DEF 14A of Humana Inc, Mar 7, 2018

DEF 14A of Humana Inc

Filed Mar 7, 2018 · FY20170001193125-18-072748

Open on EDGAR

  1. Notice of 2018 Annual Meeting of Stockholders

    | Frequently Asked Questions | 1 | | Company Overview | 8 | | Corporate Governance | 10 | | Proposal One: Election of Directors | 22 | | Director Compensation | 29 | | Stock Ownership Information | 32 | | Compensation Discussion and Analysis | 35 | | Organization & Compensation Committee Report | 59 | | Executive Compensation | 60 | | Certain Transactions with Management and Others | 77 | | Audit Committee Report | 78 | | Proposal Two: Ratification of Appointment of Independent Registered Public Accounting Firm | 80 | | Proposal Three: Non-binding Advisory Vote With Respect to the Compensation of the Company’s Named Executive Officers | 81 | | Incorporation by Reference | 83 | | Additional Information | 83 |

  2. Identifying Nominees for Directors

    Identifying Nominees for Directors The Board has delegated an established screening process for director nominees to the Nominating & Corporate Governance 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.

  3. Identifying Nominees for Directors

    | ● | 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, |

  4. Identifying Nominees for Directors

    | 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. |

  5. Identifying Nominees for Directors

    | ● | 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. |

  6. Identifying Nominees for Directors

    | ● | Stockholder Nominees. The policy of the Nominating & Corporate Governance 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, “By-Laws.” 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 Nominating & Corporate Governance 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: Joseph C. Ventura, Senior Vice President, Associate General Counsel & Corporate Secretary, Humana Inc., 500 West Main Street, 21(st) Floor, Louisville, Kentucky 40202. |

  7. PROPOSAL ONE: ELECTION OF DIRECTORS

    PROPOSAL ONE: ELECTION OF DIRECTORS The Board of Directors of the Company, in accordance with the provisions of the Company’s Articles of Incorporation and Bylaws, has determined that the number of directors to be elected at the Annual Meeting of the Company shall be twelve. The directors are elected to hold office until the Annual Meeting of Stockholders in 2019 and until a successor is elected and qualified. Each of the nominees has consented to be named as a nominee and agreed to serve if elected. If any nominee becomes unable to serve for any reason (which is not anticipated), the Shares represented by the proxy granted to Messrs. Hilzinger and Broussard may be voted for the substituted nominee as may be designated by the Board of Directors. The Board has established a policy that non-employee directors must retire at the first annual meeting following his or her seventy-third birthday. William E. Mitchell turned 73 prior to the 2017 Annual Meeting of Stockholders; however, given Mr. Mitchell’s value to the Board and the Company, and the addition of two new members to our Board in 2017 to whom Mr. Mitchell is expected to provide valuable experience and guidance, the Board of Directors has approved a waiver of the retirement policy for Mr. Mitchell to stand for re-election at the 2018 Annual Meeting. The following table shows certain information concerning the nominees at March 1, 2018.

  8. PROPOSAL ONE: ELECTION OF DIRECTORS

    | Name | Age | Position | First Elected Director | | Kurt J. Hilzinger | 57 | Chairman of the Board | 07/03 | | Bruce D. Broussard | 55 | Director, President and Chief Executive Officer | 01/13 | | Frank J. Bisignano | 58 | Director | 08/17 | | Frank A. D’Amelio | 60 | Director | 09/03 | | Karen B. DeSalvo, M.D. | 52 | Director | 11/17 | | W. Roy Dunbar | 56 | Director | 04/05 | | David A. Jones, Jr. | 60 | Director | 05/93 | | William J. McDonald | 61 | Director | 10/07 | | William E. Mitchell | 73 | Director | 04/09 | | David B. Nash, M.D. | 62 | Director | 01/10 | | James J. O’Brien | 63 | Director | 04/06 | | Marissa T. Peterson | 56 | Director | 08/08 |

  9. Director Skills & Qualifications

    Director Skills & Qualifications In evaluating a director candidate, the Committee considers factors that are in the best interests of the Company and its stockholders, including the knowledge, experience, integrity and judgment of each candidate, the potential contribution of each candidate to the diversity of backgrounds, experience and competencies which the Board desires to have represented, each candidate’s ability to devote sufficient time and effort to his or her duties as a director, independence and willingness to consider all strategic proposals, and any core competencies or technical expertise necessary to staff Board committees. In addition, the Committee assesses whether a candidate possesses: the integrity; independence; business judgment; health care industry, clinical practice and technical knowledge; government relations and/or public policy experience; 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. We believe that the current Board members not only have and demonstrate these attributes, but also have a deep commitment to the Company’s success, as evidenced by the key qualifications, skills and experiences of each director described below. Importantly, our Board added two new directors in 2017, each of whom has extensive experience with technology as a solution to complex problems. When combined with existing skills and experience on our Board, these additions allowed to form a Technology Committee of the Board of Directors to provide additional oversight and perspective on technological matters. For additional information, please refer to the section entitled, “Qualifications and Process for Nominating Directors” in this proxy statement. The information given in this proxy statement concerning the nominees is based upon statements made or confirmed to the Company by or on behalf of the nominees.

  10. Director Nominees’ Biographies

    Director Nominees’ Biographies

  11. Director Nominees’ Biographies

    | | Kurt J. Hilzinger was initially elected to the Board in July 2003, and was elected Chairman of the Board effective January 1, 2014. Mr. Hilzinger served as Lead Director from August 2010 until his appointment as Chairman. Mr. Hilzinger is a Partner at Court Square Capital Partners, having held this position since November 2007. Prior to that, he was a Director of AmerisourceBergen Corporation from March 2004 to November 2007; and was also President and Chief Operating Officer of AmerisourceBergen Corporation from October 2002 to November 2007, having previously served as its Executive Vice President and Chief Operating Officer from August 2001 to October 2002. Mr. Hilzinger also serves on the following public or privately held boards: Oncobiologics, Inc., National Seating and Mobility, Inc., NDC, Inc., Letco Inc. and Celerion, Inc. The Board believes that Mr. Hilzinger is a strong operating executive with a finance and strategic background, whose operational experience and financial expertise in the health care sector contributes valuable insight to the Board. | | | Bruce D. Broussard, President and CEO, joined Humana in 2011. Under his leadership, Humana has created an integrated care delivery model centered on improving health outcomes, driving lower costs, enhancing quality, and providing a simple and personalized member experience. With its holistic approach, Humana is dedicated to improving the health of the communities it serves by making it easy for people to achieve their best health. Bruce brings to Humana a wide range of executive leadership experience in publicly traded and private organizations within a variety of healthcare sectors, including oncology, pharmaceuticals, assisted living/senior housing, home care, physician practice management, surgical centers and dental networks. Prior to joining Humana, Bruce was Chief Executive Officer of McKesson Specialty/US Oncology, Inc. US Oncology was purchased by McKesson in December 2010. At US Oncology, Bruce served in a number of senior executive roles, including Chief Financial Officer, President, Chief Executive Officer and Chairman of the Board. Bruce plays a leadership role in key business advocacy organizations such as the Business Roundtable, the American Heart Association CEO Roundtable, and The Aspen Group. He is also a member of the Board of Directors of KeyCorp. The Board believes that Mr. Broussard’s wide range of executive leadership experience in publicly traded and private organizations within a variety of healthcare sectors, including oncology, pharmaceuticals, assisted living/senior housing, home care, physician practice management, surgical centers, and dental networks, as well as his in-depth knowledge of the Company’s operations, finances and strategy, brings valuable insight to the Board. |

  12. Director Nominees’ Biographies

    | | Frank J. Bisignano was initially elected to the Board in August 2017. He is Chairman of the Board and Chief Executive Officer of First Data Corporation, Inc., having held this position since 2013 (adding the title of Chairman of the Board in 2014). Prior to joining First Data, Bisignano was the co-chief operating officer for J.P. Morgan Chase and the chief executive officer of its Mortgage Banking unit. Born and raised in Brooklyn, Bisignano serves on the boards of the Partnership for New York City, the National September 11 Memorial and Museum, the Mount Sinai Health System, the advisory board for the Institute for Veterans and Military Families (IVMF), and is a trustee of the Battery Conservancy and St. Patrick’s Cathedral. Bisignano was previously vice chairman of the Options Clearing Corporation and a board member for the Depository Trust and Clearing Corporation, the Alliance for Downtown New York, the Lower Manhattan Cultural Council, and PENCIL. He also is a member of the Board of Directors for the Metro Atlanta Chamber and The Commerce Club of Atlanta. The Board believes that Mr. Bisignano is a proven business leader who understands the importance of technology as a solution to complex problems, which is a key part of the Company’s strategy to integrate a fragmented health care system through leveraging technology. This integration sits at the heart of a health care system that considers and cares for the ‘whole person’ while delivering true value, and the Board believes that the depth and breadth of Mr. Bisignano’s experiences and insights are valuable to the Board’s function. | | | Frank A. D’Amelio was initially elected to the Board in September 2003. He is Executive Vice President, Business Operations and Chief Financial Officer of Pfizer Inc, having held this position since December 2010, and having served as Chief Financial Officer since September 2007. Prior to that, Mr. D’Amelio was Senior Executive Vice President of Integration and Chief Administrative Officer at Alcatel-Lucent from December 2006 to August 2007, and Chief Operating Officer of Lucent Technologies Inc. from February 2006 to November 2006. From May 2001 until January 2006, he was Executive Vice President, Administration and Chief Financial Officer of Lucent. Mr. D’Amelio also serves on the Board of Directors of Zoetis, Inc. and on the board of the Independent College Fund of New Jersey. The Board believes that Mr. D’Amelio’s skills, global experience and proven leadership in both financial and operational roles contribute greatly to the Board’s composition. As a senior executive at various global companies undergoing the kind of rapid and complex changes that the Company has undertaken in response to the rapidly changing markets and regulatory environment, Mr. D’Amelio has extensive knowledge of the capital markets as well as broad experience working with the investment community, regulatory bodies and rating agencies. |

  13. Director Nominees’ Biographies

    | | Karen DeSalvo, M.D., MPH, MSc was initially elected to the Board in November 2017. Dr. DeSalvo is a physician whose career has been dedicated to improving the health of all people, with a particular focus on vulnerable populations, through patient care, education, policy and administrative roles, research, and public service. Her commitment to improving the public’s health includes ensuring access to quality, affordable health care, strengthening the public health infrastructure, and creating public-private partnerships to address the social determinants of health. Dr. DeSalvo most recently served as Acting Assistant Secretary for Health at the U.S. Department of Health and Human Services (HHS), a position President Barack Obama nominated her for in May of 2015. In that role, she oversaw 12 core public health offices and 10 regional health offices across the nation, and the development of public health policy recommendations, most notably Public Health 3.0—a blue print for the future of public health. Under Dr. DeSalvo’s leadership as Delivery System Reform strategy co-lead, HHS set and met historic goals in payment reform, supported transformed models of care delivery including in primary care, and changed the approach to information distribution in the health system. Most recently, Dr. DeSalvo is employed as a part-time faculty member at The University of Texas at Austin Dell Medical School. The Board believes that Dr. DeSalvo’s extraordinarily varied and successful career in medical practice and health administration are a tremendous addition to Humana’s Board, as the Company continues to evolve from a traditional health insurer to a consumer-focused enterprise dedicated to measurably improving the health of our members. An important part of health improvement is deploying technology to simplify the experience of our members, and Dr. DeSalvo’s experience as our nation’s Health Information Technology coordinator and as a national leader in delivery system transformation will prove invaluable to our company’s relationships with our members and our physician partners, as Humana continues to innovate in the area of health data analytics. | | | W. Roy Dunbar was initially elected to the Board in April 2005. Mr. Dunbar was the Chairman of the Board of NetworkSolutions, and was the Chief Executive Officer from January 2008 to November 2009. Mr. Dunbar also served as the President of Global Technology and Operations for MasterCard Incorporated from September 2004 until January 2008. Mr. Dunbar worked at Eli Lilly and Company for 14 years, latterly as President of Intercontinental Operations from 2003 until he joined MasterCard, and Chief Information Officer from 1999 to 2003. Mr. Dunbar also serves on the Board of Directors of Johnson Controls International plc and SiteOne Landscaping Supply, Inc. The Board believes that Mr. Dunbar’s innovative, consumer-focused approach to information technology at a variety of global companies brings a valuable advantage to the Board. The Board benefits from Mr. Dunbar’s expertise in leading companies focused on the development of information systems that are easy for consumers to understand and use effectively, which is critical to the Company’s extension of its position as a leader in health care information technology. Mr. Dunbar’s extensive experience in health care over three decades further contributes to the strategic composition of the Board. |

