Humana 2014 Annual Report Download - page 120

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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15. STOCKHOLDERS’ EQUITY
Dividends
The following table provides details of dividend payments, excluding dividend equivalent rights, in 2012, 2013,
and 2014 under our Board approved quarterly cash dividend policy:
Payment
Date
Amount
per Share
Total
Amount
(in millions)
2012 $1.02 $165
2013 $1.06 $167
2014 $1.10 $170
In October 2014, the Board declared a cash dividend of $0.28 per share that was paid on January 30, 2015 to
stockholders of record on December 31, 2014, for an aggregate amount of $42 million. Declaration and payment of
future quarterly dividends is at the discretion of the Board and may be adjusted as business needs or market conditions
change.
Stock Repurchases
In September 2014, the Board of Directors replaced a previous share repurchase authorization of up to $1 billion
(of which $816 million remained unused) with the current authorization for repurchases of up to $2 billion of our
common shares exclusive of shares repurchased in connection with employee stock plans, expiring on December 31,
2016. Under the new share repurchase authorization, shares may be purchased from time to time at prevailing prices
in the open market, by block purchases, or in privately-negotiated transactions (including pursuant to accelerated share
repurchase agreements with investment banks), subject to certain regulatory restrictions on volume, pricing, and timing.
During 2014, we repurchased 1.60 million shares in open market transactions for $195 million at an average price of
$121.68 under previous share repurchase authorizations and we repurchased 4.10 million shares in open market
transactions for $535 million at an average price of $130.42 under the current authorization, including $400 million
of shares repurchased under an accelerated stock repurchase, or ASR, agreement described further below. During 2013,
we repurchased 5.77 million shares in open market transactions for $502 million at an average price of $86.97 under
previous share repurchase authorizations. During 2012, we repurchased 6.25 million shares in open market transactions
for $460 million at an average price of $73.66 under previous share repurchase authorizations. As of February 18, 2015,
the remaining authorized amount under the current authorization totaled $1.37 billion, which includes $100 million of
stock held back as part of the accelerated share repurchase agreement as more fully described below.
On November 7, 2014, we announced that we had entered into an accelerated share repurchase agreement, or ASR
Agreement, with Goldman, Sachs & Co., or Goldman Sachs, to repurchase $500 million of our common stock as part
of the $2 billion share repurchase program authorized in September 2014. Under the ASR Agreement, on November 10,
2014, we made a payment of $500 million to Goldman Sachs from available cash on hand and received an initial
delivery of 3.06 million shares of our common stock from Goldman Sachs based on the then current market price of
Humana common stock. The payment to Goldman Sachs was recorded as a reduction to stockholders’ equity, consisting
of a $400 million increase in treasury stock, which reflects the value of the initial 3.06 million shares received upon
initial settlement, and a $100 million decrease in capital in excess of par value, which reflects the value of stock held
back by Goldman Sachs pending final settlement of the ASR Agreement. The final number of shares that we may
receive, or be required to remit, under the ASR Agreement will be determined based on the daily volume-weighted
average share price of our common stock over the term of the ASR Agreement, less a discount and subject to adjustments
pursuant to the terms and conditions of the ASR Agreement. Final settlement under the ASR Agreement will occur by
the end of the first quarter of 2015. The ASR agreement contains provisions customary for agreements of this type,
including provisions for adjustments to the transaction terms upon certain specified events, the circumstances generally
under which final settlement of the ASR Agreement may be accelerated or extended or the ASR agreement may be
terminated early by Goldman Sachs or us, and various acknowledgments and representations made by the parties to
each other. At final settlement, under certain circumstances, we may be entitled to receive additional shares of our