a Compliance Policy which are specifically designed for our contracted healthcare providers and third parties in effort to deter fraud, waste and abuse.   •  Humana is an industry leader in the adoption of principles and governance to guide its implementation of emerging technologies.   ✓ We govern our use of Artificial and Augmented Intelligence according to industry-leading principles.   ✓ We have interdisciplinary committees that establish governance over the deployment and quality of Artificial and Augmented Intelligence models.   ✓ We have signed the EqualAI pledge committing to ensuring our Artificial and Augmented Intelligence tools do not incorporate unintentional bias, and require all of our Artificial or Augmented Intelligence models that inform decisions about individuals to be reviewed to detect inadvertent bias.
Safety & Security
•  We integrate a culture of safety and security into all aspects of our business to provide our associates, contractors, members and visitors a safe and secure work environment – 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 maintain and utilize the following resources to manage/mitigate occupational health and safety: Environmental Health and Safety Manual, Incident Reporting System, Associate Safety Handbook and Associate Emergency Preparedness Training.   ✓ 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.
Data Privacy
•  We are committed to continuously enhancing and strengthening our technology infrastructure and security protocols.   ✓ We employ best-practice precautions to safeguard information and protect our members’ data. We use both offensive and defensive practices to protect against the ever-evolving cyber threats landscape, measuring and maturing our cybersecurity capabilities, and actively monitoring risks posed by threat actors.   ✓ We provide Company-wide cyber security training to associates, led by our Enterprise Information Protection team, on how to avoid security vulnerabilities and equip them with the necessary tools to protect Company data and to reduce risk. We also test their knowledge through internal phishing campaigns – tracking and reporting aggregated outcomes to leadership.   ✓ 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

 

20		Humana  |  2021 Proxy Statement  •  Corporate Governance

Corporate Responsibility Awards and Recognition

We are pleased to have received recognition for our 2020 corporate responsibility 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.”

 

 

 

Corporate Governance  •  2021 Proxy Statement  |  Humana			21

Qualifications and Process for Nominating Directors

Identifying Nominees for Directors

 

		The Board has delegated an established screening process for director nominees to the Nominating, Governance & Sustainability Committee (“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 selecting its own members — with annual stockholder voting thereafter for a director’s continued tenure on the Board. 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. The self-identification process may also incorporate responses, as appropriate, from the Board’s annual individual self-evaluations. Such evaluations require each director to honestly reflect upon and recount their personal contributions to the Board in the prior year and to provide feedback regarding their performance, the overall Board performance and the performance of certain other key Board positions. The self-evaluations are provided to the Chairman of the Board and to the CEO for their review.

Third-Party Recommendations. From time to time, we engage a professional third-party search firm to assist the Board of Directors and the Committee in identifying and recruiting candidates for Board membership. Under its charter, the Committee has committed to include, and requires any third-party search firm that it engages to include, candidates with diversity of race, ethnicity and gender in the pool considered by the Committee and/or the Board for nomination to the Board.

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 60 days or more than 90 days prior to the scheduled date of the Annual Meeting of stockholders. If less than 70 days’ notice of the Annual Meeting is given, written notice by a stockholder would be deemed timely if made no later than the 10th day following such notice of the Annual Meeting. 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.

Director Skills and Qualifications

 

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) qualifications or characteristics that are expected and befitting of all directors, and (ii) specific skills, experience or qualifications that should be represented collectively on our Board. Our Guidelines contain Board membership criteria that apply to all nominees recommended for a position on the Board.

Our director nominee screening process is designed to ensure that the Board includes members with diverse backgrounds, including race, ethnicity, gender, skills, thought, perspective and experience, as well as appropriate financial and other expertise relevant to the Company’s business. The Committee further assesses each director nominee’s ability to devote sufficient time and effort to his or her duties as a potential director, his or her willingness to consider all strategic proposals, and any core competencies or technical expertise necessary to staff Board committees. 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.

