2015 Non-Qualified Deferred Compensation…..
6
CO
indicates that the area is
a specific qualification, skill or experience that the director brings to the Board.
The lack of a ⚫for a particular area does not mean that the director does not possess that qualification, skill or
experience. We look to each director to be knowledgeable in these areas; however, the
Capital Markets
Regulatory
Political/Health Care Policy/
Outstanding Equity Awards at 2015 Fiscal Year-End
Clinical Practice
Experience with Large Complex
Organizations
Diversity
Social Media/Marketing
Direct Consumer Markets
Health Care Industry
Finance
Corporate Governance
Ballard Bueno Burke Darretta Hemsley Hooper Lawson Renwick Shine Wilensky
Technology/Business Processes
area.
51
Executive
21
22
23
Board Committees.
23
Communication with the Board of Directors...
26
Executive Summary
2015 Grants of Plan-Based Awards.
27
29
Compensation Committee Report .......
47
Compensation Committee Interlocks and Insider Participation.
47
2015 Summary Compensation Table.
48
3
Compensation Discussion and Analysis.
Board Meetings and Annual Meeting Attendance.
The skills matrix provides further that the Board as a whole should represent a diverse group and have expertise in
the substantive areas included in the following table, which indicates the director nominees with expertise in each
Meeting
Independence under the Company's Standards for Director Independence and New York Stock Exchange
("NYSE") listing requirements, subject to waiver by the Nominating Committee;
•
The skills matrix has two sections a list of core criteria that every member of the Board should meet and a list of
skills and attributes to be represented collectively on the Board. The following are core director criteria that should
be satisfied by each director or nominee:
The Nominating Committee developed and maintains a skills matrix to assist it in considering the appropriate
balance of experience, skills and attributes required of a director and to be represented on the Board as a whole.
The skills matrix is based on the Company's strategic plan and is reviewed and updated by the Nominating
Committee on a regular basis. The key features of the skills matrix are also discussed with members of our
Nominating Advisory Committee and their feedback is considered by the Nominating Committee when it updates
the skills matrix. The Nominating Committee evaluates Board candidates against the skills matrix when determining
whether to recommend candidates for initial election to the Board and when determining whether to recommend
currently serving directors for reelection to the Board.
The Nominating Committee analyzes, on an annual basis, director skills and attributes, and recommends to the
Board of Directors appropriate individuals for nomination as Board members.
Criteria for Nomination to the Board
Director Nomination Process
PROPOSAL 1 — ELECTION OF DIRECTORS
Service on no more than three other public company boards;
Other
Information
5
4 Committee
Matters
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Meeting
Other
Information
•
•
5
4 Committee
Matters
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
High integrity and ethical standards;
Audit
LO
Each of our director nominees has satisfied all the core director criteria set forth in the skills matrix, except that
Dr. Bueno is not an independent director because he is the founder and CEO of Amil, and Mr. Hemsley is not an
independent director because he is our CEO.
Ability to work collegially and collaboratively with other directors and management.
•
Understanding of and experience with complex public companies or like organizations; and
•
Risk oversight ability with respect to the particular skills of the individual director;
Standing and reputation in the individual's field;
5
Audit
Independent Board Leadership
19
Proxy Voting
Webcast
June 6, 2016
10:00 a.m. Pacific Time
Anthony Marlon Auditorium
2700 North Tenaya Way
Las Vegas, Nevada 89128
April 8, 2016. Only shareholders of record of the Company's common stock at the close of
business on the record date are entitled to receive notice of, and to vote at, the meeting
and any adjournments or postponements of the meeting.
•
Admission to the
Annual Meeting
•
To elect the ten nominees that are set forth in the attached proxy statement to the
Company's Board of Directors.
An advisory vote to approve the compensation paid to the Company's named executive
officers as disclosed in the proxy statement.
To ratify the appointment of Deloitte & Touche LLP as the independent registered
public accounting firm for the Company for the year ending December 31, 2016.
To transact other business that properly may come before the Annual Meeting or any
adjournments or postponements of the meeting.
To attend the Annual Meeting, you will need to bring an admission ticket and valid photo
identification. You may attend the Annual Meeting by following the procedures described
under Question 7 of the "Questions and Answers About the Annual Meeting and Voting"
section in the attached proxy statement.
Important. Even if you plan to attend the Annual Meeting, we still encourage you to submit
your proxy by Internet, telephone or mail prior to the meeting. If you later choose to revoke
your proxy or change your vote, you may do so by following the procedures described
under Question 13 of the “Questions and Answers About the Annual Meeting and Voting"
section in the attached proxy statement.
You can listen to the live webcast of the Annual Meeting by logging on to our website at
www.unitedhealthgroup.com and clicking on "Investors" and then on the link to the
webcast. See Question 10 of the "Questions and Answers About the Annual Meeting and
Voting" section in the attached proxy statement.
By Order of the Board of Directors,
•
Dannett L. Smitt
Items of Business
Location
UNITEDHEALTH GROUP
9900 Bren Road East, Minnetonka, Minnesota 55343
Dear Shareholder:
We cordially invite you to attend our 2016 Annual Meeting of Shareholders. We will hold our meeting on Monday,
June 6, 2016, at 10:00 a.m. Pacific Time at Anthony Marlon Auditorium, 2700 North Tenaya Way, Las Vegas,
Nevada 89128. This is the operating site of our UnitedHealthcare plan servicing Nevada.
As a shareholder of UnitedHealth Group, you play an important role in our company by considering and taking
action on the matters set forth in the attached proxy statement. We appreciate the time and attention you invest in
making thoughtful decisions.
Attached you will find a notice of meeting and proxy statement that contain further information about the items
upon which you will be asked to vote and the meeting itself, including:
•
How to obtain admission to the meeting if you plan to attend; and
•
Record Date
Different methods you can use to vote your proxy, including by Internet, telephone and mail.
Sincerely,
ем
Stephen J. Hemsley
Chief Executive Officer
Richard T. Burke
Chair of the Board
UNITEDHEALTH GROUP
Notice of 2016 Annual Meeting of Shareholders
Date
Time
Every shareholder vote is important, and we encourage you to vote as promptly as possible. If you cannot attend
the meeting in person, you may listen to the meeting via webcast. Instructions on how to access the live webcast
are included in the proxy statement.
20
Dannette L. Smith
April 22, 2016
12
13
13
13
14
14
15
Overview ......
9
Principles of Governance
19
Compliance and Ethics
Director Independence......
Risk Oversight.........
2
Corporate
Governance
Code of Conduct: Our Principles of Ethics & Integrity.
19
17
Secretary to the Board of Directors
5
1
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 6, 2016:
The Notice of Internet Availability of Proxy Materials, Notice of Annual Meeting of Shareholders, Proxy
Statement and Annual Report are available at www.unitedhealthgroup.com/proxymaterials.
Table of Contents
Page
Proxy Summary..
1
Board of
Directors
Proposal 1 Election Of Directors
5
-
2016 Director Nominees
Director Compensation
Cash Compensation...
Equity-Based Compensation..
Stock Ownership Guidelines
Director Deferral Plan..
Other Compensation
2015 Director Compensation Table...
Director Nomination Process
April 22, 2016
Page 68
Page 5
•
•
•
Return on equity exceeded 17% in 2015;
•
Adjusted earnings per share¹ increased 7% to $6.45 per share from $6.04 per share in 2014;
Operating earnings increased 7% year-over-year to $11.0 billion, and net earnings attributable to
UnitedHealth Group common shareholders remained strong at $5.8 billion and were supported by cash
flows from operations of $9.7 billion;
•
•
•
•
We are a diversified health and well-being company whose mission is to help people live healthier lives and to
make the health system work better for everyone. We achieved strong business results in 2015, including:
Business Results
This summary highlights information contained elsewhere in this proxy statement. We encourage you to review the
entire proxy statement. This proxy statement and our Annual Report for the year ended December 31, 2015 are
first being mailed to the Company's shareholders and made available on the Internet at
www.unitedhealthgroup.com/proxymaterials on or about April 22, 2016. Website addresses included throughout this
proxy statement are for reference only. The information contained on our website is not incorporated by reference
into this proxy statement.
Proxy Summary
==
84
80
Revenues increased 20% to $157.1 billion from $130.5 billion in 2014;
83
.
Total shareholder return, which is defined as the increase in stock price, together with dividends paid, was
18% in 2015 and 125% over the 2013-2015 time period;
Nominating Advisory Committee We have established a Nominating Advisory Committee comprised of
long-term shareholders of the Company and a member of the medical community that provides our
Nominating and Corporate Governance Committee (the “Nominating Committee”) with additional input
regarding desirable characteristics of director candidates and the composition of our Board.
Proxy Access -
Board Structure and Composition - Our directors are elected annually by a majority vote of our
shareholders. We have an independent Chair of our Board of Directors, and eight of our ten directors are
independent.
•
•
•
•
•
UnitedHealth Group is committed to meeting high standards of ethical behavior, corporate governance and
business conduct in everything we do, every day. This commitment has led us to implement many practices,
including the following:
•
Corporate Governance
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix in this proxy statement for
a reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
1
UnitedHealth Group was recognized for 2015 as a "Winning 'W' Company" by 2020 Women on Boards for
having 20% of our Board seats held by women.
Three UnitedHealth Group directors were included in the list of top ten directors in The Street article, "Here
Are the 10 Directors You Want on Your Company's Board;" and
UnitedHealth Group was named to both the Dow Jones Sustainability World and North America Indices for
the 17th consecutive year;
UnitedHealth Group was the top ranking company in the insurance and managed care sector on Fortune's
2016 "World's Most Admired Companies" list, based on 2015 results. This is the sixth consecutive year
UnitedHealth Group has ranked No. 1 overall in its sector and the seventh year in a row the Company has
been rated No. 1 in its sector for innovation;
We repurchased $1.2 billion in stock at an average price of $112.45 per share;
Our annual dividend rate increased to $2.00 per share, paid quarterly, representing a 33% increase over
the annual dividend rate of $1.50 per share paid quarterly since the second quarter of 2014;
1
-
88
Section 16(a) Beneficial Ownership Reporting Compliance ………..
Audit and Non-Audit Services Approval Policy.
Audit Committee's Consideration of Independence of Independent
Registered Public Accounting Firm
Disclosure of Fees Paid to Independent Registered Public
Accounting Firm
Audit Committee Report.......
Audit Committee
Matters
4
64
¡
Proposal 3 Ratification of Independent Registered Public
Accounting Firm .....