  14. Director Nominees’ Biographies

    | | David A. Jones, Jr. was initially elected to the Board in May 1993 and served as Chairman of the Board of the Company from April 2005 through August 2010, and Vice Chairman of the Board from September 1996 through April 2005. He is chairman and managing partner of Chrysalis Ventures, LLC, headquartered in Louisville, Kentucky, and also serves on the Board of Directors of Connecture, Inc. (NASDAQ: CNXR) and several private companies. As a successful venture capitalist, the Board believes that Mr. Jones brings strategic insight and leadership and a wealth of experience in health care to the Board, both in the Company’s core businesses as well as in emerging technologies and business models. | | | William J. McDonald was initially elected to the Board in October 2007. Mr. McDonald is the managing partner of Wild Irishman Advisory, LLC, a marketing consulting firm. Prior to that, he was Executive Vice President, Brand Management of Capital One Financial Corporation, having held that position from 1998 until his retirement in 2013. The Board believes that Mr. McDonald’s service in various senior executive marketing positions contributes significant experience and expertise in brand development, marketing and related disciplines. | | | William E. Mitchell was initially elected to the Board in April 2009. Mr. Mitchell is the managing partner of Sequel Venture Partners, LLC. Prior to that, Mr. Mitchell served as the Chairman of the board of directors of Arrow Electronics, Inc. from May 2006 until December 31, 2009, and also served as President and Chief Executive Officer of Arrow Electronics, Inc. from February 2003 to May 1, 2009. Mr. Mitchell also has served on the board of directors of Brown-Forman Corporation and Spansion, Inc. Mr. Mitchell currently serves on the following public or privately held boards: Rogers Corporation, Trace3, Inc. and as Presiding Director of Veritiv, Inc. The Board believes that Mr. Mitchell’s insights and experience running a complex global public company, as well as his significant experience in the governance of large publicly-traded corporations, will be valuable in helping to guide the Company in the years ahead. |

  15. Director Nominees’ Biographies

    | | David B. Nash, M.D., MBA was initially elected to the Board effective January 1, 2010. He is the founding dean of the Jefferson College of Population Health, located on the campus of Thomas Jefferson University in Philadelphia, Pennsylvania, having taken that position in 2008. Previously, Dr. Nash was the Chairman of the Department of Health Policy of the Jefferson Medical College from 2003 until 2008. Dr. Nash also serves on the following public or privately held boards: Vestagen Specialty Textiles, and the medical advisory board of Medivo Inc., and previously served on the boards of Itrax Corporation and InforMedix. Dr. Nash is internationally recognized for his work in outcomes management, medical staff development and quality-of-care improvement; his publications have appeared in more than 100 articles in major journals. He also has served as a member of the Board of Trustees of Catholic Healthcare Partners in Cincinnati, Ohio. The Board believes that Dr. Nash brings a unique and compelling set of attributes that enhance the Company’s ability to help people achieve lifelong well-being. As a widely recognized innovator in an emerging medical discipline that unites population health, health policy, and individual health, Dr. Nash is internationally recognized for his work in outcomes management, medical staff development and quality-of-care improvement. | | | James J. O’Brien was initially elected to the Board in April 2006. Until his retirement on December 31, 2014, Mr. O’Brien was the Chairman of the Board and Chief Executive Officer of Ashland Inc. Prior to being named to this position, Mr. O’Brien was President and Chief Operating Officer of Ashland Inc., and before that, Senior Vice President and Group Operating Officer. He also serves on the board of directors of Albemarle Corporation and Eastman Chemical Company. As a highly respected leader in the global business community with an extraordinary track record of success, the Board believes that Mr. O’Brien’s breadth of management experience adds valuable expertise and insight to the Board. | | | Marissa T. Peterson was initially elected to the Board in August 2008. Ms. Peterson is President and Chief Executive Officer of Mission Peak Executive Consulting, which provides client-focused executive coaching and management consulting services. Ms. Peterson was formerly Executive Vice President, Worldwide Operations, Services & Customer Advocacy for Sun Microsystems Inc. in Santa Clara, California, until her retirement in 2005 after 17 years with the company. Ms. Peterson currently serves as the Chairman of the Board of Oclaro, Inc., and a board member of Ansell Limited, and previously served on the board of directors of SUPERVALU INC., and Lucile Packard Children’s Hospital at Stanford, and the board of trustees of Kettering University. Ms. Peterson holds an honorary doctorate in management and a bachelor’s degree in engineering from Kettering University where she graduated magna cum laude. She received her MBA from Harvard Business School with the distinction of being a GM Fellow. The Board believes that Ms. Peterson’s operating and consumer-focused leadership, and experience developing and managing programs designed to help companies reduce the time, cost and risk of transforming their businesses by leveraging technology to architect, implement and maintain customers’ network computing infrastructures, bring valuable insights to the Board. Her commitment to a “customer first” ethic at Sun Microsystems Inc. established an industry leadership position for high quality and cost-effective product execution to a global customer base, a commitment that aligns with the Company’s focus on consumerism. |

  16. Director Nominees’ Biographies

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

  17. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION

  18. 2017 Director Compensation Program

    2017 Director Compensation Program During 2017, our directors were compensated pursuant to the following schedule:

  19. 2017 Director Compensation Program

    | Annual Retainer (1) | $115,000 | | Non-Employee Chairman of the Board Additional Annual Retainer (2) | $210,000 | | Committee Chairman fee per year: 1. Audit Committee Chair 2. Organization & Compensation Committee Chair (3) 3. All other Committee Chairs (4) | $25,000 $20,000 $15,000 | | Executive Committee Member fee per year | $12,000 | | Common Stock per year (1st Business Day of January) (1)(5) | $165,000 in common stock (variable # of shares) | | Charitable Contributions Annual Match | up to $25,000(8) | | Group Life and Accidental Death Insurance— (except Chairman) (6) | $150,000 of coverage | | Group Life and Accidental Death Insurance—Chairman | $400,000 of coverage | | Business Travel Accident Insurance | $250,000 of coverage | | Restricted Stock Units Granted Initial Date of Election (7) | Restricted Stock Unit grant equal to the dollar value of the then current annual stock grant for directors |

  20. 2017 Director Compensation Program

    | Increased from $105,000, effective July 1, 2017. As an employee director elected to our Board, Mr. Broussard will not receive the annual retainer or annual stock grant for service as a director. For all other directors, the annual common stock retainer is paid in the form of restricted stock units, vests at the end of the year of service related to the retainer, and will be pro-rated for any service of less than the full year in respect of which the award is granted.(1) |

  21. 2017 Director Compensation Program

    | Increased from $185,000, effective July 1, 2017.(2) |

  22. 2017 Director Compensation Program

    | Increased from $18,000, effective July 1, 2017.(3) |

  23. 2017 Director Compensation Program

    | Increased from $12,000, effective July 1, 2017.(4) |

  24. 2017 Director Compensation Program

    | Increased from $155,000, effective January 1, 2018. Pursuant to our revised Directors Stock Retention Policy, each non-employee director must maintain a minimum equity ownership level of five times the annual cash retainer. As of March 1, 2018, all of our non-employee directors satisfy this requirement. For additional information, please refer to “Corporate Governance — Corporate Governance Policies — Director Stock Ownership Guidelines” in this proxy statement.(5) |

  25. 2017 Director Compensation Program

    | Coverage amount decreases 7% each year past age 60.(6) |

  26. 2017 Director Compensation Program

    | This initial award of restricted stock units is forfeited if the director serves less than one year on our Board of Directors.(7) |

  27. 2017 Director Compensation Program

    | Effective February 16, 2018, the annual match was increased to $40,000.(8) |

  28. 2017 Compensation of Our Directors

    2017 Compensation of Our Directors The following table shows the compensation earned by our non-employee directors in 2017 in connection with their service on our Board of Directors:

  29. 2017 Compensation of Our Directors

    | Name (1) (a) | Fees Earned or Paid in Cash ($)(2) (b) | Stock Awards ($)(2)(3)(4) (c) | Option Awards ($) (d) | Non-Equity Incentive Plan Compensation ($) (e) | Change in Pension Value and Nonqualified Deferred Compensation Earnings($)(5) (f) | All Other Compensation ($)(6) (g) | Total ($) (h) | | Frank J. Bisignano | 115,000 | 154,870 | | | | 556 | 270,426 | | Frank A. D’Amelio | 135,000 | 154,812 | — | — | — | 2,951 | 292,763 | | Karen B. DeSalvo, M.D. | 115,000 | 154,974 | | | | 591 | 270,565 | | W. Roy Dunbar | 123,500 | 154,812 | — | — | — | 27,759 | 306,071 | | Kurt J. Hilzinger | 319,000 | 154,812 | — | — | — | 27,074 | 500,886 | | David A. Jones, Jr. | 135,500 | 154,812 | — | — | 32,318 | 27,206 | 349,836 | | William J. McDonald | 129,000 | 154,812 | — | — | — | 26,273 | 310,085 | | William E. Mitchell | 110,000 | 154,812 | — | — | — | 22,150 | 286,962 | | David B. Nash, M.D. | 110,000 | 154,812 | — | — | — | 26,114 | 290,926 | | James J. O’Brien | 110,000 | 154,812 | — | — | — | 27,507 | 292,319 | | Marissa T. Peterson | 110,000 | 154,812 | — | — | — | 24,170 | 288,982 |

  30. 2017 Compensation of Our Directors

    | During 2017, Mr. Broussard served as President and Chief Executive Officer of the Company, and therefore, as an employee director, did not earn compensation in connection with his service on our Board. Mr. Broussard’s compensation as our Chief Executive Officer is discussed under “Executive Compensation” in this proxy statement.(1) |

  31. 2017 Compensation of Our Directors

    | Under the Humana Inc. Deferred Compensation Plan for Non-Employee Directors, which we refer to as the Deferred Compensation Plan, non-employee directors may make an irrevocable election each year to defer compensation paid to them by the Company in the form of cash or stock for services rendered as Board members. For 2017, Messrs. D’Amelio, Hilzinger, McDonald and Mitchell and Dr. Nash each deferred their stock compensation. Refer to footnote 1(d) to the section entitled “Stock Ownership Information – Security Ownership of Directors and Executive Officers” for a disclosure of the number of shares of our common stock that have been deferred by each director. A director electing to defer cash can choose any of the investment options offered in the Deferred Compensation Plan using Charles Schwab’s Retirement Plan Services (other than the Humana Common Stock Fund) or can invest in stock units that have a value relative to that of our common stock. For 2017, Messrs. Hilzinger, Jones, and McDonald and Dr. Nash each elected to defer a portion or all of their cash compensation under the Schwab program.(2) |

  32. 2017 Compensation of Our Directors

    | On January 3, 2017, when the fair market value of our common stock was $199.50, each director in office at that time, other than Mr. Broussard, was granted a stock award of 776 shares, representing the annual grant of approximately $155,000 in common stock. Mr. Bisignano and Dr. DeSalvo each received a stock award representing approximately $155,000 upon their respective election dates, using the fair market value of our common stock on such dates ($247.79 and $244.44, respectively) to determine the awarded amount (625 shares and 634 shares, respectively). The amount shown in column (c) above is the grant-date fair market value times the number of shares awarded.(3) |