 

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The Committee recognizes that our Board should represent a diverse group of experience, skills and other qualities, and as a collective group should have expertise in certain substantive areas including: corporate governance, finance/capital markets, board of directors experience, health care industry experience, clinical practice, CEO or other C-suite experience with significant business acumen, direct to consumer marketing, diversity, experience with complex organizations, technology/business processes, government relations and/or public policy and regulatory knowledge and other skills and expertise that are likely to enhance the Board’s ability to manage and direct the affairs and business of the Company. Certain directors or director nominees may possess expertise in the designated areas, however a director or director nominee need not individually possess the experience, skill or other requisite qualification in all areas.   The Committee has determined that our Board collectively satisfies all of the above criteria, complementing each other’s skills, background and perspectives to create a collection of diverse, knowledgeable and experienced directors. Please refer to the section entitled, “Proposal One: Election of Directors” in this proxy statement for biographical information, including skills and qualifications, of our individual Board members.		Director Attributes
				Independent under our Guidelines, as well as meeting the independence requirements of, as applicable, the NYSE, SEC and Internal Revenue Code (IRS);
				External public company board service is limited (maximum of three);
				High integrity and ethical standards;
				Standing and reputation in the individual’s field;
				Risk oversight ability with respect to the particular skills of the individual director;
				Understanding of and experience with complex public companies or like organizations; and
				Ability to work collegially and collaboratively with other directors and our management team.

Board Composition and Refreshment

To meet the changing needs and strategic direction of our business, and as a result of certain director departures, we changed our Board’s composition during 2020-2021. The charts below represent certain demographics represented in the current composition of our director nominees.

 

 

 

 

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Board Evaluation Practices

 

The Board is committed to a rigorous self-evaluation process. Through evaluation, directors annually review the Board’s performance and their own individual contributions, including areas where the Board feels it functions effectively, and most importantly, areas where the Board can improve. The 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. These evaluations may be in written or oral questionnaire form and may be administered by Board members, management or third-party consultants. 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.

 

		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. Another benefit of the questionnaire is that it allows each board member to evaluate the effectiveness of the Chairman of the Board.
		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 each director 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 performance, 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 The Leapfrog Group, or Leapfrog, for which Raquel C. Bono, M.D., one of our current directors, serves as a board member;

 

(2)	a relationship between the Company and Pfizer Inc., or Pfizer, for which Frank A. D’Amelio, one of our current directors, serves as an executive officer;

 

(3)	a relationship between the Company and Insulet Corporation, or Insulet, for which Wayne A. I. Frederick, M.D., one of our current directors, serves as board member;

 

24		Humana  |  2021 Proxy Statement  •  Corporate Governance

(4)	a relationship between the Company and Tempus Labs, or Tempus, for which Wayne A. I. Frederick, M.D., one of our current directors, serves as board member;

 

(5)	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;

 

(6)	a relationship between the Company and Foundation Radiology Group PC, or Foundation Radiology, for which Mr. Jones, Jr., one of our current directors, serves as a director, and of which Chrysalis Ventures, LLC has an investment interest;

 

(7)

a relationship between the Company and Thomas Jefferson University Hospital, Thomas Jefferson University or Thomas Jefferson Health System (collectively “Thomas Jefferson”), for which Mr. Hilzinger, the Chairman of our Board, is an advisory board member on the President’s Leadership Council for Thomas Jefferson;

 

(8)	a relationship between the Company and Fiserv Solutions, Inc., a subsidiary of Fiserv, Inc., or Fiserv, for which Frank J. Bisignano, one of our current directors, serves as an executive officer and a director;

 

(9)	relationships between the Company and certain of our healthcare customers affiliated with one or more of our current directors.

Leapfrog. In 2020, we contracted with Leapfrog to obtain a certain data license subscription for which we paid approximately $190,100, which we believe is comparable to other non-affiliated persons obtaining a similar license and does not represent a direct or indirect material interest for Dr. Bono.

Pfizer. The relationship between the Company, and Pfizer consists of 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 2020, the Pfizer rebates amounted to approximately $67.6 million, substantially all of which were passed through to our members in the form of lower premiums and/or higher benefits and did not represent a direct or indirect material interest for Mr. D’Amelio.

Insulet. The relationship between the Company, and Insulet consists of a negotiated rebate based on the volume of prescriptions of Insulet insulin management systems 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 Insulet result from activity with many intermediaries over whom Humana exercises no control (i.e., the providers who prescribe these devices, the distributors who sell to the retailers, and the retailers from which our members get prescriptions). In 2020, the Insulet rebates amounted to approximately $2.4 million, substantially all of which were passed through to our members in the form of lower premiums and/or higher benefits and did not represent a direct or indirect material interest for Dr. Frederick.

Chrysalis. In 2020, 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.

Foundation Radiology. Foundation Radiology, a multi-institutional radiology services group, serves as a provider in our network, for which services we paid approximately $141.1 million in medical claims during 2020, which is an amount that is comparable to other non-affiliated providers for the provision of similar services, is not material to the Company, and does not represent a direct or indirect material interest for Mr. Jones.