Proposal 2― Advisory Approval of the Company's Executive
Compensation....
Potential Payments Upon Termination or Change in Control
59
Executive Employment Agreements ..
57
54
Compensation
57
2015 Pension Benefits...
62
Appendix A - Reconciliation of Non-GAAP Financial Measures
Page
20
Certain Relationships and Transactions ......
79
Other Matters at Meeting
79
Householding Notice
77
69
NO
65
Security Ownership of Certain Beneficial Owners and Management..
Other Information
6
Annual Meeting
5
68
67
67
67
Questions and Answers About the Annual Meeting and Voting
Page 64
In February 2016, we amended our Bylaws to allow a shareholder or group of
shareholders who have owned at least 3% of our common stock for at least three years, and who complies
with specified procedural and disclosure requirements, to include in our proxy materials shareholder-
nominated director candidates for up to 20% of the Board.
•
2
Election of Directors
1
FOR
Election of ten directors
1
Recommendation
Proposal
Advisory Approval of the
Company's Executive
Compensation
Board
Annual advisory shareholder votes to approve the Company's executive compensation.
Our 2011 Stock Incentive Plan prohibits the repricing of stock options and stock appreciation rights without
shareholder approval.
control arrangements for equity grants.
Double-trigger change
Performance-based compensation arrangements, including performance-based equity awards, that use a
variety of performance measures, with different measures used for annual and long-term plans.
No excise tax gross-ups and very limited perquisites.
.
•
Voting Matters and Vote Recommendations
•
FOR
Advisory Approval of
Executive Compensation
More
Information
FOR
Board Recommendation
Registered Public Accounting Firm
3
Ratification of Independent
Based on the Audit Committee's assessment of
Deloitte & Touche's qualifications and performance, it
believes that their retention for fiscal year 2016 is in
the best interests of the Company.
FOR
2
Board Recommendation
FOR
For Each Nominee
Board Recommendation
The Board and Nominating Committee believe that
the ten Board candidates possess the experience,
skills, attributes and diversity to effectively monitor
performance, provide oversight and advise
management on the Company's strategy.
Reasons for Recommendation
Accounting Firm
Registered Public
3 Ratification of Independent FOR
Our executive compensation program is designed to
attract and retain highly qualified executives and to
maintain a strong link between pay and the
achievement of enterprise-wide goals. We emphasize
and reward teamwork and collaboration among
executive officers, which we believe fosters Company
growth and performance, optimizes the use of
enterprise-wide capabilities, drives efficiencies and
integrates products and services for the benefit of our
customers and other stakeholders.
Chief Executive Officer ("CEO”) Succession Planning — Our succession plan, which is reviewed annually
by our Board of Directors, addresses both an unexpected loss of our CEO and longer-term succession.
Stock Ownership Guidelines - Each of our executive officers and directors satisfied our stock ownership
guidelines as of March 23, 2016. Mr. Hemsley, our CEO, directly owned shares equal to 312 times his
base salary as of March 23, 2016.
•
We maintain strong governance standards in the oversight of our executive compensation policies and practices,
including:
•
Our Overall Compensation Program Principles
Our executive compensation program uses a mix of base salary, annual and long-term cash incentives, equity
awards and broad-based benefits to attract and retain highly qualified executives and maintain a strong relationship
between executive pay and Company performance. Shareholders expressed strong support for our executive
compensation program at our 2015 Annual Meeting of Shareholders, with more than 95% of the votes cast in favor
of our say-on-pay proposal.
Executive Compensation
Our Board of Directors, assisted by its committees, oversees management's enterprise-wide risk management
activities. Risk management activities include assessing and taking actions necessary to mitigate and manage risk
incurred in connection with the long-term strategic direction and operation of our business.
Enterprise-Wide Risk Oversight
2
See the "Corporate Governance" portion of this proxy statement for further information on our governance
practices.
•
Absence of Rights Plan - We do not have a shareholder rights plan, commonly referred to as a "poison
pill."
Political Contributions Disclosure — We disclose our political contributions and public advocacy efforts and
the contributions of our federal and state political action committees on our website and as required by law.
Environmental Policy — We seek to minimize our environmental impact and to heighten our employees'
awareness of the importance of the environment.
Independent Compensation Consultant - Our Compensation and Human Resources Committee (the
"Compensation Committee”) uses an independent compensation consultant, which performs no consulting
or other services for the Company.
Clawback Policy We have adopted a clawback policy that entitles the Board of Directors to seek
reimbursement from our senior executives if they are involved in fraud or misconduct that causes a
material restatement or in the event of a senior executive's violation of non-compete, non-solicit or
confidentiality provisions.
—
We generally require executive officers to hold, for at least one year, one-third of
the net shares acquired upon vesting or exercise of any equity award. Our directors are required to hold all
equity awards granted until completion of service on the Board, or until they have met our stock ownership
requirements.
-
-
Stock Retention Policy -
Transactions in Company Securities - Our insider trading policy prohibits all directors, executive officers
and employees from engaging in short sales and hedging transactions relating to our common stock, and
requires advance approval of the Compensation Committee of any pledging of common stock by directors,
executive officers and other members of management.
•
.
Enhance the value of the business
Strong Governance Standards in Oversight of Executive Compensation Policies
3
At his request, Mr. Hemsley's total compensation is below the median for CEOs in the Company's peer group,
even though the Board believes his performance has been outstanding. Information regarding compensation paid
to each of our named executive officers in 2015 is described in the "Compensation Discussion and Analysis"
section.
Company matching contributions — $142,425 under our 401(k) and executive savings plan.
Performance shares with a target grant date fair value of $4.675 million, restricted stock
units with a grant date fair value of $2.337 million and stock options with a grant date fair value of
$2.337 million.
Equity awards
•
Annual cash incentive award of $2.75 million and long-term cash incentive award
of $922,000, which reflect the Company's performance against pre-set goals and continued strong
leadership by Mr. Hemsley.
Pay-for-performance · A substantial portion of the total compensation of our executive officers is earned
based on achievement of enterprise-wide goals that drive shareholder value.
Base salary $1.3 million, which is unchanged since 2006.
Cash incentive awards
•
Summary of Compensation Paid to Stephen Hemsley, our CEO, in 2015
- We provide standard employee benefits and very limited
—
Standard benefits and very limited perquisites
perquisites to our executive officers.
Reward long-term growth and focus management on sustained success and shareholder value creation
Compensation of our executive officers is weighted toward equity and long-term cash awards that
encourage sustained performance and positive shareholder returns.
the Company and avoid excessive risk-taking.
Incentive compensation is designed to favor the longer-term value of
-
55
2015 Option Exercises and Stock Vested
Meeting
Fees Earned
Change in Pension
Value and
Non-Qualified
The following table provides summary information for the year ended December 31, 2015 relating to compensation
paid to or accrued by us on behalf of our non-employee directors who served in this capacity during 2015.
Mr. Hemsley and Dr. Bueno are employee directors and do not receive additional compensation for serving as a
director.
2015 Director Compensation Table
Information
Meeting
5
4 Committee
Matters
Other
or Paid in
Annual
3
Corporate
Governance
2
Board of
Directors
Audit
14
Our corporate aircraft use policy prohibits personal use of corporate aircraft by any director. Because there is
essentially no incremental cost to the Company, however, the policy does permit a director's family member to
accompany the director on a business flight on Company aircraft provided a seat is available.
The Company maintains a program through which it will match up to $15,000 of charitable donations made by
each director for each calendar year. The directors do not receive any financial benefit from this program because
the charitable income tax deductions accrue solely to the Company. Donations under the program may not be
made to family trusts, partnerships or similar organizations.
We reimburse directors for any out-of-pocket expenses incurred in connection with service as a director. We also
provide health care coverage to directors but only if the director is not eligible for coverage under another group
health care benefit program. Health care coverage is provided generally on the same terms and conditions as
current employees. Upon retirement from the Board of Directors, directors may continue to obtain health care
coverage under benefit continuation coverage, and after the lapse of such coverage, under the Company's
post-employment medical plan for up to a total of 96 months if they are otherwise eligible.
Executive
Compensation
Other Compensation
Name
Cash
($)(1)
Gail R. Wilensky, Ph.D.
156,528
125,000
83,792 100,838
150,000 156,424
Kenneth I. Shine, M.D.
Glenn M. Renwick
Douglas W. Leatherdale (6)
145,000 156,528
Rodger A. Lawson
William C. Ballard, Jr.
140,000 156,528
125,000 156,602
Robert J. Darretta
425,000 156,528
Richard T. Burke
125,000 156,528
($)(4)
Deferred
Compensation
Earnings
Option
Awards
($)(3)
Stock
Awards
($)(2)
Michele J. Hooper
The Director Deferral Plan does not provide for matching contributions by the Company.
pre-selected amounts to be distributed on pre-selected dates while the director remains a member of the
Board of Directors.
for cash deferrals, an immediate lump sum upon the completion of his or her service on the Board of
Directors; or
The DSUS immediately vest upon grant, and non-employee directors are required to retain all DSUs granted until
completion of their service on the Board of Directors. Upon completion of service, the DSUs convert into an equal
number of shares of the Company's common stock. A director may defer receipt of the shares for up to ten years
after completion of service pursuant to the Director Deferral Plan.
Non-employee directors receive annual grants of DSUS under the 2011 Stock Incentive Plan having an annual
aggregate fair value of $175,000. The grants are in consideration of general service and responsibilities and
required meeting preparation. The grants are issued quarterly in arrears on the first business day following the end
of each fiscal quarter and prorated if the director did not serve the entire quarter. The number of DSUs granted is
determined by dividing $43,750 (the quarterly value of the annual equity award) by the closing stock price on the
grant date, rounded up to the nearest share.
Equity-Based Compensation
Cash retainers are payable on a quarterly basis in arrears on the first business day following the end of each fiscal
quarter, and subject to pro rata adjustment if the director did not serve the entire quarter. Directors may elect to
receive deferred stock units ("DSUS”) in lieu of their cash compensation or defer receipt of their cash
compensation to a later date pursuant to the Directors' Compensation Deferral Plan (“Director Deferral Plan”).
Cash Compensation
Information
Meeting
5
4 Committee
Matters
If a director elects to convert his or her cash compensation into DSUs, such conversion grants are made on the
day the eligible cash compensation becomes payable to the director and immediately vest upon grant. The director
receives the number of DSUs equal to the cash compensation foregone, divided by the closing price of our
common stock on the date of grant, rounded up to the nearest share.