  33. 2017 Compensation of Our Directors

    | Vested restricted stock units with a payout deferral made by the director accrue quarterly dividends equivalent rights that are reinvested into the director’s account as additional restricted stock units and will be included in the final restricted stock unit payment when the shares are issued in accordance with the director’s payout election. This column does not include dividend equivalent units that have accrued through December 31, 2017.(4) |

  34. 2017 Compensation of Our Directors

    | Non-employee directors elected subsequent to 1997 do not receive any retirement benefits. As he was first elected to the board in 1993, David A. Jones, Jr. is the only director that will have retirement benefits under this former retirement policy, including: (A) at the director’s election, either: (x) an annual retirement benefit for the life of the director in the amount of $38,000, the annual retainer fee in effect for 1997; or (y) in lieu thereof, an actuarially equivalent joint and survivor annuity payment; and (B) an annual matching charitable contribution benefit of $19,000 for the life of the director.(5) |

  35. 2017 Compensation of Our Directors

    | We pay for or reimburse our directors’ travel, lodging and other reasonable out-of-pocket expenses in connection with attendance at board, committee and stockholder meetings. From time to time, we may transport one or more directors and members of their immediate family to and from such meetings or other Company business on company aircraft. Directors may elect to participate in the medical and dental benefit programs offered to all our employees at a rate comparable to the rate paid by employees. In 2017, Messrs. Dunbar, McDonald and Mitchell, and Ms. Peterson, elected to participate. Under the terms of our director compensation policy, each non-employee director who participates in medical and dental plans provided by Humana will, for two years following the date of completion of a change in control, be eligible to participate in medical and dental plans on substantially the same terms as immediately prior to the change in control, including the requirement to pay premiums at the same rates as our associates. We also reimburse the director for other reasonable expenses related to board service, such as director education, which amounts are not included in the table above. In addition, we paid certain local occupational taxes and life and accidental death insurance premiums per outside director, in each case as disclosed below, and provided a matching charitable gift program. The “All Other Compensation” amount above includes the following amounts earned in connection with service on our Board of Directors:(6) |

  36. 2017 Compensation of Our Directors

    | Director | Matching Charitable Gift | Occupational Tax | Life Insurance | Other | Total – All Other Compensation | | Frank J. Bisignano | $0 | $556 | $0 | $0 | $556 | | Frank A. D’Amelio | $1,100 | $663 | $1,188 | $0 | $2,951 | | Karen B. DeSalvo, M.D. | $0 | $556 | $35 | $0 | $591 | | W. Roy Dunbar | $25,000 | $1,617 | $774 | $368 | $27,759 | | Kurt J. Hilzinger | $25,000 | $10 | $2,064 | $0 | $27,074 | | David A. Jones, Jr. | $25,000 | $1,432 | $774 | $0 | $27,206 | | William J. McDonald | $25,000 | $85 | $1,188 | $0 | $26,273 | | William E. Mitchell | $20,000 | $593 | $1,557 | $0 | $22,150 | | David B. Nash, M.D. | $25,000 | $5 | $1,109 | $0 | $26,114 | | James J. O’Brien | $25,000 | $1,477 | $1,030 | $0 | $27,507 | | Marissa T. Peterson | $21,840 | $1,556 | $774 | $0 | $24,170 |

  37. Humana’s 2017 Performance

    | ● | We made investments for the long-term success of our business, which included investments in our workforce, merger and acquisition activity, optimization of our real estate footprint, member benefits to generate growth, and a one-time contribution to the Humana Foundation. |

  38. Humana’s 2017 Performance

    We also advanced our strategy by expanding our provider integration, expanding our clinical programs and simplifying the member experience through several key initiatives: Historically, we have delivered significant stock price appreciation, while also returning capital to our stockholders in the form of dividends and share repurchases1: 1 Cumulative stock price appreciation plus dividends, with dividends reinvested quarterly, through December 31, 2017. The following graph compares our total return to stockholders with the returns of the Standard & Poor’s Composite 500 Index, which we refer to as the S&P 500, and the Dow Jones US Select Health Care Providers Index, which we refer to as the DJ Peer Group, for the five years ended December 31, 2017. The graph assumes an investment of $100 in each of our common stock, the S&P 500 and the DJ Peer Group on December 31, 2012, and that dividends were reinvested when paid.

  39. Results Under Our 2017 Compensation Program

    Results Under Our 2017 Compensation Program Our adjusted EPS for 2017 was $11.71*, reflecting strong performance across our business lines and exceeding our initial EPS guidance, while allowing us to make certain unplanned investments in the long-term success of the business. When determining the payout under our short-term incentive program, the Committee decided to award payments for our Named Executive Officers at 144.4% of target, based on our strong financial performance (Adjusted EPS), the achievement of consumer health participation metrics (CHP), and certain exceptions as detailed further in the section entitled “Elements of Compensation – Short-term Incentives” and the Summary Compensation Table in this proxy statement. When determining the vesting of performance-based restricted stock units granted in 2015 for the 2015-2017 performance period (which we refer to as the 2015 PSUs), the Committee considered the overall performance of the company over the three-year performance period, including our total stockholder return (TSR), both in absolute terms and relative to our peer group and the S&P 500. Following this consideration, the Committee determined that the 2015 PSUs would vest at 95% of their target value. For more information, including an adjustment the Committee approved with respect to their performance, please refer to the section entitled, “Elements of Compensation — Long-term incentives.”

  40. Refreshing Certain Elements of Our Compensation Program

    Refreshing Certain Elements of Our Compensation Program In 2017, following termination of the merger agreement (which limited our ability to make material changes to our ongoing compensation and benefits programs), we evaluated changes to our executive pay and benefit programs in an effort to ensure they are sustainable, aligned with the external market practices, provide appropriate balance between risk and reward and retain, motivate and engage our executives. In consultation with our independent compensation consultant, we performed an external benchmarking review of the compensation programs of our peer group, and determined to adjust certain aspects of our approach to base pay, benefits and incentives. Upon the recommendation of management, the Committee approved the following changes to these programs in 2017:

  41. The Role of the Committee

    | ● | Administer our short-term incentive compensation plan, including annually selecting those executive officers and other key executives eligible to participate in the plan and establishing specific performance targets based on predetermined business goals aligned to our annual operating plan; |

  42. The Role of the Independent Compensation Consultant

    The Role of the Independent Compensation Consultant The Committee retains an independent compensation consultant to ensure that the Committee has objective information needed to make informed decisions in the best interests of stockholders based on compensation trends and practices in public companies, and to provide assistance to the Committee in evaluating our executive compensation policy and programs. The compensation consultant’s responsibilities include, but are not limited to:

  43. The Role of the Independent Compensation Consultant

    | ● | Attend and participate in Committee meetings; |

  44. The Role of the Independent Compensation Consultant

    | ● | Advise the Committee on executive compensation programs, philosophy and market practices; |

  45. The Role of the Independent Compensation Consultant

    | ● | Provide market information to assist the Committee in determining appropriate target compensation levels ; |

  46. The Role of the Independent Compensation Consultant

    | ● | Review and provide input into meeting agenda and presentation materials; |

  47. The Role of the Independent Compensation Consultant

    | ● | Review and provide input into the design of the Company’s short-term and long-term incentive plan design; and |

  48. The Role of the Independent Compensation Consultant

    | ● | Advise the Board on director compensation. |

  49. The Role of the Independent Compensation Consultant

    For 2017, the independent compensation consultant for the Committee was Willis Towers Watson, and a representative of Willis Towers Watson attended all of the regularly-scheduled Committee meetings in 2017, including, when invited, executive sessions. In addition, in 2017 we again retained Aon Hewitt to provide certain advice to management regarding executive compensation, independent of advice provided to the Committee. In accordance with the Committee’s Charter, the Committee has the sole authority to determine the compensation for, and to terminate the services of, the independent compensation consultant. With regard to Willis Towers Watson and Aon Hewitt, the Committee has considered certain factors to determine whether such firm’s service as a compensation consultant raised a conflict of interest, including, among other things:

  50. The Role of the Independent Compensation Consultant

    | ● | Whether the firm provided other services to Humana; |

  51. The Role of the Independent Compensation Consultant

    | ● | The amount of fees received by the firm from Humana, as a percentage of such firm’s total revenue; |

  52. The Role of the Independent Compensation Consultant

    | ● | The firm’s policies and procedures that are designed to prevent conflicts of interest; |

  53. The Role of the Independent Compensation Consultant

    | ● | Whether the firm’s representatives providing services to the Committee have any business or personal relationship with a member of the Committee; |

  54. The Role of the Independent Compensation Consultant

    | ● | Whether the firm’s representatives providing services to the Committee own Humana stock; and |

  55. The Role of the Independent Compensation Consultant

    | ● | Whether the firm’s representatives providing services to the Committee, or the firm itself, have any business or personal relationship with any of our executive officers. |

  56. The Role of the Independent Compensation Consultant

    In 2017, we paid Willis Towers Watson approximately $468,000 for executive compensation advisory support services provided to the Committee. In addition, the Committee considered certain advisory services provided by Willis Towers Watson, including corporate risk and broking, and fees for data, surveys and technology, in addition to risk consulting, for which services we paid approximately $773,000. After considering the above factors, the Committee determined that the service as a compensation consultant of each of Willis Towers Watson and Aon Hewitt did not raise any conflict of interest.

  57. Use of a Peer Group

    Use of a Peer Group Our Peer group is used as a reference point in making compensation decisions, such as developing base salary ranges, developing short-term and long-term incentive award ranges, determining competitiveness of our total compensation package for our NEO’s and comparing company performance in order to validate if our compensation programs are informed by market practices. We believe that our peer group is comprised of companies with whom we compete for talent and whose revenues, market capitalization, and business focus are similar to our own. Using different screening criteria (e.g., line of business, industry, market cap, etc.) yields multiple perspectives that enrich our understanding of competitive executive pay practices. Each comparable company is reviewed by the Committee every year to ensure continued appropriateness of our peer group. For 2017 compensation decisions, with advice from the Committee’s independent compensation consultant, the Committee re-affirmed a group of public companies to serve as our peer group, with no changes from 2016 (other than to reflect M&A activity), as follows:

  58. Use of a Peer Group

    | Managed Care Peers | Healthcare Services & Facilities | Financial & Insurance | | Aetna Inc. | AmerisourceBergen Corporation | AFLAC Inc. | | Anthem, Inc. | Cardinal Health, Inc. | The Allstate Corporation | | CIGNA Corporation | DaVita Healthcare Partners, Inc. | Hartford Financial Services Group, Inc. | | UnitedHealth Group Incorporated | Eli Lilly and Company | The Progressive Corporation | | | Express Scripts Holding Company | Prudential Financial, Inc. | | | McKesson Corporation | The Travelers Companies, Inc. | | | | Unum Group |

  59. Investor Outreach and the Say-on-Pay Vote

    | ● | For our 2018 long-term incentive awards, the Committee resumed the use of performance-based restricted stock units, and also incorporated relative total stockholder return (TSR) in the long-term incentive plan. |

  60. Investor Outreach and the Say-on-Pay Vote

    | ● | Adjusted short-term incentive measures to more closely align with our strategic objectives. |

  61. Investor Outreach and the Say-on-Pay Vote

    | ● | Adjusted our Severance and Change in Control Policies to incorporate restrictive covenants during the severance period (as described further in the section entitled “Other Compensation Considerations — Severance/Change in Control”). |