Tempus. Tempus serves as a provider in our network, for which services during 2020 we paid approximately $3.3 million in medical claims related expenses and does not represent a direct or indirect material interest for Dr. Frederick.

Thomas Jefferson. Thomas Jefferson serves as a provider in our network, for which services during 2020 we paid approximately $52.1 million in medical claims related expenses. In addition, we paid Thomas Jefferson University, through its Jefferson College of Population Health, $100,000 as an annual retainer fee related to certain consulting services performed by David B. Nash, M.D., a former director of the Company, to the Company’s Chief Medical Officer. In each case, the amount is comparable to other non-affiliated vendors for the provision of similar services, are not material to the Company, and do not represent a direct or indirect material interest for Mr. Hilzinger.

Fiserv. In 2020, we contracted for certain marketing and advertising services from Fiserv in connection with member communication materials for which we paid approximately $6.6 million, which is comparable to other non-affiliated vendors for the provision of similar services, is not material to the Company, and does not represent a direct or indirect material interest for Mr. Bisignano.

Healthcare Customers. In 2020, we received health care premium payments, healthcare administration fee payments (associated with our self-funded ASO plan offerings) and/or made certain claims funding payments, from certain customers with whom one of our current directors or a relative of that director has a relationship. Under each such arrangement, the premiums or administrative fees charged and

 

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benefits provided, including claims funding arrangements, are comparable to those extended to our other non-affiliated customers. The following relationships were included in this review:

 

•

Foundation Radiology, from which we received approximately $735,300 in premium payments, and by which Mr. Jones, one of our current directors, serves on its board of directors.

 

•

Insulet, from which we received approximately $2,500 in premium payments, and by which Dr. Frederick, one of our current directors, serves on its board of directors.

 

•

Tempus, from which we received approximately $3.1 million in premium payments, and by which Dr. Frederick, one of our current directors, serves on its board of directors.

 

•

Thomas Jefferson, from which we received approximately $775,200 in premium payments, and by which Mr. Hilzinger, the Chairman of our Board, serves as an advisory board member on the President’s Leadership Council for Thomas Jefferson.

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. Each director recused themselves from the independence assessment 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.

Committee Membership and Attendance

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,” and then you will see a link to the Committee Charters. The number of Board committee meetings (telephonic and in-person) held in 2020 and membership as of March 1, 2021, were as follows:

 

Director

Audit

Organization       &       Compensation

Nominating       Governance &         Sustainability

Executive

Technology

Investment

Kurt J. Hilzinger

Bruce D. Broussard

Frank J. Bisignano

Raquel C. Bono, M.D.1

Frank A. D’Amelio

Wayne A. I. Frederick, M.D.

John W. Garratt

David A. Jones, Jr.

Karen W. Katz

Marcy S. Klevorn2

William J. McDonald

Jorge S. Mesquita2

James J. O’Brien

Marissa T. Peterson

Number of Meetings in 2020

9

8

11

0

5

5

 = Chair          = Member

 

1	Elected to the Board effective September 4, 2020.

2	Elected to the Board effective February 17, 2021.

 

26		Humana  |  2021 Proxy Statement  •  Corporate Governance

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;

 

•

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 17, 2021 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, 2020, 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;

 

Corporate Governance  •  2021 Proxy Statement  |  Humana			27

•

review 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.

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 2020, W. Roy Dunbar (Chair until his resignation in August 2020), James J. O’Brien (Chair effective in September 2020), Frank J. Bisignano, Wayne A. I. Frederick, M.D. and David A. Jones, Jr. 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 17, 2021, 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 2020, 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;

 

28		Humana  |  2021 Proxy Statement  •  Corporate Governance

•

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.

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.

The Technology Committee may also assist the Audit Committee in its oversight of our information technology internal controls, cyber security, business continuity and disaster recovery programs.

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.

 

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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:

 

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

 

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

 

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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.

 

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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.

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 2020, apart from Committee meetings, the Board of Directors met 15 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 23, 2020.

Executive Sessions of Non-Management Directors

In 2020, our non-management directors held regularly scheduled, formal executive meetings, separate from management and 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 2020 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.

 

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Public Policy

Our Company has an active voice on healthcare policy issues that matter most to the people we serve. From Medicare, TRICARE and home health; to integrated care, Medicaid and healthcare reform – we are committed to advancing public policy that moves us toward a future in which everyone can enjoy lifelong health and well-being.

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 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 “Contact the 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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