Other
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Audit
12
Effective July 1, 2015, the annual deferred stock unit award amount was increased from $150,000 to $175,000.
*
Annual
The Company pays dividend equivalents in the form of additional DSUs on all outstanding DSUs. Dividend
equivalents are paid at the same rate and at the same time that dividends are paid to Company shareholders and
are subject to the same vesting conditions as the underlying grant.
Stock Ownership Guidelines
Under our stock ownership guidelines, we require non-employee directors to achieve ownership of shares of the
Company's common stock (excluding stock options, but including vested deferred stock units and vested restricted
stock units) having a fair market value equal to five times the directors' annual base cash retainer. Non-employee
directors must comply with the stock ownership guidelines within five years of their appointment to the Board of
Directors. All of our non-employee directors have met the stock ownership requirement.
a delayed lump sum following either the fifth or tenth anniversary of the completion of his or her service on
the Board of Directors;
a series of five or ten annual installments following the completion of his or her service on the Board of
Directors;
•
•
•
•
Under the Director Deferral Plan, subject to compliance with applicable laws, non-employee directors may elect
annually to defer receipt of all or a percentage of their compensation. Amounts deferred are credited to a
bookkeeping account maintained for each director participant that uses a collection of unaffiliated mutual funds as
measuring investments. Subject to certain additional rules set forth in the Director Deferral Plan, a participating
director may elect to receive the distribution in one of the following ways:
Director Deferral Plan
Information
Meeting
5
4 Committee
Matters
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Audit
13
140,000
Cash compensation converted into common stock or DSUs at
the director's election
156,528
($)(5)
Gail R. Wilensky, Ph.D.
Kenneth I. Shine, M.D.
Glenn M. Renwick
Douglas W. Leatherdale
Rodger A. Lawson
Michele J. Hooper
Robert J. Darretta
Richard T. Burke
William C. Ballard, Jr.
Deferred
Stock Units
Name
Includes the value of deferred stock units issued upon conversion of annual cash retainer as described in
footnote 1 above of $125,000 for Mr. Darretta and $150,000 for Mr. Renwick.
37,584 25,663
75,051 75,015 81,277
37,584 37,508 43,845
37,584 37,508 43,845
37,591
37,591
75,081
37,591
37,584 37,508 43,845
37,584 37,508 43,845
37,591
37,591
43,845
As of December 31, 2015, our non-employee directors held outstanding deferred stock unit awards as follows:
43,845
19,139
35,752
16
(6) Mr. Leatherdale retired from our Board of Directors on June 1, 2015 and his deferred stock units were paid in shares of
common stock in accordance with the terms of the deferred stock units.
Dr. Wilensky - $15,000. In 2015, the Company also made a $3,000 contribution to a charitable organization selected on
behalf of the following directors in lieu of 2014 holiday gifts: Mr. Ballard, Mr. Burke, Ms. Hooper, Mr. Lawson,
Mr. Leatherdale, Mr. Renwick, Dr. Shine and Dr. Wilensky. We also paid $6,177, $490 and $6,159 in health care
premiums on behalf of Mr. Burke, Ms. Hooper and Mr. Lawson, respectively.
-
-
(5) In 2015, the Company matched charitable contributions made by directors to charitable organizations selected by directors
pursuant to the Company's Board Matching Program as follows: Mr. Ballard $15,000; Mr. Burke - $15,000;
Ms. Hooper $15,000; Mr. Lawson $15,000; Mr. Renwick - $15,000; Dr. Shine - $15,000; and
(4) The Director Deferral Plan does not credit above-market earnings or preferential earnings to the amounts deferred. There
are no measuring investments tied to Company stock performance. The measuring investments are a collection of
unaffiliated mutual funds identified by the Company.
625 stock options; and
_
19,139
-
-
-
(3) The Company did not grant stock option awards to directors in 2015. As of December 31, 2015, our non-employee
directors held outstanding (and unexercised) stock option awards as follows: Mr. Ballard - 73,000 stock options;
Mr. Burke 97,630 stock options; Mr. Darretta · 56,621 stock options; Ms. Hooper 35,000 stock options;
Mr. Leatherdale - 69,960 stock options; Mr. Renwick - 33,929 stock options; Dr. Shine
Dr. Wilensky 81,150 stock options.
19,139
27,569
36,612
0
17,616
25,511
-
37,591 37,584 37,508
37,591 37,584 37,508
68,833 68,826 68,846 75,097
($)
($)
Board of
Directors
Audit
15
(2) The amounts reported reflect the aggregate grant date fair value of the stock awards granted in 2015 computed in
accordance with FASB ASC Topic 718, based on the closing stock price on the grant date. The amounts reported include
for each director the aggregate grant date fair value of the annual equity award of deferred stock units granted in quarterly
installments. The amounts reflect the value of fractional shares issued with the quarterly installments as we round grants
of deferred stock units up to the nearest whole share. For Messrs. Darretta and Renwick, we combined the cash
compensation they elected to convert into deferred stock units on a quarterly basis and the value of the quarterly deferred
stock unit grant prior to determining the number of deferred stock units to be granted each quarter.
(1) Mr. Darretta and Mr. Renwick elected to convert 2015 cash compensation into 1,098 and 1,317 deferred stock units,
respectively. Mr. Leatherdale elected to defer all 2015 cash compensation under the Director Deferral Plan.
314,528
18,000
18,000 299,528
324,424
2
18,000
325,687
24,159
315,018
18,490
281,602
24,177 605,705
18,000 299,528
($)
Total
3,000 187,630
Corporate
Governance
3
Executive
Compensation
($)
2015
2015
2015
2015
($)
January 2, April 1, July 1, October 1,
Gail R. Wilensky, Ph.D.
Kenneth I. Shine, M.D.
Glenn M. Renwick*
Douglas W. Leatherdale
Rodger A. Lawson
Michele J. Hooper
Robert J. Darretta*
William C. Ballard, Jr.
Richard T. Burke
Name
The aggregate grant date fair values of the stock awards granted in 2015 (including, for Messrs. Darretta and Renwick,
the deferred stock units issued in lieu of cash compensation) computed in accordance with FASB ASC Topic 718, based
on the closing stock price on the grant date, are as follows:
Other
Information
Meeting
5
4 Committee
Matters
Annual
All Other
Compensation
Information
$175,000 aggregate fair value of deferred stock units*
Annual Equity Award
Gail R. Wilensky, Ph.D.
Kenneth I. Shine, M.D.
Glenn M. Renwick
Rodger A. Lawson
Michele J. Hooper
Stephen J. Hemsley
Robert J. Darretta
Richard T. Burke
Edson Bueno, M.D.
Age
William C. Ballard, Jr.
The Board of Directors recommends that you vote FOR the election of each of the nominees. Executed
proxies will be voted FOR the election of each nominee unless you specify otherwise.
Our Certificate of Incorporation and Bylaws provide that each member of our Board of Directors is elected annually
by a majority of votes cast if the election is uncontested. The Board of Directors has nominated the ten directors
set forth below for election by the shareholders at the 2016 Annual Meeting. All of the nominees were elected by
our shareholders at the 2015 Annual Meeting. All of the nominees have informed the Board that they are willing to
serve as directors if elected. If any nominee should decline or become unable to serve as a director for any
reason, the persons named as proxies will elect a replacement.
2016 Director Nominees
Information
Meeting
5
4 Committee
Matters
Other
Annual
Name
Executive
Compensation
Director Since
1993
William C. Ballard, Jr.
The director nominees, if elected, will serve until the 2017 Annual Meeting or until their successors are elected and
qualified. Following is a brief biographical description of each director nominee. A table listing the areas of
expertise in the skills matrix that are held by each director and that, in part, led the Board to conclude that each
respective director should continue to serve as a member of the Board is included on page 6.
1993
72
2009
81
2008
60
2011
75
69
64
2000
63
2007
69
1977
72
2012
72
2007
Age 75
3
2
Number of Directors Nominees
2
4
Nominating Advisory Committee
■ 1-5 years
■ 6-10 years
■More than 10 years
UnitedHealth Group embraces and encourages a culture of diversity and inclusion. We believe that valuing diversity
makes good business sense and helps to ensure our future success. Diversity is included as one of the collective
attributes in our director skills matrix. Our Board has not adopted a formal definition of diversity.
Our Board assesses its overall effectiveness through an annual evaluation process. This evaluation includes,
among other things, an assessment of the overall composition of the Board, including the diversity of its members.
Although the Board does not establish specific goals with respect to diversity, the Board's overall diversity is a
consideration in the director nomination process. For this year's election, the Board has nominated ten individuals;
all are incumbent nominees who collectively bring tremendous diversity to the Board. Each nominee is a strategic
thinker and has varying, specialized experience in the areas that are relevant to the Company and its businesses.
Moreover, their collective experience covers a wide range of countries, geographies and industries, including health
care, insurance, consumer products, technology and financial services, including roles in academia and
government. The ten director nominees range in age from 60 to 81 and two of the ten director nominees are
women; one is African American; and three are citizens of other countries including Brazil, New Zealand and the
United Kingdom.
Board Diversity
7
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Audit
Corporate
Governance
Our Nominating Committee strives to maintain a balance of tenure on the Board. Long-serving directors bring
valuable experience with our Company and familiarity with the successes achieved and challenges it has faced
over the years, while newer directors bring fresh perspectives and ideas. Tenure of the director nominees is as
follows:
Meeting
Board of
Directors
Audit
8
Our shareholders may also nominate candidates for election to the Board of Directors from the floor of our Annual
Meeting of Shareholders, instead of including the director candidate in our proxy statement. Shareholders may
nominate director candidates by submitting timely written notice to the Secretary to the Board in accordance with
our Bylaws. The notice must include the information required by our Bylaws, which are available at
www.unitedhealthgroup.com. For the 2017 Annual Meeting, this notice must be received at our principal executive
offices, directed to the Secretary to the Board of Directors, no earlier than February 6, 2017 and no later than
March 8, 2017.
Shareholder Nominations of Director Candidates at a Meeting
Shareholder Director Candidates for Inclusion in our Proxy Statement (Proxy Access)
Our Bylaws provide a shareholder or group of shareholders (of up to 20) who have owned at least 3% of our
common stock for at least three years the ability to include in our proxy statement shareholder-nominated director
candidates for up to 20% of the Board. To be eligible to use this right, the shareholder(s) and the candidate(s)
must satisfy the requirements specified in our Bylaws. Our Bylaws are available at
www.unitedhealthgroup.com/About/Corporate Governance.aspx. For the 2017 Annual Meeting, director nominations
submitted under these Bylaw provisions must be received at our principal executive offices, directed to the
Secretary to the Board of Directors, no earlier than November 23, 2016 and no later than December 23, 2016.