  62. Investor Outreach and the Say-on-Pay Vote

    | ● | Updated our peer group for 2018 compensation decisions. |

  63. Investor Outreach and the Say-on-Pay Vote

    | ● | Certain of our stockholders questioned the absence of grants of performance-based equity awards for our Named Executive Officers in 2016 and 2017, and requested additional information about adjustments that our Committee approved to certain performance-based incentive awards. In response, we reaffirmed our long-standing commitment to a pay for performance compensation philosophy (as demonstrated by the grant of performance-based equity awards in February of 2018), and noted that given the unique challenges we faced following the termination of the proposed merger with Aetna in early 2017, the Committee made the decision to approve certain adjustments to our GAAP financial results (consistent with our publicly-announced financial results) for unusual events and revisions to our operating plan that occurred during the fiscal year. |

  64. Total Direct Compensation

    Total Direct Compensation We take a holistic approach to compensation using a mix of elements to achieve levels of direct compensation that are appropriate in the context of the Company’s compensation philosophy and performance. The Committee considers total direct compensation, benchmarked against our peer group in its assessment of the compensation of our Named Executive Officers. Our Committee uses a competitive market analysis and the overall performance of the Company as the starting points for compensation decisions, considered with the assistance of the Committee’s independent compensation consultant. In addition, the Committee takes into consideration an executive’s overall performance, his or her potential, the presence of any unique or hard-to-replace skills, as well as the executive’s judgment, leadership ability, competencies and internal equity. The performance of the executive’s business function and his or her ability to build effective teams and develop talent are also important factors. The following summarizes the results of the Committee’s external benchmarking with respect to total direct compensation (comprised of base salary, annual short-term incentive plan and long-term equity incentive compensation). Due to certain limitations in our merger agreement with Aetna that operated to limit our ability to alter our compensation programs, the Committee decided not to make material adjustments to the target compensation of our Named Executive Officers for 2017, despite those target compensation levels, in some instances, falling short of market median target levels:

  65. Design of Our Compensation Program

    | ● | Market-based — Competitive with our peer group and general industry standards, with total compensation targeted on average at market medians, but typically ranging from the 25(th) to 75(th) percentiles, depending on the level of competency, past and expected future contribution, and the competitive market for new talent; |

  66. At a Glance – Humana’s Best Practice Compensation Program Governance

    | WHAT WE DO | | WHAT WE DON’T DO | | | ✓ | Double-trigger change in control agreements for our Named Executive Officers that provide for cash severance only upon termination following a change in control, and equity agreements that provide for acceleration only upon termination following a change in control | × | No single trigger vesting of equity or cash severance payments upon a change in control | | ✓ | More than 85% of our Named Executive Officer pay is at risk | × | Compensation programs do not encourage unreasonable risk taking, confirmed by annual compensation risk assessment | | ✓ | Clawbacks that allow us to recoup cash-based compensation earned by an executive officer in the event of a material restatement of our financials resulting from the misconduct or fraud on the part of that officer | × | Our policies prohibit all hedging transactions designed to offset any decrease in the market value of our securities, and directors and executive officers are prohibited from holding Humana securities in margin accounts or pledging Humana securities as collateral | | ✓ | Stock ownership guidelines that link a significant amount of executive officer net worth to our strategic and financial success | × | No tax gross-ups for our Named Executive Officers, and no excessive perquisites, as all have a specific business rationale | | ✓ | Use of tally sheets to effectively analyze the compensation each executive officer has accumulated to date and to fully understand the amount the executive officer could accumulate in the future | × | Other than our CEO, our executive officers do not have employment agreements | | ✓ | Regular engagement with our stockholders to strengthen our understanding of stockholder concerns | × | No stock option repricing, reloads or exchanges without stockholder approval |

  67. At a Glance – Significant At-Risk Pay

    At a Glance – Significant At-Risk Pay The key elements of direct executive compensation — salary, short-term incentives, and long-term incentives awards — are designed to place a substantial portion of pay at risk. While salaries are intended to be assured, the other two elements only have value if certain key performance results are achieved. Cash incentives are paid only upon the achievement of defined objectives. Grants of stock options only have value to executives if the value of the Company increases through common stock price appreciation and any applicable vesting conditions are satisfied, providing a retention benefit. Time-based restricted stock units generally provide value regardless of whether our stock price increases from the date of grant, providing a retention and inducement benefit, and performance-based restricted stock units are only earned based upon our achievement of certain pre-established performance goals and generally requires continued employment for vesting, providing a retention and performance benefit. The graph below illustrates the relative mix of pay in 2017 for our Named Executive Officers, comprised of base salary, the potential value of the target annual cash incentive earned in 2017 and paid in 2018, and the aggregate grant date fair value of the stock options (based on a Black-Scholes valuation at the time of grant) and retention-focused restricted stock unit awards granted in 2017 (the 2017 equity award mix was 50% options and 50% time-based restricted stock units,). Due to the proposed merger with Aetna and the challenges associated with structuring such awards during the merger pendency, the Committee did not award performance-based restricted stock units. After the termination of the merger agreement with Aetna, we reaffirmed our long-standing commitment to a pay for performance compensation philosophy, which includes the inclusion of performance-based equity awards in our 2018 long-term incentive mix. See the tables entitled “Summary Compensation Table” and “Grants of Plan-Based Awards” that follow this report for greater detail.

  68. 2017 Compensation Mix

    | Long-term incentive compensation includes aggregate grant date fair value of stock option awards and grant date value of restricted stock unit awards granted in 2017. In 2017, the Committee approved certain adjustments to outstanding performance-based restricted stock units granted in 2015, and the incremental value of such adjustments is not included in the table above. For more information, refer to “Elements of Compensation – Long Term Equity Awards” in this Compensation Discussion & Analysis section.(1) |

  69. Short-Term Incentives

    Short-Term Incentives Incentive Plan Objectives Our annual incentive compensation plans ensure a portion of each Named Executive Officer’s compensation is at-risk by linking such portion of compensation to certain key performance objectives and rewarding them, when appropriate, for their efforts in optimizing our profitability and growth consistent with sound and ethical business practices, and an appropriate level of risk-taking. Description of the Plan for Named Executive Officers Our Committee established the target percentages of 2017 base earnings paid at each of the threshold, target and maximum levels through a process of external benchmarking of total compensation against our peer group. These percentages reflect our philosophy of targeting total compensation at the median, while recognizing that a significant percentage of total compensation should be performance-based. The Committee may determine that certain adjustments will be made in evaluating whether the performance targets have been met (e.g., disposition or acquisition of a business, gains or losses resulting from material litigation, debt refinancing costs, the effect of changes in accounting principles during the performance period or operational restructuring). For 2017, our Committee continued to incorporate certain elements that align all leaders to our shared enterprise vision, including:

  70. Short-Term Incentives

    | ● | The Committee set 2017 targets for our short-term incentive compensation plan based 80% upon Adjusted earnings per share (EPS) and 20% upon pre-established consumer health metrics, to incentivize our executives to take actions to improve the health of our members. |

  71. Short-Term Incentives

    | ● | Adjusted EPS provides enterprise focus on driving profitability and reinforces the importance of operational and strategic priorities. Consumer health metrics measure the participation of our members in programs and services that improve their health outcomes and lead to lower costs. |

  72. Short-Term Incentives

    | ● | For 2017, our Committee pre-established threshold, target and maximum achievement payout levels to determine the final value of the award for our Named Executive Officers. |

  73. Short-Term Incentives

    | ● | The performance levels were challenging goals, designed to reward our executives only for exemplary performing, taking into account actions to improve the health of our members. |

  74. Short-Term Incentives

    | ● | Adjusted EPS Funding Gate, whereby performance below threshold would result in no payout. |

  75. Short-Term Incentives

    | ● | Threshold performance was generally set above our 2016 results and maximum levels were set to appropriately reflect an increase over our historical performance. |

  76. Short-Term Incentives

    EPS Performance Metric The Committee maintained Adjusted EPS as 80% of the overall performance target because it believed that, when considering compensation for 2017, those individuals with the greatest responsibility for the strategy, implementation and success of the organization should have a substantial portion of their compensation linked to the achievement of a financial goal. The Committee felt that attainment of an Adjusted EPS goal would be a meaningful reflection of the success of our financial objectives and business plan, since Adjusted EPS is a comprehensive measure of income, focuses management on profitable growth and expense control, and is viewed as a strong indicator of sustained performance over the long term. Consumer Health Participation Performance Metric The consumer health participation performance metric, or CHP, focuses on increasing the levels of participation by our members in various programs and services proven to improve health outcomes and lower the cost of care. For 2017, the Committee maintained the five leading indicators of health outcomes to measure CHP performance that were introduced in 2015. These were selected on the basis of being applicable to the medical lines of our business, and the Company’s overall business outcomes, and were consistent with furtherance of our integrated care delivery strategy. Furthermore, they are closely aligned to the Company’s strategic vision of improving the health of the communities we serve 20% by 2020 and by making it easy for people to achieve their best health. The Committee applied these principles and determined that the following CHP components would be evaluated, averaging the performance results of each component into a single overall score:

  77. Short-Term Incentives

    | CHP Component | Description | Weighting | | Health Risk Assessment Completion (HRA) | The HRA assessment allows us to identify the new members who have the highest risk and need for our clinical programs. | 4.5% | | Humana At Home Chronic Care Program (HCCP) Engagement | HCCP care managers help individual members better manage their chronic conditions and achieve better health outcomes. | 4.5% | | In-Home Assessment Acceptance (IHA) | The in-home health and wellbeing assessment is designed to fully document a member’s health status and engage the member in our clinical programs. | 4.5% | | Humana Pharmacy Usage (HPS) | We believe that the use of Humana Pharmacy, our mail order pharmacy service, by our members leads to higher medication adherence. | 4.5% | | Go365 Participation (Go365) | Maintaining health and wellness is critical for our group members, and the Go365 program connects them to online health programs and services designed to improve and maintain their health. | 2.0% |

  78. Short-Term Incentives

    The performance levels were challenging goals, designed to reward our associates only for exemplary performance in taking actions to improve the health of our members. The threshold performance level for the CHP components were generally set above our 2016 results, and the target and maximum levels were set to appropriately reflect an increase over our historical performance, taking into account our projected new member growth. 2017 Incentive Plan Results For 2017, the Committee approved a funding rate of 144.4% of target for our 2017 short-term incentive compensation plan results, measured in accordance with the following goals and resulting performance:

  79. Short-Term Incentives

    | | Weighting | Minimum | Target | Maximum | Results | Funding Rate | Total Payout | | | | 50% | 100% | 150% | | | | | Adjusted EPS* | 80% | $9.68 | $11.00 | $12.32 | $12.38 | 150.0% | 120.0% | | | | | | | | | | | Consumer Health Measures | 20% | 57.3% | 60.3% | 63.3% | 61.63% | 122.17% | 24.4% | | | | | | | | | 144.4% |

  80. Short-Term Incentives

    Our adjusted EPS for 2017 was $11.71*, reflecting strong performance across our business lines. When this performance was considered by the Committee in light of the negative effect of certain investments made by management in the long-term success of the business, including:

  81. Short-Term Incentives

    | Consideration | EPS Effect | | Adjusted EPS | $11.71 | | Investments in our workforce to simplify and align annual pay planning to a single point in the year | $0.35 | | M&A expenses for transactions investing in the Company’s strategy | $0.03 | | Optimization of real estate portfolio by accelerating termination of leases and consolidating real estate footprint | $0.14 | | Contribution to the Humana Foundation | $0.15 | | Performance Approved by Committee | $12.38 |

  82. Short-Term Incentives

    In arriving at this determination, the Committee considered the need to preserve the intended incentives and benefits of our short-term incentive compensation plan structure, the challenges and opportunities presented in 2017 across our sector, and that our strategic business lines had performed at levels that exceeded management’s expectations in 2017.

