Cigna 2010 Annual Report Download - page 137

Download and view the complete annual report

Please find page 137 of the 2010 Cigna annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 172

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172

CIGNA CORPORATION2010 Form 10K 117
PART II
ITEM 8 Financial Statements and Supplementary Data
e table below summarizes information for stock options exercised during the last three years :
(In millions)
2010 2009 2008
Intrinsic value of options exercised $ 30 $ 7 $ 23
Cash received for options exercised $ 62 $ 30 $ 26
Excess tax benefi ts realized from options exercised $ 5 $ — $ 6
e following table summarizes information for outstanding common stock options at December 31, 2010:
(Dollars in millions, except per share amounts)
Options
Outstanding Options
Exercisable
Number (in thousands) 12,093 7,656
Total intrinsic value $99 $44
Weighted average exercise price $ 31.10 $ 34.42
Weighted average remaining contractual life 5.8 years 4.3 years
e weighted average fair value of options granted under employee
incentive plans was $11.56 for 2010, $4.60 for 2009 and $14.33 for 2008, using the Black-Scholes option-pricing model and the
following assumptions:
2010 2009 2008
Dividend yield 0.1% 0.3% 0.1%
Expected volatility 40.0% 40.0% 35.0%
Risk-free interest rate 1.9% 1.6% 2.2%
Expected option life 4 years 4 years 4 years
e expected volatility refl ects the Company’s past daily stock price
volatility.  e Company does not consider volatility implied in the
market prices of traded options to be a good indicator of future
volatility because remaining maturities of traded options are less than
one year.  e risk-free interest rate is derived using the four-year U.S.
Treasury bond yield rate as of the award date for the primary grant.
Expected option life refl ects the Company’s historical experience.
Restricted stock. e Company awards restricted stock to its employees
or directors with vesting periods ranging from two to fi ve years.  ese
awards are generally in one of two forms: restricted stock grants or
restricted stock units. Restricted stock grants are the most widely used
form of restricted stock awards and are used for substantially all U.S.-
based employees receiving such awards. Recipients of restricted stock
grants are entitled to earn dividends and to vote during the vesting
period, but forfeit their awards if their employment terminates before
the vesting date. Awards of restricted stock units are generally limited
to international employees. A restricted stock unit represents a right
to receive a common share of stock when the unit vests. Recipients
of restricted stock units are entitled to receive hypothetical dividends,
but cannot vote during the vesting period.  ey forfeit their units if
their employment terminates before the vesting date.
e table below shows the status of, and changes in, restricted stock
grants and units during the last three years:
(Awards in thousands)
2010 2009 2008
Grants/Units
Weighted Average
Fair Value
atAwardDate Grants/Units
Weighted Average
Fair Value
atAwardDate Grants/Units
Weighted Average
Fair Value
atAwardDate
Outstanding — January 1 4,113 $ 27.65 2,347 $ 40.53 2,482 $ 34.28
Awarded 1,155 $ 34.63 2,678 $ 18.14 820 $ 43.90
Vested (541) $ 40.87 (557) $ 32.00 (760) $ 23.81
Forfeited (421) $ 29.28 (355) $ 33.79 (195) $ 40.47
OUTSTANDING DECEMBER31 4,306 $ 27.70 4,113 $ 27.65 2,347 $ 40.53
e fair value of vested restricted stock was: $18 million in 2010,
$10 million in 2009 and $35 million in 2008.
At the end of 2010, approximately 3,000 employees held 4.3 million
restricted stock grants and units with $65 million of related
compensation expense to be recognized over the next three years
(weighted average period).
Strategic Performance Shares. e Company awards strategic
performance shares to its executives generally with a performance
period of three years. Strategic performance shares are divided into
two broad groups: 50% are subject to a market condition (total
shareholder return relative to industry peer companies) and 50% are
subject to a performance conditions (revenue growth and cumulative
adjusted net income).  ese targets are set by the Committee. At
the end of the performance period, holders of strategic performance
shares will be awarded anywhere from 0 to 200% of the original grant
of strategic performance shares in CIGNA common stock.