In considering potential candidates for election to the Board, the Nominating Committee, with input from the full
Board of Directors, assesses the potential candidate's qualifications and how these qualifications fit with the desired
composition of the Board of Directors as a whole. The Nominating Committee considers views expressed by
members of the Nominating Advisory Committee and other shareholders regarding skill sets that would be valuable
for a new director to possess. The Nominating Committee has an outside firm on retainer to assist in identifying
and evaluating director candidates. The Nominating Committee will also consider recommendations submitted by
shareholders for director candidates. Recommendations should be directed to the Secretary to the Board of
Directors. None of the Company's shareholders recommended candidates for the Board of Directors in connection
with the 2016 Annual Meeting.
In assessing currently serving directors for potential re-nomination, the Nominating Committee reviews the directors'
overall performance on the Board of Directors and other relevant factors, including the factors listed above under
"Criteria for Nomination to the Board."
Process for Identifying and Evaluating Nominees; Shareholder Recommendations for
Director Candidates
Information
The Board of Directors formed the Nominating Advisory Committee in 2006 to provide the Nominating Committee
with additional input from shareholders and others regarding desirable characteristics of director candidates and the
composition of the Board of Directors. The Nominating Committee considers, but is not bound by, input provided by
the Nominating Advisory Committee. The Nominating Advisory Committee currently includes four individuals
affiliated with long-term shareholders of the Company and one individual who is a member of the medical
community. Members of the Nominating Advisory Committee do not receive any compensation from the Company
for serving on the Nominating Advisory Committee. The Nominating Advisory Committee met in March 2015. A
description of the Nominating Advisory Committee, including a description of how the members of the committee
are nominated and selected, can be found on our website at www.unitedhealthgroup.com.
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Audit
Equity Conversion Program
Director since 1993
9
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Audit
11
Dr. Wilensky has been a senior fellow at Project HOPE, an international health foundation, since 1993. From 2008
to 2009, Dr. Wilensky was President of the Department of Defense Health Board and chaired its sub-committee on
health care delivery. From 2006 to 2008, Dr. Wilensky co-chaired the Department of Defense Task Force on the
Future of Military Health Care. During 2007 she also served as a commissioner on the President's Commission on
Care for America's Returning Wounded Warriors. From 2001 to 2003, she was the Co-Chair of the President's
Task Force to Improve Health Care for our Nation's Veterans. From 1997 to 2001, she was also Chair of the
Medicare Payment Advisory Commission. From 1992 to 1993, Dr. Wilensky served as the Deputy Assistant to
President George H. W. Bush for policy development, and from 1990 to 1992, she was the Administrator of the
Health Care Financing Administration (now known as the Centers for Medicare and Medicaid Services) directing
the Medicaid and Medicare programs for the United States. Dr. Wilensky is a nationally recognized health care
economist. Dr. Wilensky currently serves as a director of Quest Diagnostics Incorporated. In the past five years,
she has also served as a director of Cephalon, Inc. and SRA International Inc.
Other
Director since 1993
Dr. Shine has been Professor of Medicine at the Dell Medical School within the University of Texas System (the "UT
System"), which consists of nine academic campuses and six health institutions, since June 2015. He served as the
Special Advisor to the Chancellor for Health Affairs of the UT System from September 2013 to June 2015, as
Executive Vice Chancellor for Health Affairs of the UT System from 2003 to September 2013, and as interim
Chancellor of the UT System from 2008 to February 2009. Dr. Shine served as President of the Institute of Medicine
at the National Academy of Sciences from 1992 until 2002. From 1993 until 2003, Dr. Shine served as a Clinical
Professor of Medicine at the Georgetown University School of Medicine. From 1971 until 1992, Dr. Shine served in
several positions at the University of California at Los Angeles School of Medicine, with his final position being Dean
and Provost, Medical Sciences, and he continues to hold the position of Professor of Medicine Emeritus. Dr. Shine
also served as Chair of the Council of Deans of the Association of American Medical Colleges from 1991 until 1992
and as President of the American Heart Association from 1985 until 1986. He is a nationally recognized cardiologist.
Gail R. Wilensky, Ph.D.
Director since 2009
Age 81
Kenneth I. Shine, M.D.
Mr. Renwick is Chair of the Board of Directors, President and CEO of The Progressive Corporation, an auto
insurance holding company. Before being named President and CEO in 2001, Mr. Renwick served as
CEO-Insurance Operations and Business Technology Process Leader at Progressive from 1998 to 2000. Prior to
that, he led Progressive's Consumer Marketing group and served as President of various divisions within
Progressive. Mr. Renwick joined Progressive in 1986 as Auto Product Manager for Florida. Mr. Renwick also
currently serves as a director of Fiserv, Inc.
Director since 2008
Age 60
Glenn M. Renwick
Mr. Lawson served as President of Fidelity, a mutual fund and financial services company, from 2007 to 2010. Prior to
joining Fidelity, Mr. Lawson was Vice Chairman of Prudential Financial from 2002 to 2007 where he was responsible for
the International Operating Division and for Global Marketing Communications. Mr. Lawson served as Executive Vice
President of Prudential from 1996 to 2002. Prior to joining Prudential, Mr. Lawson was President and CEO of VanEck
Global from 1994 to 1996. Mr. Lawson was Managing Director and Partner-in-Charge of Private Global Banking and
Mutual Funds at Bankers Trust from 1992 to 1994. Mr. Lawson was a Managing Director and CEO at Fidelity
Investments-Retail from 1985 to 1991, and President and CEO at Dreyfus Service Corporation from 1982 to 1985.
Mr. Lawson currently serves as Chair of the Board of Directors of E*TRADE Financial Corporation.
Age 72
Director since 2011
4 Committee
Matters
Meeting
$300,000
$ 15,000
$ 15,000
$ 20,000
$ 25,000
$125,000
Compensation Value
Annual Nominating Committee Chair Cash Retainer
Annual Public Policy Committee Chair Cash Retainer
Annual Board Chair Cash Retainer
Annual Compensation Committee Chair Cash Retainer
5
Annual Audit Committee Chair Cash Retainer
Compensation Element
The following table highlights the material elements of our director compensation program for 2015:
The Compensation Committee's recommendations, and the Board's subsequent approval, were made after
considering the results of the market practices review and the complexity of the Company's structure and
operations. This increase in deferred stock units is the only increase in the compensation paid to all non-employee
directors since the director compensation program was restructured in 2009.
effective January 1, 2016, for directors who have satisfied the Company's stock ownership requirements,
the ability to elect to take grants of deferred stock units in shares of common stock or to elect to convert
cash compensation into shares of common stock.
an increase in the annual grant of deferred stock units awarded to non-employee directors from $150,000
to $175,000 effective as of July 1, 2015 (2015 amounts to be prorated for the remainder of the calendar
year); and
•
Our director compensation and benefit program is designed to compensate our non-employee directors fairly for
work required for a company of our size and scope and to align their interests with the long-term interests of our
shareholders. Director compensation reflects our desire to attract, retain and use the expertise of highly qualified
people serving on the Company's Board of Directors. The Compensation Committee reviews the compensation
level of our non-employee directors on an annual basis and makes recommendations to the Board of Directors. In
June 2015, the Compensation Committee, with the advice of its independent compensation consultant, undertook
an annual review of the structure and philosophy of the director compensation program. This review analyzed the
structure and the overall level and mix of compensation delivered by the Company's director compensation
program as compared to the Company's general industry peer group and also the four large publicly traded
managed health care companies. Following this review, the Compensation Committee recommended, and the
Board approved, the following:
DIRECTOR COMPENSATION
Information
Annual Cash Retainer
Mr. Ballard served as Of Counsel to Bingham Greenebaum Doll LLP (formerly Greenebaum Doll & McDonald
PLLC), a law firm in Louisville, Kentucky, from 1992 until 2008. In 1992, Mr. Ballard retired from Humana, Inc., a
company operating managed health care facilities, after serving with Humana in various roles for 22 years,
including as the Chief Financial Officer ("CFO") and a director. In the past five years, he also served as a director
of Welltower, Inc. (formerly Health Care REIT, Inc.).
Age 69
Other
Information
Robert J. Darretta
Mr. Burke is Chair of the Board of Directors of UnitedHealth Group, has been a member of our Board since 1977,
and was CEO of UnitedHealthcare, Inc., our predecessor corporation, until 1988. From 1995 until 2001, Mr. Burke
was the owner, CEO and Governor of the Phoenix Coyotes, a National Hockey League team. Mr. Burke currently
serves as a director of Meritage Homes Corporation.
Director since 1977
Age 72
Richard T. Burke
Dr. Bueno is the founder and CEO of Amil Assistência Médica Internacional S.A., formerly Amil Participações S.A.
("Amil"), in which UnitedHealth Group owns a 90% interest. Founded in 1978, Amil is the largest health care
company in Brazil. Dr. Bueno holds a medical degree from the Federal University of Rio de Janeiro, with
specialization in general surgery. He has attended courses in the Business Administration program at the Pontifical
Catholic University of Rio de Janeiro and management programs at Harvard Business School.
Director since 2012
Age 72
Edson Bueno, M.D.
Other
Information
Meeting
6
5
4 Committee
Matters
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Audit
Age 69
Rodger A. Lawson
Director since 2007
Stephen J. Hemsley
Meeting
6
5
4 Committee
Matters
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Audit
10
10
Ms. Hooper is President and CEO of The Directors' Council, a private company she co-founded in 2003 that works
with corporate boards to increase their independence, effectiveness and diversity. She was President and CEO of
Voyager Expanded Learning, a developer and provider of learning programs and teacher training for public
schools, from 1999 until 2000. Prior to that, she was President and CEO of Stadtlander Drug Company, Inc., a
provider of disease-specific pharmaceutical care, from 1998 until Stadtlander was acquired in 1999. Ms. Hooper is
a nationally recognized corporate governance expert. Ms. Hooper currently serves as a director of PPG
Industries, Inc. In the past five years, she also served as a director of AstraZeneca plc. and Warner Music Group
Corp.