  83. Long-Term Incentives

    Long-Term Incentives Our Committee believes that equity-based compensation provides a vital link between the long-term results achieved for our stockholders and the financial rewards provided to our Named Executive Officers. From time to time, we may use the following equity compensation vehicles:

  84. Long-Term Incentives

    | ● | Stock Options. The value recognized under our stock option grants reflects absolute stock price appreciation over time. We use stock options to motivate and challenge our Named Executive Officers to achieve positive returns for our stockholders by placing key elements of executive compensation at risk, with a secondary benefit of retention derived from vesting conditions imposed on the stock options and a non-compete covenant embedded in our stock option agreements. Generally, stock options vest ratably over three years from the date of grant, subject to continued employment with the Company through the vesting date. |

  85. Long-Term Incentives

    | ● | Performance-Based Restricted Stock Units (PSUs). Performance-based equity awards in the form of restricted stock units, with vesting at the end of three years contingent upon our achievement of specified financial and business growth targets over the vesting period and continued employment with the Company through the end of the vesting period, further align the economic incentives of our Named Executive Officers to those of our stockholders. In this proxy statement, we generally refer to our performance-based equity awards by their applicable three-year performance period (for example, awards granted in 2015 are referred to as our “2015-2017 performance-based awards”). |

  86. Long-Term Incentives

    | ● | Time-Based Restricted Stock Units (RSUs). We may also use restricted stock unit grants to attract, retain, motivate and challenge our executives. This is accomplished through time-based vesting conditions imposed on the restricted stock units and a non-compete covenant embedded in our restricted stock unit agreements. A secondary benefit is derived from the potential added appreciation opportunity as our stock price increases. Currently, awards of restricted stock generally vest ratably in three installments over three years from the date of grant, subject to continued employment with the Company through the vesting date. For our Named Executive Officers, time-based restricted stock units are generally only used in special circumstances (e.g., retention awards) and are not part of our normal long-term incentive awards. |

  87. Long-Term Incentives

    A Closer Look at How We Determine Equity Compensation The Committee, with the assistance of the independent compensation consultant, determines the aggregate amounts and terms of equity compensation awards for each Named Executive Officer following a review of stock programs and competitive practices at peer companies, as well as the outstanding equity information for each executive officer using tally sheets to examine the value of prior compensation decisions. The grant value of each award reflects the executive’s level of responsibility and past and expected future contributions to the Company’s performance. In making equity awards, the Committee generally reviews and approves the dollar value of an award to be granted to each Named Executive Officer, based on the internal and external benchmarking of total compensation discussed above. The number of shares subject to the award is then determined using the fair market value of the award on the grant date, which, in the case of stock options, is determined using a Black-Scholes methodology. In 2017, following the termination of our proposed merger with Aetna, our Committee determined to grant special retention awards to our critical talent, in order to reset and refocus the organization, preserve associate engagement and retain our critical talent necessary to our long-term success. The recipients of these awards exhibit deep subject matter expertise or a unique knowledge of our systems and processes, are defined as “top talent” for purposes of our internal succession planning, are in business critical areas where overachievement is expected to create significant long-term value for our stockholders, or have a high cost of replacement. These retention awards were in the form of time-based restricted stock units and stock options for our Named Executive Officers, vesting fully three years from the date of grant. For more information, please refer to the “Summary Compensation Table” in this proxy statement. A Closer Look at our 2017 Equity Awards Mix In March 2017, following the termination of our proposed merger with Aetna, our Committee determined to grant long-term incentive awards to our Named Executive Officers in the form of an equal split of stock options and time-based restricted stock unit awards. Given the short time frame between termination of the proposed merger and the grant date of the annual awards, and the need to retain our key talent as we moved into a challenging operating environment following the termination of the merger agreement, our Committee determined that for 2017, this mix provided an appropriate balance between attraction, retention and motivation of executives and the creation of stockholder value. Re-Introduction of Performance-Based Equity Awards in 2018 In discussions with our stockholders, our Committee reaffirmed its commitment to performance-based compensation, including the expectation to grant performance-based restricted stock awards to our Named Executive Officers in 2018. Accordingly, in February 2018, our Committee determined to award equity to our Named Executive Officers as 25% stock options, 25% restricted stock units and 50% performance-based restricted stock units with performance criteria based upon three-year cumulative goals for adjusted return on invested capital (ROIC), as it represents management’s ability to build long-term value of the organization and returns generated by investments in the company, which is highly correlated with value that is created for our stockholders. In addition, the Committee approved the application of a modifier to the final performance results based upon relative total shareholder return (rTSR), to be used as multiplier to adjust final award payouts up or down based on how the Company performed relative to our 2018 peer group. The Committee believed that this award ratio, performance measures, and the inclusion of the modifier:

  88. Long-Term Incentives

    | ● | aligns executives with the interests of our stockholders; |

  89. Long-Term Incentives

    | ● | allows executive to focus on measures they have the ability to influence while also satisfying stockholder expectations of using a relative measure; |

  90. Long-Term Incentives

    | ● | ensures that our long-term incentive compensation program is not overly dependent upon rTSR as an independent measure; and |

  91. Long-Term Incentives

    | ● | adjusts to general economic conditions that would impact all companies in our peer group. |

  92. Long-Term Incentives

    A Closer Look at the Performance of our 2015-2017 Performance-Based Restricted Stock Unit Awards In February 2015, the Committee granted performance-based equity awards to our then-serving named executive officers, with performance criteria for these awards based upon three-year cumulative goals for (a) strategic membership growth and (b) return on invested capital (ROIC), further linking executive compensation to the Company’s performance. The following discloses the three-year cumulative goals originally included in the 2015-2017 performance-based awards, which provide for incremental payout between steps (depending upon performance, up to 200% of the target performance-based awards may be earned):

  93. Long-Term Incentives

    | | | Strategic Membership Growth | | | | | | 584,000 members | 711,000 members | 842,000 members | | Financial: ROIC | >=10.0% | Achievement at 50% | Achievement at 75% | Achievement at 100% | | | 11.0% | Achievement at 75% | Achievement at 100% | Achievement at 150% | | | >=12.5% | Achievement at 100% | Achievement at 150% | Achievement at 200% |

  94. Long-Term Incentives

    The Committee based the performance goals on strategic membership growth and ROIC because at the time, the Committee believed the combined use of these metrics were the most comprehensive factors for driving sustainable growth and returns in our business. Achievement of the goals would be challenging and would require superior performance at either the target or maximum payout levels, considering the historical membership growth rates of both Humana and the Medicare Advantage industry as a whole, our 2015-2017 strategic plan and the implications of various ROIC results on the implementation of that plan, and the degree to which the operating success of the Company would be reflected in achievement of each performance criteria. When determining the vesting of performance-based restricted stock units granted in 2015 for the 2015-2017 performance period (which we refer to as the 2015 PSUs), the Committee determined that the business and external environment had materially changed as a result of the proposed transaction with Aetna Inc. Specifically, the committee considered that the challenging operating environment resulting from the proposed merger had extended over two Medicare Annual Election periods and therefore negatively impacted the Company’s strategic membership growth for a significant portion of the relevant performance period for the 2015 PSUs. Furthermore, the Committee considered that competitor actions taken as a result of the proposed merger and the announced intention to divest assets in certain geographies in connection with the regulatory approvals process has hampered our ability to grow in those geographies, which had fundamentally impacted the Company’s membership growth projections from the plan originally considered in connection with the 2015 PSUs, therefore making an accurate determination of the true performance of the measure challenging. In addition. the Committee determined that the ROIC as a single measure was appropriate as it represents management’s ability to build long-term value for the organization and returns generated by investments in the Company, which is highly correlated with value that is created for our stockholders. In consultation with the Committee’s independent compensation consultant and after considering a variety of factors, including but not limited to, the overall TSR performance compared to our Peer Group and the broader market, 3-year ROIC performance, and the need to retain our executive officers and other key associates during the prolonged regulatory review period for our proposed merger with Aetna, the Committee determined to modify the 2015 PSUs whereby strategic membership would not be considered in calculating the outcome of the performance metrics, and the Committee would assess performance of the 2015 PSUs based solely on the Company’s 3-year ROIC results. Over the performance period our 3-year ROIC performance was 10.9%, which resulted in a final vesting of the 2015 PSUs at 95% of their target award level. For more information, please refer to the section entitled, “Elements of Compensation – Long-term incentives.”

  95. Severance/Change in Control

    Severance/Change in Control Mr. Broussard The amended and restated employment agreement that we have with Mr. Broussard, our President and CEO, which we refer to as the Broussard Agreement, governs any severance or change in control payments for Mr. Broussard. There are no excise tax gross-up provisions in the Broussard Agreement. For a description of the severance benefits to which Mr. Broussard would be entitled upon a termination of employment, see the section entitled “Potential Payments Upon Termination or Change in Control of the Company” in this proxy statement. Other Named Executive Officers The Company maintains a severance policy, which we refer to as the Severance Policy, for all of our Named Executive Officers, except for Mr. Broussard (whose severance is covered by the Broussard Agreement). The Severance Policy provides our Named Executive Officers with severance benefits upon certain qualifying terminations of employment. In 2017, our Committee refreshed our Severance Policy, which was established in 1999 and last amended in 2007. Under the terms of the revised Severance Policy:

  96. Severance/Change in Control

    | ● | Benefits are calculated based upon an 18 month severance period, with cash severance determined as a multiple of base salary only; and |

  97. Severance/Change in Control

    | ● | The Named Executive Officer is required to enter into a written agreement that forbids him or her from competing and includes specific provisions relating to non-disparagement, non-solicit and cooperation. |

  98. Severance/Change in Control

    For a discussion of the payments each of our Named Executive Officers would receive in the event of a termination of employment that qualifies for severance pursuant to the Severance Policy, see the section entitled “Potential Payments Upon Termination or Change in Control of the Company” in this proxy statement. In addition, because we operate in a highly competitive, complex and consolidating industry, we have adopted a Change In Control Policy (the CIC Policy), which will replace individual change in control agreements, or CIC Agreements, that we previously had with all of our executive officers, including our Named Executive Officers (except for Mr. Broussard, whose severance in the event of a Change in Control would be governed by the Broussard Agreement) going forward. Pursuant to the CIC Policy, in the event that the Named Executive Officer’s employment is terminated by the Company without Cause or by the Named Executive Officer for Good Reason within twenty-four months following a Change in Control (as each term is defined in the CIC Policy), or by the Company without Cause under certain circumstances prior to a Change in Control, certain benefits will be provided to these executives. Under the CIC Agreements, in the event of a termination of employment under the circumstances described above, our Named Executive Officers are entitled to receive a severance payment in the amount of:

  99. Severance/Change in Control

    | ● | Two times the sum of each such officer’s annual base salary and the target incentive compensation payable to him or her for the year in which termination occurs; and |

  100. Severance/Change in Control

    | ● | Health, life and disability insurance coverage would be provided generally for eighteen months following termination unless the participant dies or is eligible for comparable coverage from another source. |

  101. Severance/Change in Control

    The existing CIC Agreements and the CIC Policy (and the Change in Control provisions of the Broussard Agreement) provide for cash severance benefits payable only upon a “double trigger” (i.e., two events must occur before any severance payment is made: the executive officer must be terminated or constructively terminated as described in the CIC Agreement or CIC Policy, as applicable, and such termination must have occurred during a specified period after the Company entered into a definitive agreement, the consummation of which would result in a Change in Control, or the Change in Control has occurred). The Committee opted for a “double-trigger,” rather than providing for payments solely on the basis of a Change in Control (so called “single trigger’), because we believe this to be more consistent with the purpose of encouraging the continued employment and focus of our Named Executive Officers and the CIC Policy, as applicable, following a Change in Control. We believe that the CIC Agreements for our Named Executive Officers allowed our executives to devote their time to the duties of running our Company without being distracted by any potential Change in Control, and also have a significant retention value to the Company with respect to our Named Executive Officers. We believe that the severance multiples provided for in the CIC Agreements and the CIC Policy are appropriate because they are comparable to similarly situated senior executives across U.S. industries. For a discussion of the payments each of our Named Executive Officers would receive in the event of a termination of employment in connection with a Change in Control or in the event of a termination of employment in other circumstances, see the section entitled “Potential Payments Upon Termination or Change in Control of the Company” in this proxy statement.

