Humana Inc. (HUM)

Criticisms on file

No material criticisms on file for this pillar.

Disclosed initiatives

No disclosed initiatives on file for this pillar.

Criticisms on file

No material criticisms on file for this pillar.

Disclosed initiatives

• Annual Employee Engagement Survey (AES)

  Confidential third-party administered survey with 79% response rate in 2025; 84% of employees reported as highly engaged

  Supports workforce retention and organizational health
• Pay Equity & Transparency Program

  Comprehensive annual pay equity/gap analysis conducted to identify and address potential pay disparities between associates performing similar work

  Aims to ensure unbiased, competitive compensation alignment
• Total Rewards Program

  Competitive compensation, robust benefits, and resources supporting health, financial security, and work-life balance across all associate levels

  Supports associate financial security and engagement
• Talent Development & Career Growth

  Professional development initiatives, mentorship, education and certification program assistance through partner organizations

  Enhances associate skill development and retention
• Community Health & Social Equity Initiatives

  Volunteerism, philanthropy, and strategic investments to address social and economic barriers and build equitable communities

  Advances community health outcomes and social determinants

Criticisms on file

• RADV Audit Dispute: Final RADV Rule legal challenge. On September 1, 2023, Humana filed suit against HHS Secretary challenging validity of Final RADV Rule (which eliminated FFS Adjuster and applied retroactively to PY 2018+). On September 25, 2025, U.S. District Court granted Humana's summary judgment motion and vacated the Final RADV Rule, finding procedural invalidity under Administrative Procedure Act (not a 'logical outgrowth' of proposed rule). Government appealed November 21, 2025; case pending at Fifth Circuit Court of Appeals (Humana v Kennedy). Outcome uncertain but materially impacts MA reimbursement if adverse.

  Source: HUM 10-K Form, Risk Factors section, CMS RADV Audit Methodology discussion; Legal Proceedings and Certain Regulatory Matters (Note 17)
• Star Ratings Decline & Lawsuit: Humana filed lawsuit seeking to vacate 2025 Medicare Advantage Star Ratings citing methodology concerns. Company experienced significant decline in number of MA plans rated 4-star or higher for 2025. No assurance of success in litigation. Decline will negatively impact 2026 quality bonus payments from CMS and may significantly adversely affect revenues and cash flows.

  Source: HUM 10-K Form, Risk Factors section, Medicare Advantage Star Ratings discussion
• Medicare Part D Risk Corridor & Reinsurance Settlement Disputes: Company subject to ongoing reconciliation and settlement disputes with CMS regarding risk corridor provisions, reinsurance subsidies, and low-income cost subsidies for Medicare Part D. Claims data may fail CMS edits; reconciliation process creates cash flow and financial reporting uncertainty.

  Source: HUM 10-K Form, Risk Factors section, Government Health Care Programs discussion
• False Claims Act Litigation: Company faces exposure to qui tam lawsuits (False Claims Act suits brought on behalf of government) alleging false submissions to government programs, false diagnosis coding under risk-adjustment model, and retention of overpayments. Treble damages and significant penalties possible.

  Source: HUM 10-K Form, Risk Factors section, Legal Actions and Governmental Investigations
• Cybersecurity Incident Impact: In February 2024, Change Healthcare (third-party service provider) experienced material cybersecurity breach disrupting services to payers, providers, and pharmacies nationwide, including Humana. Impact to Humana operations not material through December 31, 2025, but material future breaches possible.

  Source: HUM 10-K Form, Risk Factors section, Cybersecurity and Data Security Incidents
• Shareholder Proposal on Golden Parachutes (Proposal 5): Activist shareholder John Chevedden submitted proposal requesting shareholder approval of severance packages exceeding 2.99x base salary plus target bonus for Named Executive Officers. Board unanimously recommended AGAINST. Proponent cited Humana's long-term poor stock performance (fell from $474 in 2020 to $252 in late 2025) as rationale for concern about management incentives.

  Source: HUM Proxy Statement (DEF 14A), Proposal Five section

Disclosed initiatives

• Board Refreshment & Independence Policy

  Mandatory retirement of non-employee directors at first annual meeting following age 73; regular evaluation and rotation of committee composition and leadership

  Ensures fresh perspective and sustained governance quality
• Nominating, Governance & Sustainability Committee

  Requires diversity of race, ethnicity, and gender in director candidate slates; reviews ESG and sustainability programs; conducts annual performance evaluation

  Strengthens board diversity and ESG oversight
• Executive Severance & Change-in-Control Policy

  Limits cash severance to levels well below 2.99x base salary plus target bonus; equity acceleration only upon death, disability, or double-trigger termination following change of control

  Provides reasonable post-employment protections while managing shareholder cost
• Annual Say-on-Pay Advisory Vote

  Stockholders cast non-binding advisory vote on Named Executive Officer compensation; company reports high historical support levels

  Provides stockholder voice on executive compensation
• Technology Committee Oversight

  Board-level committee provides oversight of IT strategy, cybersecurity, AI/ML governance, and emerging technology risks

  Addresses modern governance risks in data-intensive healthcare operations
• Stockholder Engagement Program

  Company maintains regular dialogue with investors on governance, compensation, and ESG matters; responsive to feedback

  Enhances transparency and alignment with shareholder interests