Director since 2007
Age 64
Michele J. Hooper
Mr. Hemsley is CEO of UnitedHealth Group and has served in that capacity since 2006. He has been a member of
the Board of Directors since 2000. Mr. Hemsley joined the Company in 1997 as Senior Executive Vice President
and became Chief Operating Officer in 1998. Mr. Hemsley served as President and Chief Operating Officer from
1999 to 2006 and as President and CEO from 2006 to November 2014. Mr. Hemsley currently serves as a director
of Cargill, Inc.
Director since 2000
Age 63
Mr. Darretta is the retired Vice Chair of the Board of Directors, CFO and member of the Executive Committee of
Johnson & Johnson, a health care products company. Mr. Darretta served as CFO and a member of the Executive
Committee from 1997 to 2007 and as Vice Chair from 2004 to 2007. Mr. Darretta joined Johnson & Johnson in
1968. Mr. Darretta currently serves as a trustee for certain Putnam mutual funds.
Years of Service on the Board
24
21
•
Corporate
Governance
2
Board of
Directors
1
Audit
Audit
1
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Meeting
3
Information
Executive
Compensation
Other
✓
Standards for Director Independence
✓
Board of Directors Committee Charters
✓
Principles of Governance
Bylaws
✓
✓ Certificate of Incorporation
Corporate Governance Documents
UnitedHealth Group is committed to high standards of corporate governance and ethical business conduct.
Important documents reflecting this commitment are listed below.
Overview
CORPORATE GOVERNANCE
Information
Meeting
5
4 Committee
Matters
Annual
Code of Conduct: Our Principles of Ethics & Integrity
Related-Person Transactions Approval Policy
Director Independence
Our Board of Directors has determined that William C. Ballard, Jr., Richard T. Burke, Robert J. Darretta,
Michele J. Hooper, Rodger A. Lawson, Glenn M. Renwick, Kenneth I. Shine, M.D. and Gail R. Wilensky, Ph.D. are
each "independent” under the NYSE rules and the Company's Standards for Director Independence and have no
material relationships with the Company that would prevent the directors from being considered independent.
Stephen J. Hemsley, the Company's CEO, and Edson Bueno, M.D., founder and CEO of Amil, are not independent
directors.
Information
Independent Board Leadership
Our Board of Directors believes that having independent Board leadership is an important component of our
governance structure. As such, our Bylaws require the Company to have either an independent Chair of the Board
or a Lead Independent Director. Richard T. Burke serves as our independent Chair. The Company believes the
current leadership structure delineates the separate roles of managers and directors. Our CEO sets the strategic
direction for the Company, working with the Board, and provides day-to-day leadership; our independent Chair of
the Board leads the Board in the performance of its duties and serves as the principal liaison between the
independent directors and the CEO. In addition to these overall differences in duties, our Principles of Governance
outline the specific duties of the Chair of the Board or a Lead Independent Director, including:
•
•
•
•
.
•
•
Chairing all meetings of the Board at which the Chair is present (Chair of the Board duty only);
Working with the CEO on the scheduling of Board meetings and the preparation of agendas and materials
for Board meetings;
Coordinating the preparation of agendas and materials for executive sessions of the Board's
non-management directors;
Scheduling and leading the executive sessions of the Board's non-management directors;
Defining the scope, quality, quantity and timeliness of the flow of information between Company
management and the Board that is necessary to effectively and responsibly perform their duties;
Leading the Board process for hiring, terminating and evaluating the performance of the Company's CEO
and working with the Chair of the Compensation Committee on the process for compensating and
evaluating the CEO;
Serving as an ex-officio member of each committee and working with the Board Committee Chairs on the
performance of their designated roles and responsibilities;
Interviewing, along with the Chair of the Nominating Committee, all Board candidates and making director
candidate recommendations to the Nominating Committee;
Meeting
Our Board of Directors has adopted the Company's Standards for Director Independence, which are available on
our website at www.unitedhealthgroup.com. The Standards for Director Independence requirements exceed the
independence standards set by the NYSE.
5
Other
In determining independence, the Board of Directors considered, among other factors, the business relationships
between the Company and our directors and nominees, their immediate family members (as defined by the NYSE)
and their affiliated companies. The Board of Directors considered whether any director or any nominee was a
director, partner, significant shareholder or executive officer of an organization that has a relationship with the
Company, and also considered charitable contributions that the Company or its affiliates made to organizations with
which such directors or nominees are or have been associated. In particular, the Board of Directors evaluated the
following relationships and determined that such relationships were in the normal course of business and did not
impair the directors' ability to exercise independent judgment:
•
.
Mr. Burke is an owner of Rainy Partners, LLC. Rainy Partners is a customer of the Company and paid the
Company premiums for health insurance of approximately $183,300 in 2015. These premiums were
determined on the same terms and conditions as premiums for other comparable customers.
Dr. Shine is a Professor of Medicine at the Dell Medical School within the University of Texas System (the
"UT System"), which includes six health institutions. The health institutions participate in the Company's
broad national network of hospitals and physicians and other care providers. In 2015, we paid the UT
System approximately $138.8 million for medical and related expenses on behalf of consumers who obtain
health insurance from us, $145,500 for grants and clinical trials and $127,900 for tuition payments for
employees. The UT System paid the Company approximately $1.5 million for coding manuals and software
products in 2015. The aggregate amount of these transactions represents 1.11% of the 2015 operating
revenues of the UT System. In aggregate, our self-funded customers paid approximately $380.5 million to
the UT System for health care services on behalf of their employees and health plan participants. Dr. Shine
is neither directly nor indirectly involved in the relationship between the UT System and the Company or
the customers of the Company. Dr. Shine has no direct responsibilities for any contractual or other
relationships with the Company or its competitors. The UT System has established a process pursuant to
which Dr. Shine will not have access to any information that is maintained by the UT System that could be
used to benefit or provide an advantage to the Company.
Dr. Wilensky is a Senior Fellow of Project HOPE. In 2015, Project HOPE paid the Company approximately
$1.3 million for premiums for health insurance. These premiums were determined on the same terms and
conditions as premiums and fees for other comparable customers. Dr. Wilensky is neither directly nor
indirectly involved in the relationship.
The Board of Directors also considered relationships between the Company and organizations on which our
non-employee directors or their immediate family members serve only as directors and determined that such
relationships did not impair the directors' exercise of independent judgment.
20
20
Audit
1
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
Board of Directors Communication Policy
Political Contributions Policy
✓
Corporate Environmental Policy
Our insider trading policy prohibits all directors, executive officers and employees from engaging in short
sales and hedging transactions relating to our common stock, and requires advance approval of the
Compensation Committee of any pledging of common stock by directors, executive officers and other
members of management.
18
Audit
Board of
1
2
Directors
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
5
Meeting
Other
Information
.
Our Board of Directors believes that effective Board-shareholder communication strengthens the Board of
Directors' role as an active, informed and engaged fiduciary, so we have a communication policy that
outlines how shareholders and other interested parties may communicate with the Board of Directors. See
"Corporate Governance Communication with the Board of Directors."
We have an environmental policy that outlines our focus on minimizing our impact on the environment and
creating a Company culture that heightens our employees' awareness of the importance of preserving the
environment and conserving energy and natural resources.
A Nominating Advisory Committee comprised of representatives from the shareholder and medical
communities provides input into the composition of our Board of Directors.
We have a political contributions policy that is overseen by our Public Policy Strategies and Responsibility
Committee (the "Public Policy Committee”). The Company's political contributions and public advocacy
efforts and the contributions of our federal and state political action committees are disclosed on our
website.
-
•
•
•
Our directors are required to offer their resignations upon a change in their primary careers.
Our Board of Directors and each Board committee regularly conduct executive sessions of
non-management directors. Our Chair of the Board presides over each executive session of
non-management directors. Committee Chairs preside over executive sessions of their respective
committees.
Our Board of Directors and Board committees have the authority to retain independent advisors.
Our Board of Directors and Board committees conduct performance reviews annually.
All directors are required to complete a specified level of director training.
Guidelines and Board Policies
•
•
•
•
Our Board of Directors has developed our CEO succession plan with input from our CEO and reviews the
plan annually. The CEO succession plan has two components: one addressing emergency or unanticipated
loss of our CEO and one addressing longer-term succession. Material features of this plan include
identification of Board members to lead the succession process, identification and development of internal
candidates and identification of external resources necessary to ensure a successful transition.
-
We maintain stock ownership and retention guidelines for directors and executive officers. See
"Compensation Discussion and Analysis · Elements of Our Compensation Program Other
Compensation Practices Executive Stock Ownership Guidelines and Stock Retention Policy," "Director
Compensation · Equity-Based Compensation" and "Director Compensation - Stock Ownership
Guidelines" for further information.
_
We have a related-person transactions approval policy regarding the review, approval and ratification by
our Audit Committee of all related-person transactions. See "Certain Relationships and Transactions."
We have a clawback policy that entitles the Board of Directors to seek reimbursement from our senior
executives if they are involved in fraud or misconduct that causes a material restatement or, in the event of
a senior executive's violation of non-compete, non-solicit or confidentiality provisions. See “Compensation
Discussion and Analysis Elements of Our Compensation Program Other Compensation Practices
Potential Impact on Compensation from Executive Misconduct/Compensation Clawbacks."
Independent Auditors
•
Our shareholders annually ratify the appointment of our independent registered public accounting firm.
The non-audit and non-audit-related fees paid to our independent registered public accounting firm were
less than 7% of total fees paid to that firm by the Company in 2015.
A non-management director may not serve on more than three other public company boards of directors.
All members of our Audit Committee are "audit committee financial experts" as defined by the Securities
and Exchange Commission ("SEC").
•
•
Board and Board Committee Composition and Performance
We have a non-executive, independent Chair of the Board. If a future Chair of the Board is not
independent, a Lead Independent Director will be appointed by a majority vote of the independent
directors.
Our Certificate of Incorporation and Bylaws do not have any supermajority shareholder approval provisions.
In February 2016, we amended our Bylaws to provide eligible shareholders the right to include shareholder
director nominees representing up to 20% of the Board in our proxy statement.
a majority vote. To address a provision Delaware law that allows a director who has not been re-elected
to remain in office until a successor is elected and qualified, we have a policy requiring any director who
does not receive a greater number of votes “for” than “against” his or her election in an uncontested
election to tender his or her resignation from the Board of Directors following certification of the shareholder
vote.
Our Certificate of Incorporation provides that, in an uncontested election, each director must be elected by
•
•
•
All members of our Board of Directors are elected annually by our shareholders.
•
Board Structure and Shareholder Rights
You can access these documents at www.unitedhealthgroup.com to learn more about our corporate governance
practices. We will also provide copies of any of these documents without charge upon written request to the
Company's Secretary to the Board of Directors. Our key corporate governance practices are highlighted below.