  102. Summary Compensation Table

    Summary Compensation Table The following Summary Compensation Table shows the compensation earned for the time period served as an executive officer during the last three fiscal years by (i) Bruce D. Broussard, our President and Chief Executive Officer, (ii) Brian A. Kane, our Chief Financial Officer, and (iii) each of our three other highest compensated executive officers serving at December 31, 2017 (we collectively refer to these officers in this proxy statement as our “Named Executive Officers”).

  103. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(3) | Option Awards ($)(2)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(5) | Total ($) | | Bruce D. Broussard, President and Chief Executive Officer(6) | 2017 | 1,272,367 | — | 10,196,821 | 5,279,241 | 2,671,970 | — | 348,124 | 19,768,525 | | | 2016 | 1,235,446 | — | 11,888,551 | 4,370,743 | 1,973,624 | — | 254,036 | 19,722,400 | | | 2015 | 1,243,087 | — | 4,374,947 | 4,390,051 | 0 | — | 331,774 | 10,339,859 | | Brian A. Kane, Chief Financial Officer | 2017 | 698,779 | — | 2,367,097 | 1,494,046 | 978,291 | — | 120,261 | 5,658,476 | | | 2016 | 636,254 | — | 2,588,908 | 774,252 | 677,610 | — | 106,617 | 4,783,641 | | | 2015 | 641,076 | — | 774,984 | 777,675 | 0 | — | 126,475 | 2,320,210 | | Jody L. Bilney, Chief Consumer Officer | 2017 | 590,590 | — | 2,029,669 | 1,157,928 | 826,826 | — | 138,740 | 4,743,755 | | | 2016 | 573,452 | — | 2,277,660 | 774,252 | 610,726 | — | 101,215 | 4,337,305 | | | 2015 | 577,798 | — | 774,984 | 777,675 | 0 | — | 128,662 | 2,259,119 | | Timothy S. Huval, Chief Human Resources Officer | 2017 | 590,590 | — | 2,029,669 | 1,157,928 | 826,826 | — | 134,783 | 4,739,797 | | | 2016 | 573,453 | — | 2,277,660 | 774,252 | 610,727 | — | 87,704 | 4,323,796 | | | 2015 | 578,098 | — | 774,984 | 777,675 | 0 | — | 126,541 | 2,257,298 | | Christopher M. Todoroff, Chief Legal Officer | 2017 | 590,590 | — | 2,029,609 | 1,158,105 | 826,826 | — | 99,267 | 4,704,398 |

  104. Summary Compensation Table

    | The amounts listed under the column “Stock Awards” in the Summary Compensation Table above disclose (i) the aggregate grant date fair value of equity awards granted in the 2017 fiscal year, as well as in prior periods, and (ii) the aggregate incremental fair market value calculated in accordance with FASB ASC Topic 718 in connection with a modification of certain performance-based restricted stock units, in each case calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation — Stock Compensation.”(1) |

  105. Summary Compensation Table

    As discussed under the “Compensation Discussion and Analysis” section of this proxy statement, with respect to performance-based restricted stock units granted in 2015 (the 2015 PSUs), the Committee considered certain changes to our business and external environment resulting from the proposed merger with Aetna, as well as our need to retain our executive officers and other key associates following the termination of the proposed merger. Specifically, the Committee considered that the challenging operating environment resulting from the proposed merger had extended over two Medicare Annual Election periods and therefore negatively impacted the company’s strategic membership growth for a significant portion of the relevant performance period for the 2015 PSUs. Furthermore, the Committee considered that competitor actions taken as a result of the proposed merger and the announced intention to divest assets in certain geographies in connection with the regulatory approvals process had hampered our ability to grow in those geographies. Taken together, these factors fundamentally impacted the Company’s membership growth projections from the plan originally considered in connection with the 2015 PSUs, therefore making an accurate determination of the true performance of the measure challenging. Considering all of this, the Committee determined that the Company’s strategic membership growth would not be considered for purposes of determining the outcome of the performance metrics for the 2015 PSUs, and that the sole metric would therefore be ROIC. As a result of the Committee’s determination and resulting adjustments, the 2015 PSUs vested at 95% of the target level, rather than at a 0% level had the adjustments not been applied. Therefore, the aggregate incremental fair market value resulting from this modification included in the amounts listed above under the column “Stock Awards” for each Named Executive Officer is calculated as the fair market value on the date of the modification multiplied by the total number of restricted stock units expected to vest, with the following results:

  106. Summary Compensation Table

    | Named Executive Officer | Incremental Fair Value | | Bruce D. Broussard | $4,896,896 | | Brian A. Kane | $867,368 | | Jody L. Bilney | $867,368 | | Timothy S. Huval | $867,368 | | Christopher M. Todoroff | $867,368 |

  107. Summary Compensation Table

    | The amounts listed under the “Option Awards” column in the Summary Compensation Table above disclose the aggregate grant date fair value of stock option awards granted in the 2017 fiscal year, as well as in prior periods, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation—Stock Compensation.” Note 13 to the Notes to Consolidated Financial Statements of our Annual Report on Form 10-K for the year ended December 31, 2017, describes the assumptions used to determine the grant date fair value for overall Company stock options.(2) |

  108. Summary Compensation Table

    The assumptions used for valuing the Named Executive Officers’ stock options as a group, applying the Black-Scholes methodology, were as follows:

  109. Summary Compensation Table

    | | 2017 | 2016 | 2015 | | Weighted Average Fair Value at Grant Date | $49.85 | $37.22 | $37.01 | | Expected Option Life (Years) | 4.1 | 4.2 | 4.2 | | Expected Volatility | 27.1% | 27.5% | 27.4% | | Risk Free Interest Rate | 2.0% | 1.1% | 1.4% | | Dividend Yield | 0.7% | 0.7% | 0.7% |

  110. Summary Compensation Table

    | The amounts listed include special retention awards that were granted to certain critical talent, including certain of our NEOs, following the termination of our proposed merger with Aetna, in order to reset and refocus the organization, preserve associate engagement and retention where necessary to our long-term success. The recipients of these awards exhibit deep subject matter expertise or a unique knowledge of our systems and processes, are defined as “top talent” for purposes of our internal succession planning, are in business critical areas where overachievement is expected to create significant long-term value for our stockholders, or have a high cost of replacement. These retention awards were in the form of time-based restricted stock units and stock options, each fully vesting or becoming exercisable three years from the date of grant. Included in the amounts above are the following retention awards for our Named Executive Officers:(3) |

  111. Summary Compensation Table

    | Named Executive Officer | 2017 Retention Awards | | | | RSUs | Options | | Bruce D. Broussard | $0 | 0 | | Brian A. Kane | $499,837 | $497,997 | | Jody L. Bilney | $387,434 | $385,975 | | Timothy S. Huval | $387,434 | $385,975 | | Christopher M. Todoroff | $387,374 | $386,089 |

  112. Summary Compensation Table

    | For a discussion of the potential ranges that could have been earned in 2017 under our short-term incentive compensation plan, see the Grants of Plan-Based Awards table, and for a discussion of the actual amounts awarded to our Named Executive Officers in light of the Company’s performance, see the section entitled, “Elements of Compensation—Annual Cash Incentives” in this proxy statement.(4) |

  113. Summary Compensation Table

    | The amounts listed under the column entitled “All Other Compensation” in the Summary Compensation Table above include: Company contributions to the Humana Retirement Equalization Plan and the Humana Retirement Savings Plan; personal use of Company aircraft; a matching charitable gift program; financial planning assistance; life insurance benefits; wellness incentives; and physicals, as further described in the table below.(5) |

  114. Summary Compensation Table

    | | Company Contributions to Humana Retirement Equalization Plan ($)(a) | Company Contributions to Humana Retirement Savings Plan ($) | Personal Use of Company Aircraft ($)(b) | Matching Charitable Contributions ($) | Financial Planning ($) | Other ($)(c) | | Bruce D. Broussard | 223,266 | 20,250 | 43,344 | 25,000 | 20,286 | 15,980 | | Brian A. Kane | 44,810 | 20,250 | 12,911 | 20,000 | 19,772 | 2,520 | | Jody L. Bilney | 69,869 | 20,250 | 0 | 20,000 | 19,474 | 9,149 | | Timothy S. Huval | 69,869 | 20,250 | 0 | 20,000 | 19,772 | 4,893 | | Christopher M. Todoroff | 69,869 | 20,250 | 0 | 0 | 0 | 9,149 |

  115. Summary Compensation Table

    | This amount is also listed in the Nonqualified Deferred Compensation table.(a) |

  116. Summary Compensation Table

    | The costs of personal use of Company aircraft was based on the aggregate incremental costs to the Company, including the lost tax deduction to the Company and personal deadhead hours.(b) |

  117. Summary Compensation Table

    | Includes life insurance, wellness incentives and physicals.(c) |

  118. Summary Compensation Table

    | As previously noted in in the section “Other Compensation Considerations – Severance/Change in Control” in the “Compensation Discussion and Analysis” section of this proxy statement, the Broussard Agreement provides for the following compensation elements: (i) annual base salary of not less than $1,120,000 (currently $1,273,080 per annum), (ii) target annual incentive equal to 150% of his annual base salary (“Target Annual Incentive”) and a maximum annual incentive equal to 150% of his target incentive (i.e., 225% of his annual base salary), (iii) a long-term incentive award to be granted at the discretion of the Committee in February of each year determined on the same basis as the Committee values such awards generally and in a form and on terms comparable to the long-term incentive awards to be granted to other senior executives, and (iv) participation in all benefit plans, including retirement plans and perquisites, made available by the Company to other senior executives. In addition, the Broussard Agreement provides for certain severance and other termination benefits which are described in footnote 1 to the section entitled “Potential Payments Upon Termination or Change in Control of the Company” in this proxy statement.(6) |

  119. CEO PAY RATIO

    CEO PAY RATIO Our CEO Pay Ratio was calculated in compliance with the requirements set forth in Item 402(u) of Regulation S-K. We identified the median employee using our employee population as of December 31, 2017, which included all 46,000 global full-time, part-time, temporary, and seasonal employees employed on that date. We used a consistently applied compensation measure across our global employee population to calculate the median employee compensation. For our consistently applied compensation measure, we used W-2 earnings. We then calculated the median employee’s compensation in the same manner as the named executive officers in the Summary Compensation Table. Our median employee compensation was $57,385. Our Chief Executive Officer compensation was $19,768,525. Accordingly, our CEO to Employee Pay Ratio is 344:1.

  120. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table provides information about equity awards granted in 2017 under our 2011 Stock Incentive Plan, which we refer to as the 2011 Stock Plan, and the range of potential payments earned in 2017 under our short-term incentive compensation plan. A discussion of the features of each type of award is included in the footnotes that follow the table.

  121. Grants of Plan-Based Awards

    | Name | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number Of Shares Of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh)(4) | Closing Market Price on Grant Date ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k-1) | (k-2) | (l) | | Bruce D. Broussard | 03/08/2017 | 954,810 | 1,909,620 | 2,864,430 | | | | | | | | | | | 03/08/2017 | | | | | | | | 105,529 | 217.4150 | 217.45 | 5,256,378 | | | 03/08/2017 | | | | | | | | 459 | 217.4150 | 217.45 | 22,863 | | | 03/08/2017 | | | | | | | 24,377 | | | 217.45 | 5,299,925 | | | 06/28/2017(6) | | | | | | | 20,460 | | | 239.76 | 4,896,896 | | Brian A. Kane | 03/08/2017 | 350,000 | 700,000 | 1,050,000 | | | | | | | | | | | 03/08/2017 | | | | | | | | 19,997 | 217.415 | 217.45 | 996,047 | | | 03/08/2017 | | | | | | | | 9,539 | 217.415 | 217.45 | 475,136 | | | 03/08/2017 | | | | | | | | 459 | 217.415 | 217.45 | 22,863 | | | 03/08/2017 | | | | | | | 4,599 | | | 217.45 | 999,892 | | | 03/08/2017 | | | | | | | 2,299 | | | 217.45 | 499,837 | | | 06/28/2017(6) | | | | | | | 3,624 | | | 239.76 | 867,368 | | Jody L. Bilney | 03/08/2017 | 295,461 | 590,921 | 886,382 | | | | | | | | | | | 03/08/2017 | | | | | | | | 15,498 | 217.4150 | 217.45 | 771,952 | | | 03/08/2017 | | | | | | | | 7,290 | 217.4150 | 217.45 | 363,113 | | | 03/08/2017 | | | | | | | | 459 | 217.4150 | 217.45 | 22,863 | | | 03/08/2017 | | | | | | | 3,564 | | | 217.45 | 774,867 | | | 03/08/2017 | | | | | | | 1,782 | | | 217.45 | 387,434 | | | 06/28/2017(6) | | | | | | | 3,624 | | | 239.76 | 867,368 | | Timothy S. Huval | 03/08/2017 | 295,461 | 590,921 | 886,382 | | | | | | | | | | | 03/08/2017 | | | | | | | | 15,498 | 217.4150 | 217.45 | 771,952 | | | 03/08/2017 | | | | | | | | 7,290 | 217.4150 | 217.45 | 363,113 | | | 03/08/2017 | | | | | | | | 459 | 217.4150 | 217.45 | 22,863 | | | 03/08/2017 | | | | | | | 3,564 | | | 217.45 | 774,867 | | | 03/08/2017 | | | | | | | 1,782 | | | 217.45 | 387,434 | | | 06/28/2017(6) | | | | | | | 3,624 | | | 239.76 | 867,368 | | Christopher M. Todoroff | 03/08/2017 | 295,461 | 590,921 | 886,382 | | | | | | | | | | | 03/08/2017 | | | | | | | | 15,039 | 217.4150 | 217.45 | 749,090 | | | 06/28/2017 | | | | | | | | 7,366 | 239.12 | 239.76 | 386,152 | | | 03/08/2017 | | | | | | | | 459 | 217.4150 | 217.45 | 22,863 | | | 03/08/2017 | | | | | | | 3,564 | | | 217.45 | 774,867 | | | 06/28/2017 | | | | | | | 1,620 | | | 239.76 | 387,374 | | | 06/28/2017(6) | | | | | | | 3,624 | | | 239.76 | 867,368 |

  122. Grants of Plan-Based Awards

    | Amounts calculated based upon annualized base salary, rather than actual amounts paid, for 2017. The actual payment of incentive compensation is shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table under “Executive Compensation” in this proxy statement. In 2017, for our CEO, the threshold, target and maximum opportunity, as a percentage of base salary, were 75%, 150% and 225%, respectively, and for our other Named Executive Officers, were 50%, 100% and 150%, respectively.(1) |

  123. Grants of Plan-Based Awards

    | In 2017, our Named Executive Officers were awarded 50% of their equity grants in the form of stock options and 50% in the form of time-based restricted stock units. The restricted stock units generally vest in equal annual one-third installments from the date of grant to the extent the Named Executive Officer continues to be employed through the applicable vesting date, other than restricted stock units granted in connection with a special retention grant, which vest fully three years from the date of grant.(2) |

  124. Grants of Plan-Based Awards

    | Stock options awarded to our Named Executive Officers are incentive stock options to the extent allowed by regulation and the balance are treated as nonqualified stock options. Stock options granted to our Named Executive Officers vest and become exercisable in equal annual one-third installments from the date of grant, other than options granted in connection with a special retention grant, which vest fully three years from the date of grant. The above options expire seven years from the date of grant. In the event of a Change in Control of the Company, as defined in the 2011 Stock Plan, all outstanding stock options granted prior to July 2, 2015 (other than those granted to Mr. Broussard), become fully vested and immediately exercisable in their entirety (see the section entitled “Potential Payments Upon Termination or Change in Control of the Company” herein for further detail and for a quantification of the acceleration of stock options upon a Change in Control). As of February 2018, there were no longer any unvested outstanding options that had been granted prior to July 2, 2015. Options granted to Mr. Broussard will vest upon a qualifying termination of employment following a Change in Control. The exercise price may be paid in cash or, at the discretion of the Committee, in shares of our common stock valued at the fair market value on the date of exercise or any combination thereof. Under our stock plans, the Board may not reduce the exercise price for options or stock appreciation rights by re-pricing or replacing any option award.(3) |

  125. Grants of Plan-Based Awards

    | Options under our stock plans cannot be granted at less than the Fair Market Value, defined in our stock plans as the average of the highest and lowest reported sales prices of our common stock in transactions reported on the composite tape by the NYSE on the grant date. Our stock plans were approved by our Board of Directors and by our stockholders.(4) |

  126. Grants of Plan-Based Awards

    | Discloses the aggregate grant date fair value of restricted stock unit awards and stock option awards granted in the fiscal year, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation — Stock Compensation.” Performance-based restricted stock unit awards are disclosed at target value, based upon the probable outcome of the performance conditions.(5) |

  127. Grants of Plan-Based Awards

    | Each Named Executive Officer was granted performance-based restricted stock units on February 24, 2015, the vesting of which was tied, in part, to the Company’s strategic membership growth and return on invested capital (ROIC). As discussed in the “Compensation Discussion and Analysis” section of this proxy statement, in June 2017, the Committee determined that certain factors had fundamentally impacted the Company’s membership growth projections from the plan originally considered in connection with the 2015 PSUs, therefore making an accurate determination of the true performance of the measure challenging. Considering all of this, the Committee determined that the Company’s strategic membership growth would not be considered for purposes of determining the outcome of the performance metrics for the 2015 PSUs, and that the sole metric would therefore be ROIC, capped at the target level of performance. Therefore, the amount set forth in this row is the aggregate incremental fair market value resulting from this modification, calculated as the fair market value of each unit on the date of the Committee’s action multiplied by the number of restricted stock units expected to vest as a result of the modification.(6) |

  128. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table provides information on the stock option, restricted stock units and performance-based restricted stock unit holdings of our Named Executive Officers as of December 31, 2017.

  129. Outstanding Equity Awards at Fiscal Year-End

    | | | Option Awards | | | | Stock Awards | | | | | Name (a) | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | Number of Securities Underlying Unexercised Options (#) Unexercisable (c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) | Option Exercise Price ($/Sh) (e) | Option Expiration Date (f) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested ($) (h)(11) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) N/A (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) N/A (j) | | Bruce D. Broussard | 0 | 39,542 | | 164.6450 | 02/24/2022(1) | | | | | | | 0 | 78,294 | | 167.8050 | 02/18/2023(2) | | | | | | | 0 | 105,988 | | 217.4150 | 03/08/2024(3) | | | | | | | | | | | | 20,460(6) | 5,075,512 | | | | | | | | | | 8,693(5) | 2,156,473 | | | | | | | | | | 16,252(6) | 4,031,634 | | | | Brian A. Kane | 14,009 | 7,005 | | 164.6450 | 02/24/2022(1) | | | | | | | 6,934 | 13,870 | | 167.8050 | 02/18/2023(2) | | | | | | | 0 | 19,997 | | 217.4150 | 03/08/2024(3) | | | | | | | 0 | 9,998 | | 217.4150 | 03/08/2024(4) | | | | | | | | | | | | 3,624(6) | 899,005 | | | | | | | | | | 1,540(7) | 382,028 | | | | | | | | | | 2,299(8) | 570,313 | | | | | | | | | | 3,067(9) | 760,831 | | | | Jody L. Bilney | 7,054 | 0 | | 102.1550 | 02/18/2021 | | | | | | | 14,009 | 7,005 | | 164.6450 | 02/24/2022(1) | | | | | | | 6,934 | 13,870 | | 167.8050 | 02/18/2023(2) | | | | | | | 0 | 15,498 | | 217.4150 | 03/08/2024(3) | | | | | | | 0 | 7,749 | | 217.4150 | 03/08/2024(4) | | | | | | | | | | | | 3,624(6) | 899,005 | | | | | | | | | | 1,540(7) | 382,028 | | | | | | | | | | 1,782(8) | 442,061 | | | | | | | | | | 2,377(9) | 589,662 | | | | Timothy S. Huval | 0 | 7,005 | | 164.6450 | 02/24/2022(1) | | | | | | | 0 | 13,870 | | 167.8050 | 02/18/2023(2) | | | | | | | 0 | 15,498 | | 217.4150 | 03/08/2024(3) | | | | | | | 0 | 7,749 | | 217.4150 | 03/08/2024(4) | | | | | | | | | | | | 3,624(6) | 899,005 | | | | | | | | | | 1,540(7) | 382,028 | | | | | | | | | | 1,782(8) | 442,061 | | | | | | | | | | 2,377(9) | 589,662 | | |

  130. Outstanding Equity Awards at Fiscal Year-End

    | | | Option Awards | | | | Stock Awards | | | | | Name (a) | Number of Securities Underlying Unexercised Options (#) Exercisable (b) | Number of Securities Underlying Unexercised Options (#) Unexercisable (c) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) | Option Exercise Price ($/Sh) (e) | Option Expiration Date (f) | Number of Shares or Units of Stock That Have Not Vested (#) (g) | Market Value of Shares or Units of Stock That Have Not Vested ($) (h)(11) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) N/A (i) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) N/A (j) | | Christopher M. Todoroff | 0 | 7,005 | | 164.6450 | 02/24/2022(1) | | | | | | | 0 | 13,870 | | 167.8050 | 02/18/2023(2) | | | | | | | 0 | 15,498 | | 217.4150 | 03/08/2024(3) | | | | | | | 0 | 7,366 | | 239.1200 | 06/28/2024(5) | | | | | | | | | | | | 3,624(6) | 899,005 | | | | | | | | | | 1,540(7) | 382,028 | | | | | | | | | | 2,377(9) | 589,662 | | | | | | | | | | 1,620(10) | 401,873 | | |

  131. Outstanding Equity Awards at Fiscal Year-End

    | Options granted on February 24, 2015, vesting ratably over three years with full vesting on February 24, 2018.(1) |

  132. Outstanding Equity Awards at Fiscal Year-End

    | Options granted on February 18, 2016, vesting ratably over three years with full vesting on February 18, 2019.(2) |

  133. Outstanding Equity Awards at Fiscal Year-End

    | Options granted on March 8, 2017, vesting ratably over three years with full vesting on March 8, 2020.(3) |

  134. Outstanding Equity Awards at Fiscal Year-End

    | Options granted on March 8, 2017, vesting fully three years from the date of grant.(4) |

  135. Outstanding Equity Awards at Fiscal Year-End

    | Options granted on June 28, 2017, vesting fully three years from the date of grant.(5) |

  136. Outstanding Equity Awards at Fiscal Year-End

    | Performance-based restricted stock units awarded on February 24, 2015, fully vested on February 24, 2018. The number of shares reported is based upon achievement of performance goals at 95% of the target performance, based on an adjustment made by the Committee, as discussed further in the “Compensation Discussion & Analysis” section of this proxy statement.(6) |

  137. Outstanding Equity Awards at Fiscal Year-End

    | Restricted stock units awarded on February 18, 2016, vesting ratably over three years with an initial tranche vested on December 15, 2016, and full vesting on December 15, 2018.(7) |

  138. Outstanding Equity Awards at Fiscal Year-End

    | Restricted stock units awarded on March 8, 2017, vesting fully three years from the date of grant.(8) |

  139. Outstanding Equity Awards at Fiscal Year-End

    | Restricted stock units awarded on March 8, 2017, vesting ratably over three years with an initial tranche vested on December 15, 2017, and full vesting on December 15, 2019.(9) |

  140. Outstanding Equity Awards at Fiscal Year-End

    | Restricted stock units awarded on June 28, 2017, vesting fully three years from the date of grant.(10) |

  141. Outstanding Equity Awards at Fiscal Year-End

    | Based on the closing stock price on December 29, 2017 of $248.07.(11) |

  142. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table provides information on the stock options exercised by, and shares acquired upon the vesting of restricted stock units held by, our Named Executive Officers in 2017. Options exercised or vested restricted stock units may or may not have been sold by a particular Named Executive Officer, and the inclusion in this table of such information should not be understood to imply the actual receipt of monies.