17
Audit
1
Board of
Directors
Principles of Governance
Our Certificate of Incorporation and Bylaws, together with Delaware law and NYSE and SEC rules, govern the
Company. Our Principles of Governance set forth many of the practices, policies and procedures that provide the
foundation for our commitment to strong corporate governance. The policies and practices covered in our Principles
of Governance include shareholder rights and proxy voting; structure, composition and performance of the Board of
Directors; stock ownership and retention requirements; Board of Directors operation; individual director
responsibilities; and Board committees. Our Principles of Governance are reviewed at least annually by our
Nominating Committee and are revised as necessary.
Code of Conduct: Our Principles of Ethics & Integrity
The Code of Conduct: Our Principles of Ethics & Integrity is posted on our website and covers our principles and
policies related to business conduct, conflicts of interest, public disclosure, legal compliance, reporting and
accountability, corporate opportunities, confidentiality, fair dealing and protection and proper use of Company
assets. Any waiver of the Code of Conduct for the Company's executive officers, senior financial officers or
directors may be made only by the Board of Directors or a committee of the Board. We will publish any
amendments to the Code of Conduct and waivers of the Code of Conduct for an executive officer or director on our
website.
Compliance and Ethics
We strongly encourage employees to raise ethics and compliance concerns, including concerns about accounting,
internal controls or auditing matters. We offer several channels for employees and third parties to report ethics and
compliance concerns or incidents, including by telephone or online, and individuals may choose to remain
anonymous in jurisdictions where anonymous reporting is permissible. We prohibit retaliatory action against any
individual who in good faith raises concerns or questions regarding ethics and compliance matters or reports
suspected violations. We train all employees and periodically advise them regarding the means by which they may
report possible ethics or compliance issues and their affirmative responsibility to report any possible issues. In our
2015 employee survey, 97% of employees said they knew what to do if they believed unethical behavior or
misconduct occurred in their work area.
19
•
Assisting the Board and the Company in assuring compliance with and implementation of the Company's
Principles of Governance;
Information
Meeting
5
4 Committee
Matters
Annual
Executive
Compensation
3
Corporate
Governance
2
Other
Coordinating the performance evaluations of the Board and the Board committees in conjunction with the
Committee Chairs and the Nominating Committee;
Recommending outside advisors and consultants, as necessary, who report directly to the Board on Board-
related issues;
Working with the Nominating Committee on the membership of Board committees; and
Kenneth I. Shine, M.D.
Glenn M. Renwick
Rodger A. Lawson
Michele J. Hooper
Stephen J. Hemsley
Robert J. Darretta
Richard T. Burke*
Gail R. Wilensky, Ph.D.
Edson Bueno, M.D.
Director
*
The Board of Directors has established four standing committees: the Audit Committee, the Compensation
Committee, the Nominating Committee and the Public Policy Committee. These committees help the Board fulfill its
responsibilities and assist the Board in making informed decisions. Each committee operates under a written
charter, and evaluates its charter and conducts a committee performance evaluation annually. The following table
identifies the members of each committee as of March 23, 2016:
Board Committees
Directors are expected to attend Board meetings, meetings of committees on which they serve and the Annual
Meeting of Shareholders. All ten directors attended the 2015 Annual Meeting. During the year ended
December 31, 2015, the Board of Directors held ten meetings. All directors attended at least 75% of the meetings
of the Board and any Board committees of which they were members in 2015.
Board Meetings and Annual Meeting Attendance
After considering the results of the risk assessment, management concluded that the level of risk associated with
the Company's enterprise-wide compensation programs is not reasonably likely to have a material adverse effect
on the Company. The results of the risk assessment were reviewed with the Compensation Committee at its
February 2016 meeting. Please see "Compensation Discussion and Analysis" for a discussion of compensation
design elements intended to mitigate excessive risk-taking by our executive officers.
William C. Ballard, Jr.
Ⓒ Chairperson
Member
Financial Expert
4 Committee
Matters
Other
Annual
.
3
Corporate
Governance
Directors
2
1
Board of
Audit
23
Mr. Burke is the Chair of the Board and ex-officio member of the Audit Committee, Compensation Committee
and Public Policy Committee. As an ex-officio member, Mr. Burke has a standing invitation to attend each
Board committee meeting, but does not count for quorum purposes or vote on committee matters.
C
Public Policy
Compensation Nominating
Audit
Other
Information
5
Meeting
4 Committee
Matters
Our Board of Directors oversees management's enterprise-wide risk management activities. Risk management
activities include assessing and taking actions necessary to manage risk incurred in connection with the long-term
strategic direction and operation of our business. Each director on our Board is required to have risk oversight
ability for each skill and attribute the director possesses that is reflected in the collective skills section of our
director skills matrix described in "Proposal 1 · Election of Directors Director Nomination Process Criteria for
Nomination to the Board" above. Collectively, our Board of Directors uses its committees to assist in its risk
oversight function as follows:
Enterprise-Wide Risk Oversight
Risk Oversight
Information
Meeting
5
4 Committee
Matters
•
Other
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
1
Audit
Annual
•
•
-
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
1
Audit
22
22
Our Compensation Committee requested that management conduct a risk assessment of the Company's
enterprise-wide compensation programs. The risk assessment reviewed both cash incentive compensation plans
and individual cash incentive awards paid in 2015 for the presence of potential design elements that could incent
employees to incur excessive risk, the ratio and level of incentive to fixed compensation, the amount of manager
discretion, the level of compensation expense relative to the business units' revenues, and the presence of other
design features that serve to mitigate excessive risk-taking, such as the Company's clawback policy, stock
ownership guidelines, multiple performance measures and similar features. The Compensation Committee also
receives an annual report on the Company's compliance with its equity award program controls.
Enterprise-Wide Incentive Compensation Risk Assessment
Our Board of Directors maintains overall responsibility for oversight of the work of its various committees by
receiving regular reports from the Committee Chairs regarding their work. In addition, discussions about the
Company's strategic plan, consolidated business results, capital structure, merger and acquisition-related activities
and other business discussed with the Board of Directors include a discussion of the risks associated with the
particular item under consideration. Our current Board of Directors' leadership structure separates the positions of
CEO and Chair of the Board. The Board believes that this separation is appropriate for the Company at this time
because it allows for a division of responsibilities and a sharing of ideas between individuals having different
perspectives.
The Public Policy Committee oversees risk associated with the public policy arena, including health care
reform and modernization activities, political contributions, government relations, community and charitable
activities and corporate social responsibility.
The Nominating Committee oversees Board processes and corporate governance-related risk; and
The Compensation Committee oversees risk associated with our compensation practices and plans;
The Audit Committee oversees management's internal controls and compliance activities. The Audit
Committee also oversees management's processes to identify and quantify material risks facing the
Company, including risks disclosed in the Company's Annual Report on Form 10-K. The enterprise risk
management function assists the Company in identifying and assessing the Company's material risks. The
Company's General Auditor, who reports to the Audit Committee, assists the Company in evaluating risk
management controls and methodologies. The Audit Committee receives periodic reports on the enterprise
risk management function. In connection with its risk oversight role, the Audit Committee regularly meets
privately with representatives from the Company's independent registered public accounting firm and the
Company's CFO, General Auditor and Chief Legal Officer;
5
Meeting
Executive
Compensation
Audit Committee
Information
Meeting
5
4 Committee
Matters
Other
Annual
Executive
Compensation
Communication with the Board of Directors
3
2
Board of
Directors
Information
25
25
Dr. Wilensky and Dr. Shine are each independent directors under the NYSE listing standards.
Independence:
Corporate
Governance
The Public Policy Committee is responsible for assisting the Board of Directors in fulfilling its responsibilities
relating to the Company's public policy, health care reform and modernization activities, political contributions,
government relations, community and charitable activities and corporate social responsibility. The Public Policy
Committee is also responsible for overseeing the risks associated with these activities.
The Board of Directors values the input and insights of our shareholders and other interested parties and believes
that effective communication strengthens the Board of Directors' role as an active, informed and engaged fiduciary.
The Board of Directors has adopted a Board of Directors Communication Policy to facilitate communication
between shareholders and other interested parties and the Board. Under this policy, the Board of Directors has
designated the Company's Secretary to the Board of Directors as its agent to receive and review communications.
Appropriate matters to raise in communications to the Board include:
•
Being available for communications with shareholders, as needed.
46
26
The policy, including information on how to contact the Board of Directors, may be found in the corporate
governance section of our website, www.unitedhealthgroup.com.
General Board oversight, including accounting, internal controls, auditing and other related matters.
Corporate governance; and
The Secretary to the Board of Directors will not forward to the directors communications received which are of a
personal nature or not related to the duties and responsibilities of the Board of Directors, including, without
limitation, junk mail, mass mailings, business solicitations, routine customer service complaints, new product or
service suggestions, and opinion survey polls. The Secretary to the Board of Directors will forward such complaints
and suggestions received to the appropriate members of the Company's management.
Use of capital;
CEO succession planning process;
⋅
•
•
•
Board succession planning process;
•
Executive compensation;
Meetings Held in 2015: 4
Audit
Committee Members:
Meetings Held in 2015: 3
24
Each of the Compensation Committee members is an independent director under the NYSE listing standards
and the SEC rules, a non-employee director under the SEC rules and an outside director under the Internal
Revenue Code of 1986 (the "Internal Revenue Code").
Independence:
Gail R. Wilensky, Ph.D. (Chair), Edson Bueno, M.D. and Kenneth I. Shine, M.D.
Primary Responsibilities:
Meetings Held in 2015: 5
Rodger A. Lawson (Chair), William C. Ballard, Jr. and Gail R. Wilensky, Ph.D.
Primary Responsibilities:
Audit
Committee Members:
Each of the Audit Committee members is an independent director under the NYSE listing standards and the
SEC rules. The Board of Directors has determined that Messrs. Renwick and Darretta and Ms. Hooper are
"audit committee financial experts" as defined by the SEC rules.
Independence:
The Audit Committee has responsibility for the selection and retention of the independent registered public
accounting firm and assists the Board of Directors by overseeing financial reporting and internal controls and
public disclosure. The Audit Committee reviews and assesses the effectiveness of the Company's policies,
procedures and resource commitment in the areas of compliance, ethics, privacy and data security, by
interacting with personnel responsible for these functions. The Audit Committee also oversees management's
processes to identify and quantify material risks facing the Company. The Audit Committee establishes
procedures concerning the receipt, retention and treatment of complaints regarding accounting, internal
accounting controls and auditing matters. The Audit Committee operates as a direct line of communication
between the Board of Directors and our independent registered public accounting firm, as well as our internal
audit, compliance and legal personnel.