  143. Option Exercises and Stock Vested

    | | Option Awards | | Stock Awards | | | Name (a) | Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($)(1) (c) | Number of Shares Acquired on Vesting (#) (d) | Value Realized on Vesting ($)(2) (e) | | Bruce D. Broussard | 185,852 | 14,696,228 | 70,072 | 15,199,614 | | Brian A. Kane | — | — | — | — | | Jody L. Bilney | 8,032 | 1,190,044 | 13,377 | 2,878,285 | | Timothy S. Huval | 18,968 | 1,362,059 | 13,377 | 2,878,285 | | Christopher M. Todoroff | 40,710 | 4,005,035 | 13,377 | 2,878,285 |

  144. Option Exercises and Stock Vested

    | The Value Realized on Exercise is based on the difference between the Fair Market Value of our common stock as reported by the NYSE composite tape and the exercise price of the options on the date of exercise.(1) |

  145. Option Exercises and Stock Vested

    | The Value Realized on Vesting is based on the Fair Market Value of our common stock as reported on the composite tape by the NYSE on the date of vesting.(2) |

  146. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation The following table and narrative that follows provides information on the Humana Retirement Equalization Plan contributions and earnings for the Named Executive Officers in 2017.

  147. Nonqualified Deferred Compensation

    | Name (a) | Executive Contributions in Last FY ($) (b) | Registrant Contributions in Last FY ($) (c)(1) | Aggregate Earnings in Last FY ($) (d) | Aggregate Withdrawals/ Distributions ($) (e) | Aggregate Balance at Last FYE ($) (f) | | Bruce D. Broussard | — | 223,266 | 123,749 | — | 1,134,323 | | Brian A. Kane | — | 44,810 | 22,197 | — | 198,219 | | Jody L. Bilney | — | 69,869 | 27,049 | — | 264,389 | | Timothy S. Huval | — | 69,869 | 4,278 | — | 327,300 | | Christopher M. Todoroff | — | 69,869 | 76,949 | — | 611,898 |

  148. Nonqualified Deferred Compensation

    | The amounts listed above under Registrant Contributions in Last Fiscal Year (column c) are also included under the All Other Compensation column of the Summary Compensation Table in this proxy statement.(1) |

  149. Nonqualified Deferred Compensation

    We have a 401(k) plan, the Humana Retirement Savings Plan, and a nonqualified, unfunded, defined contribution plan, the Humana Retirement Equalization Plan. The Internal Revenue Code imposes limitations on the contributions that may be made to a qualified plan, like our Humana Retirement Savings Plan. In 2017, once an individual is paid $270,000 in compensation, both individual and Company contributions to the Pretax Savings Account of the Humana Retirement Savings Plan must cease. Any Company matching contributions that would have been made to the Pretax Savings Account of the Humana Retirement Savings Plan are credited to the Pretax Savings Account of the Humana Retirement Equalization Plan. The benefits accrued under the Humana Retirement Equalization Plan are those Company contributions that cannot be made to the qualified Humana Retirement Savings Plan because of the IRS limitations. The maximum percentage of compensation (base salary and incentive compensation) that can be contributed by a highly compensated employee to the Humana Retirement Savings Plan is 35% for 2017. The Company matches 125% of the first 6% of employee salary deferrals. Accruals under the Humana Retirement Equalization Plan, which is unfunded, are deemed to be invested in the accounts selected by the participants. The Humana Retirement Equalization Plan allows daily rebalancing of funds and allows direction of investment elections. Benefits in the Humana Retirement Equalization Plan, as directed by the participants, are distributable upon termination of employment, death, total disability, retirement or a change in control of the Company. Distribution of benefits may take the form of a lump sum payment, periodic installments not to exceed twenty (20) years, or an annuity — if the Humana Retirement Equalization Plan balance exceeds $100,000. All of the Named Executive Officers, except Mr. Broussard (who elected installments for 10 years following termination), eligible for a contribution under the Humana Retirement Equalization Plan in 2017 will receive a lump sum payment upon termination.

  150. Potential Payments Upon Termination or Change in Control of the Company

    Potential Payments Upon Termination or Change in Control of the Company In accordance with our past disclosure practice, the table below discloses amounts payable to our Named Executive Officers under various scenarios had such occurred as of December 31, 2017. The Named Executive Officers would each receive certain payments upon termination from the Company which vary in amount depending on the reason for termination. Each Named Executive Officer would also receive a specified payment in connection with a change in control of the Company. The table below provides dollar amounts for all potential payments that would be paid by us to each Named Executive Officer under various scenarios involving either a termination or a change in control. The payments to our Named Executive Officers are governed by the various agreements or arrangements described in the footnotes to the table. The timing of the payments described below to the Named Executive Officers may also be subject to the provisions of Section 409A which may delay payment.

  151. Potential Payments Upon Termination or Change in Control of the Company

    | Name and Form of Payment | Voluntary Termination (a) | Involuntary Termination without Cause (b) | Involuntary Termination for Cause (c) | Retirement(6) (d) | Death or Disability(3) (e) | Change in Control(4) (f) | | Bruce D. Broussard (1) | | | | | | | | • Severance | $0 | $6,365,400 | $0 | $0 | $0 | $6,365,400 | | • Life, Health & Other Benefits (7) | 0 | 0 | 0 | 0 | 0 | 44,929 | | • Stock Options (accelerated) (1) | 0 | 0 | 0 | 0 | 13,140,998 | 13,140,998 | | • Restricted Stock Units (accelerated) (1) | 0 | 0 | 0 | 0 | 12,850,915 | 6,222,530 | | • Subtotal: Termination Related Payments | $0 | $6,365,400 | $0 | $0 | $25,991,913 | $25,773,857 | | • Stock Options (vested) (1)(3) | 0 | 0 | 0 | 0 | 0 | 0 | | • Supplemental Retirement Plan (5) | 1,134,323 | 1,134,323 | 1,134,323 | 1,134,323 | 1,134,323 | 1,134,323 | | Subtotal: Currently Vested Amounts | $1,134,323 | $1,134,323 | $1,134,323 | $1,134,323 | $1,134,323 | $1,134,323 | | • Mr. Broussard’s Totals | $1,134,323 | $7,499,723 | $1,134,323 | $1,134,323 | $27,126,236 | $26,908,180 | | Brian A. Kane | | | | | | | | • Severance (2) | $0 | $875,000 | $0 | $0 | $0 | $2,100,000 | | • Life, Health & Other Benefits (7) | 0 | 0 | 0 | 0 | 0 | 17,327 | | • Stock Options (accelerated) (3) | 0 | 0 | 0 | 0 | 2,687,365 | 2,687,365 | | • Restricted Stock Units (accelerated) (3) | 0 | 0 | 0 | 0 | 4,071,024 | 4,071,024 | | • Subtotal: Termination Related Payments | $0 | $875,000 | $0 | $0 | $6,758,389 | $8,875,716 | | • Stock Options (vested) (3) | 1,754,159 | 1,754,159 | 0 | 1,754,159 | 1,754,159 | 1,754,159 | | • Supplemental Retirement Plan (5) | 198,219 | 198,219 | 198,219 | 198,219 | 198,219 | 198,219 | | Subtotal: Currently Vested Amounts | $1,952,378 | $1,952,378 | $198,219 | $1,952,378 | $1,952,378 | $1,952,378 | | • Mr. Kane’s Totals | $1,952,378 | $2,827,378 | $198,219 | $1,952,378 | $8,710,767 | $10,828,094 | | Jody L. Bilney | | | | | | | | • Severance (2) | $0 | $787,895 | $0 | $0 | $0 | $1,772,763 | | • Life, Health & Other Benefits (7) | 0 | 0 | 0 | 0 | 0 | 28,720 | | • Stock Options (accelerated) (3) | 0 | 0 | 0 | 0 | 2,471,192 | 2,471,192 | | • Restricted Stock Units (accelerated) (3) | 0 | 0 | 0 | 0 | 3,769,937 | 3,769,937 | | • Subtotal: Termination Related Payments | $0 | $787,895 | $0 | $0 | $6,241,129 | $8,042,612 | | • Stock Options (vested) (3) | 2,793,178 | 2,793,178 | 0 | 2,793,178 | 2,793,178 | 2,793,178 | | • Supplemental Retirement Plan (5) | 264,389 | 264,389 | 264,389 | 264,389 | 264,389 | 264,389 | | Subtotal: Currently Vested Amounts | $3,057,567 | $3,057,567 | $264,389 | $3,057,567 | $3,057,567 | $3,057,567 | | • Ms. Bilney’s Totals | $3,057,567 | $3,845,462 | $264,389 | $3,057,567 | $9,298,696 | $11,100,179 | | Timothy S. Huval | | | | | | | | • Severance (2) | $0 | $837,138 | $0 | $0 | $0 | $1,772,763 | | • Life, Health & Other Benefits (7) | 0 | 0 | 0 | 0 | 0 | 40,820 | | • Stock Options (accelerated) (3) | 0 | 0 | 0 | 0 | 2,471,192 | 2,471,192 | | • Restricted Stock Units (accelerated) (3) | 0 | 0 | 0 | 0 | 3,769,937 | 3,769,937 | | • Subtotal: Termination Related Payments | $0 | $837,138 | $0 | $0 | $6,241,129 | $8,054,712 | | • Stock Options (vested) (3) | 0 | 0 | 0 | 0 | 0 | 0 | | • Supplemental Retirement Plan (5) | 327,300 | 327,300 | 327,300 | 327,300 | 327,300 | 327,300 | | Subtotal: Currently Vested Amounts | $327,300 | $327,300 | $327,300 | $327,300 | $327,300 | $327,300 | | • Mr. Huval’s Totals | $327,300 | $1,164,438 | $327,300 | $327,300 | $6,568,429 | $8,382,012 | | Christopher M. Todoroff | | | | | | | | • Severance (2) | $0 | $886,382 | $0 | $0 | $0 | $1,772,763 | | • Life, Health & Other Benefits (7) | 0 | 0 | 0 | 0 | 0 | 28,038 | | • Stock Options (accelerated) (3) | 0 | 0 | 0 | 0 | 2,299,044 | 2,299,044 | | • Restricted Stock Units (accelerated) (3) | 0 | 0 | 0 | 0 | 3,729,526 | 3,729,526 | | • Subtotal: Termination Related Payments | $0 | $886,382 | $0 | $0 | $6,028,570 | $7,829,371 | | • Stock Options (vested) (3) | 0 | 0 | 0 | 0 | 0 | 0 | | • Supplemental Retirement Plan (5) | 611,898 | 611,898 | 611,898 | 611,898 | 611,898 | 611,898 | | Subtotal: Currently Vested Amounts | $611,898 | $611,898 | $611,898 | $611,898 | $611,898 | $611,898 | | • Mr. Todoroff’s Totals | $611,898 | $1,498,280 | $611,898 | $611,898 | $6,640,468 | $8,441,269 |