Primary Responsibilities:
Glenn M. Renwick (Chair), Robert J. Darretta and Michele J. Hooper
Committee Members:
Meetings Held in 2015: 10
Compensation Committee
Board of
The Compensation Committee is responsible for overseeing our policies and practices related to total
compensation for executive officers, the administration of our incentive and equity-based plans and the risk
associated with our compensation practices and plans. The Compensation Committee also establishes our
employment arrangements with our CEO and other executive officers, conducts an annual performance review
of the CEO, and reviews and monitors director compensation programs and the Company's stock ownership
guidelines.
2
Public Policy Committee
Each of the Nominating Committee members is an independent director under the NYSE listing standards.
1
The Nominating Committee's duties include identifying and nominating individuals to be proposed as nominees
for election as directors at each Annual Meeting or to fill Board vacancies, conducting the Board evaluation
process, evaluating the categorical standards which the Board of Directors uses to determine director
independence, and monitoring and evaluating corporate governance. The Nominating Committee also oversees
Board processes and corporate governance-related risk.
Primary Responsibilities:
Michele J. Hooper (Chair), William C. Ballard, Jr. and Richard T. Burke
Committee Members:
Nominating Committee
Information
Independence:
Annual
Meeting
5
4 Committee
Matters
Executive
Compensation
3
Corporate
Governance
Directors
Other
The 2015 non-financial performance measures were based on survey data results and, at target levels,
represented increases over 2014 performance in all categories. These measures were viewed to be important to
longer-term financial success that might not be immediately reflected in annual financial results. The Compensation
Committee was of the view that the breadth of financial and non-financial performance measures for the 2015
annual cash incentive award would motivate executive officers to achieve results that contribute to value creation
for our shareholders on a long-term basis and avoid excessive risks.
•
•
•
Grow medical enrollment in UnitedHealthcare by approximately 900,000;
•
At the beginning of 2015, the Compensation Committee believed that achievement of the annual incentive goals
required substantial performance on a broad range of initiatives contained in the 2015 business plan. These
initiatives included the following:
Marketplace disruption and financial uncertainty related to certain elements of the public exchanges,
including the level of enrollment growth and enrollee health status, risk-adjustment payments, the
transitional reinsurance program, and the availability of funds to support the risk-corridor provision;
•
•
There would not be net favorable development in previously reported medical costs payable estimates;
Health system utilization would increase modestly from the historically low levels experienced over the past
several years; and
There would be continued downward rate pressure in government programs.
•
The 2015 financial performance measures at target level represented year-over-year growth in revenues of
$11.0 billion, or 8.5%; year-over-year growth in operating income of $976 million, or 9.5%; and a year-over-year
increase in operating cash flows of $149 million, or 1.9%. These targets reflected the view that there would be a
continued challenging business environment in 2015, including the following expectations:
•
Annual performance compensation,
variable
Continue to enhance the quality and operations of our government businesses to compensate for continued
expected funding pressures;
Other
Information
EXECUTIVE COMPENSATION
Executive Summary
UnitedHealth Group's compensation program is designed to attract and retain highly qualified executives and to
maintain a strong link between pay and the achievement of enterprise-wide goals. We emphasize and reward
teamwork and collaboration among executive officers, which we believe fosters Company growth and performance,
optimizes the use of enterprise-wide capabilities, drives efficiencies and integrates products and services for the
benefit of our customers and other stakeholders.
In determining 2015 executive compensation, the Compensation Committee considered the Company's strong
growth, operating performance and financial results, all of which were achieved in a challenging economic
environment, as well as individual executive performance. Some of our key business results for 2015 were:
•
•
Context for the 2015 Annual Cash Incentive Plan Performance Goals
36
Further improve our consolidated operating cost ratio after considering the impact of changes in business
mix.
Execute on Optum's growth and alignment initiatives, with major focus areas including care delivery,
technology-enabled services and pharmacy care services; and
Increase the Company's net promoter score and enhance customer service, driving initiatives such as the
deployment of the single point-of-contact Advocate4Me service approach;
Deliver more effective and comprehensive clinical management, and expand the proportion of our network
operating with value-based contracts;
Continue to innovate in commercial products, service and distribution and expand participation in the public
exchanges;
46
Meeting
Information
5
ownership positions
officers and build stock
RSUS to retain executive
executives in building ownership
in the Company
Performance shares to motivate
sustained performance and
growth and potentially assist
•
•
To motivate and retain executive
officers and align their interests with
shareholders through the use of:
Non-qualified stock options to
To provide a base level of cash
compensation for executive officers
To encourage and reward executive
officers for achieving annual
corporate performance goals and
individual performance results
To encourage and reward executive
officers for achieving three-year
corporate performance goals
Employee benefits
Equity awards
Long-term cash incentive awards
Annual cash incentive awards
Base salary
Compensation Element
The compensation program for our named executive officers consists of the following elements:
Overview
Objective
encourage sustained stock price
appreciation
To promote health, well-being and
financial security of employees,
including executive officers;
constitutes the smallest part of total
remuneration
Type of Compensation
Annual compensation, not variable
Revenue*
Weight
1/3
Operating Income*
1/3
Cash Flows from
Threshold
Performance
$134.425 billion
$9.563 billion
$6.97 billion
Target
Performance
$141.5 billion
$11.250 billion
$8.2 billion
Maximum
Performance
$148.575 billion
$12.938 billion
$9.43 billion
Operations*
Stewardship:
1/3
• Customer and
Physician Satisfaction
Employee Engagement
*
Employee Teamwork
2014 results for
customer and
physician
satisfaction and
teamwork;
2 points above
2014 results for
employee
engagement
Other
Information
Elements of our Compensation Program
Meeting
5
2
Board of
Directors
Audit
31
The companies that were included in the 2015 peer group and the four managed care companies are listed at the
end of this Compensation Discussion and Analysis.
At the first quarter meeting, the Compensation Committee determines pay opportunities for each officer
using the market competitiveness assessment from the fourth quarter as a reference point. In addition, the
Compensation Committee takes into consideration the Company's performance against previously
established performance goals, each officer's individual performance, internal equity, the CEO's
recommendations, and other relevant business performance that may not be adequately captured by the
Company and individual officer goals.
At the fourth quarter Compensation Committee meeting, Pay Governance presents an annual review of the
market competitiveness of the Company's executive compensation program for the Company's executive
officers. The review compares the compensation opportunities provided to the Company's executive officers
to peer group companies on a position-by-position basis and on an aggregate basis.
•
•
Once the process is determined and peer group companies are selected, the Compensation Committee generally
uses the data as follows:
The Compensation Committee also considers market data from the four largest publicly traded managed care
companies with which we compete for business, three of which are in the 51-company peer group described
above. However, the Compensation Committee does not use this group of managed care companies as a primary
reference point for benchmarking compensation practices because the Company is substantially larger, more
complex and more diverse than these companies, and because we believe that the Company competes primarily
for talent and capital with other successful large companies across a broader group of industries.
Approximately at the 70th percentile in number of employees.
Approximately at the 60th percentile in earnings from operations; and
•
•
Above the median on a market cap basis;
In the top decile on a revenue basis;
•
This screening process resulted in the 51 companies set forth under "Peer Group and Managed Care Companies"
below. As compared to the peer group, the Company is:
Corporate
Governance
Measure
3
Annual
4 Committee
Matters
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
1
Audit
32
32
When approving compensation decisions, the Compensation Committee reviews comprehensive tally sheet
information for each of our executive officers. These tally sheets are prepared by management and quantify the
elements of each executive officer's total compensation. The tally sheets include a summary of all equity awards
previously granted to each executive officer, the gain realized from past vesting or exercise of equity awards, the
projected value of accumulated equity awards based upon various stock price scenarios, and compensation to be
paid under various potential employment termination scenarios. This is done to effectively analyze the
compensation each executive officer has accumulated to date and to fully understand the amount the executive
officer could potentially accumulate in the future.
Use of Tally Sheets and Wealth Accumulation Analysis
The Compensation Committee has the responsibility to approve and monitor all compensation for our executive
officers. Management recommends appropriate enterprise-wide financial and non-financial performance goals for
use in incentive compensation. Our CEO assists the Compensation Committee by evaluating the performance of
the executive officers that report directly to him and recommending compensation levels for these executive
officers.
Role of Management and CEO in Determining Executive Compensation
Other
Information
Meeting
5
4 Committee
Matters
Executive
Compensation
Add major companies located near UnitedHealth Group's headquarters and primary operating locations.
2015 Performance
Annual cash incentive awards may be paid if our Company meets or exceeds annual performance goals for that
year as determined by the Compensation Committee. In establishing the performance measures for the 2015
annual cash incentive awards, the Compensation Committee sought to align broadly the compensation of our
executive officers with key elements of the Company's 2015 business plan. Development of the Company's 2015
business plan was a robust process that involved input from all of the Company's business units and was reviewed
with the Company's Board of Directors in the fourth quarter of 2014 and the first quarter of 2015. These
performance measures are based on enterprise-wide measures because the Compensation Committee believes
that the named executive officers share the responsibility to support the goals and performance of the Company as
key members of the Company's leadership team. At the target level, the financial performance goals were generally
higher than the 2015 financial outlook presented publicly in December 2014 at the Company's annual investor
conference.
Performance
shares
Annual Compensation
Base Salary
9%
16%
Base salary
Non-qualified
stock options
19%
33%
Annual cash
incentive award
5%
Long-term
cash incentive
award
31%
Performance
shares
72%
Long-term Incentives
12%
Base salary
19%
16%
Restricted
stock units
Restricted
stock units
17%
Non-qualified
stock options
Long-term performance
compensation, variable
Long-term performance
compensation, variable
Annual indirect compensation, not
variable
33
33
Audit
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
5
Meeting
Other
Information
As reflected in the charts below, the mix of total target compensation granted in 2015 to our named executive
officers was heavily weighted towards performance-based and long-term incentive compensation, with long-term
incentive awards making up approximately 70% of total target compensation for our named executive officers.
CEO Compensation Mix
Other NEOS Compensation Mix
17%
Annual cash
incentive award
6%
Long-term
cash incentive
award
69%
650,000
4%
34
=4
Annual Cash Incentive Awards
Audit
1
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Meeting
Information
2015 Annual Incentive Plan Performance Goals
675,000
The following table sets forth the performance measures and goals established, as well as actual 2015
performance results:
7%
800,000
Long-term Incentives
The Compensation Committee generally determines base salary levels for our named executive officers early in the
fiscal year, with changes becoming effective during the first quarter of the fiscal year. In February 2015, following
consideration of 2014 performance evaluations and to reflect increased responsibilities undertaken in connection
with business realignment activities announced in November 2014, the Compensation Committee approved the
following changes to base salary levels for our named executive officers for fiscal 2015. The changes to the base
salary for Mr. Wichmann, Mr. Renfro, Ms. Short and Ms. Wilson were made retroactive to December 1, 2014:
Increase From
2014 to 2015
Name
Stephen J. Hemsley
David S. Wichmann
Larry C. Renfro
Marianne D. Short
D. Ellen Wilson
2015 Base Salary 2014 Base Salary
($)
($)
(%)
1,300,000
1,300,000
0%
1,100,000
900,000
22%
1,100,000
900,000
22%
750,000
Meeting
Limit the list to the largest companies by revenue and market cap to avoid companies of significantly
smaller scope; and
•
Base salary of $1.3 million, which is unchanged since 2006;
.
As discussed in detail below and reflected in the 2015 Summary Compensation Table, in 2015, the Compensation
Committee determined that our CEO, Mr. Hemsley, should receive the following compensation:
The Compensation Committee believes that total compensation for the executive officers listed in the 2015
Summary Compensation Table (the "named executive officers" or "NEOS") should be heavily weighted toward
long-term performance-based compensation, and this was the case for 2015. The elements of compensation for
our named executive officers were unchanged from 2014. In 2015, long-term compensation represented
approximately 70% of the total mix of compensation granted to our named executive officers.
Information
Meeting
5
4 Committee
Matters
•
Other
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Audit
22
27
Annual
•
•
Annual cash incentive award of $2.75 million, which represents 106% of his target opportunity;
•
Annual advisory shareholder vote to approve the Company's executive compensation.
•
Prohibition on repricing of stock options and stock appreciation rights without shareholder approval.
Stock ownership guidelines for our executive officers, each of whom complied with the applicable
ownership guidelines as of December 31, 2015. Mr. Hemsley, our CEO, directly owned shares equal to
312 times his base salary as of March 23, 2016.
A stock retention policy that generally requires executive officers to hold, for at least one year, one-third of
the net shares acquired upon vesting or exercise of any equity award.
A compensation clawback policy that entitles the Board of Directors to seek reimbursement from our senior
executives if they are involved in fraud or misconduct that causes a material restatement, or in the event of
a senior executive's violation of non-compete, non-solicit or confidentiality provisions.
No excise tax gross-ups or executive-only perquisites such as company cars, security systems or financial
planning.
Performance-based compensation arrangements, including performance-based equity awards, that use a
variety of performance measures, with different measures used for annual and long-term plans.
Double-trigger accelerated vesting of time-based equity awards, requiring both a change in control and a
qualifying employment termination, which is our only change in control consideration.
•
•
•
•
•
•
We endeavor to maintain strong governance standards in the oversight of our executive compensation programs,
including the following policies and practices that were in effect during 2015:
Company matching contributions of $142,425 made under the Company's 401(k) plan and Executive
Savings Plan.
A performance-based restricted stock unit opportunity ("performance shares") with a target grant date fair
value of $4.675 million, restricted stock units ("RSUS”) with a grant date fair value of $2.337 million, and
non-qualified stock options with a grant date fair value of $2.337 million; and
Long-term cash incentive award of $922,000 for the 2013-2015 performance period, which represents
above target performance by the Company against pre-set 2013-2015 long-term incentive plan
performance goals;
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for
a reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
2
UnitedHealth Group was named to both the Dow Jones Sustainability World and North America Indices for
the 17th consecutive year.
UnitedHealth Group was the top ranking company in the insurance and managed care sector on Fortune's
2016 "World's Most Admired Companies" list, based on 2015 results. This is the sixth consecutive year
UnitedHealth Group has ranked No. 1 overall in its sector and the seventh year in a row the Company has
been rated No. 1 in its sector for innovation;
engagement and
teamwork;
between threshold
and target for
customer and
physician
satisfaction
The Company's annual incentive plan allows for adjustments to the Company's reported results for the impact
of changes in accounting principles, extraordinary items and unusual or non-recurring gains or losses,
including significant differences from the assumptions contained in the financial plan upon which the incentive
targets were established. Adjustments to reported results are intended to better reflect executives' line of
sight/ability to affect payouts, align award payments with growth of the Company's business, avoid artificial
inflation or deflation of awards due to unusual or non-recurring items in the applicable period and emphasize
the Company's preference for long-term and sustainable growth. In 2015, our revenue results for incentive
plan measurement purposes were decreased to remove the revenues of acquired companies whose
acquisitions were not contemplated when the targets were established.
35
55
Audit
1
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
employee
The direct retention by the Compensation Committee of its independent compensation consultant, Pay
Governance LLC, which performs no other consulting or other services for the Company.
6 points above
2014 results for
employee
engagement
physician
satisfaction and
We repurchased $1.2 billion in stock at an average price of $112.45 per share;
Our annual dividend rate increased to $2.00 per share, paid quarterly, representing a 33% increase over
the annual dividend rate of $1.50 per share paid quarterly since the second quarter of 2014;
Total shareholder return, which is defined as the increase in stock price, together with dividends paid, was
18% in 2015 and 125% over the 2013-2015 time period;
•
•
•
•
Return on equity exceeded 17% in 2015;
•
Adjusted earnings per share² increased 7% to $6.45 per share from $6.04 per share in 2014;
Operating earnings increased 7% year-over-year to $11.0 billion, and net earnings attributable to
UnitedHealth Group common shareholders remained strong at $5.8 billion and were supported by cash
flows from operations of $9.7 billion;
Revenues increased 20% to $157.1 billion from $130.5 billion in 2014;
•
•
4 points above
2014 results for
employee
engagement
Actual 2015
Performance
$144.519 billion
$10.760 billion
$8.948 billion
4 points above At 2015 target for
2014 results for
customer and
teamwork;
•
28
1
Corporate
Governance
2
Board of
Directors
1
Audit
50
30
At the request of the Compensation Committee, Pay Governance conducts an annual review of the Company's
compensation peer group. This review ensures that the peer group companies remain appropriate from a business
and talent perspective and occurs at the second quarter Compensation Committee meeting because recent
financial and compensation data are generally available.
3
In general, the Compensation Committee's goal is to achieve total compensation for the named executive officers
as a group that falls within a range of the 50th to 75th percentiles of the market data for our peer group (as
discussed below) if paid at target. Target total compensation of our named executive officers as a group in 2015,
consisting of base salary, target annual cash incentive award, target long-term cash incentive award and the grant
date fair value of equity awards (including performance shares at target), resulted in a target compensation
opportunity for our named executive officers in the aggregate between the 50th and the 75th percentiles of the
market data for our peer group. The Compensation Committee believes this range is an appropriate reflection of
the Company's size, complexity and relative performance over the past several years. The following briefly
summarizes the processes followed by the Compensation Committee to select competitive compensation
benchmark data and how the Compensation Committee uses this data.
Competitive Positioning
The Compensation Committee retains a separate independent compensation consultant, Jon Weinstein of Pay
Governance LLC, to advise the Compensation Committee on executive and director compensation matters, assess
total compensation program levels and program elements for executive officers and evaluate competitive
compensation trends. Pay Governance does not provide any other services to the Company and does not perform
any work for management. The Compensation Committee has assessed the independence of Mr. Weinstein and of
Pay Governance, specifically considering, in accordance with SEC rules, whether Mr. Weinstein and Pay
Governance had any relationships with the Company, our officers or our Board members that would impair their
independence. Based on this evaluation, the Compensation Committee concluded that Mr. Weinstein's and Pay
Governance's work for the Compensation Committee does not raise any conflict of interest.
The Compensation Committee's Use of an Independent Compensation Consultant
In addition, in making compensation decisions, the Compensation Committee considers the results of the
Company's annual shareholder advisory votes approving the Company's executive compensation. Since our
inaugural vote in 2011, more than 95% of the votes cast have been in favor of the Company's executive
compensation at each of our annual meetings. The Compensation Committee believes these shareholder votes
indicate strong support for the Company's executive compensation program.
Other
Information
Meeting
5
4 Committee
Matters
2 points above
2014 results for
customer and
physician
satisfaction and
teamwork;
Executive
Compensation
Annual
Other
Professional Services (e.g., consulting, accounting)
•
Financial Services
•
Pharma/Biotech/Life Sciences
.
Technology
•
Insurance
•
Health care
•
All U.S. publicly traded companies in the following industries as the starting point:
•
The Compensation Committee uses the following methodology, which formulates a peer group focused on the
industries reflected in the prior career experience of approximately 240 of the Company's senior leaders:
Information
Meeting
5
4 Committee
Matters
Annual
Executive
Compensation
3
Corporate
Governance
Attract, motivate and retain highly qualified executive officers.
•
Reward performance that advances our mission of helping people live healthier lives and helping to make
the health system work better for everyone.
Align the economic interests of our executive officers with those of our shareholders.
•
We seek to attract and retain highly qualified executives and establish a strong pay-for-performance alignment by
linking senior management compensation to enterprise and individual performance goals. The primary objectives of
our executive compensation program are to:
Philosophy and Objectives of our Compensation Program
Compensation Discussion and Analysis
Matters
Other
Information
Meeting
5
4 Committee
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
•
Audit
Reward performance that emphasizes teamwork and close collaboration among executive officers while
also recognizing individual performance.
Reward performance that supports the Company's values.
2
Board of
Directors
Audit
29
29
The Compensation Committee oversees the Company's policies and philosophy related to total compensation for
executive officers. The Compensation Committee approves the compensation for the named executive officers
based on its own evaluation, input from our CEO (for all executive officers except himself), internal pay equity
considerations, the tenure, role and performance of each named executive officer, input from its independent
consultant and market data.
Role of the Compensation Committee
Determination of Total Compensation
Standard benefits and very limited perquisites. We provide standard employee benefits and very limited
perquisites to our executive officers. We generally do not have any "executive-only" benefits or perquisites,
which we believe is appropriate in our culture and does not impact our ability to attract and retain top
executive talent.
Reward long-term growth and focus management on sustained success and shareholder value creation.
Compensation of our executive officers is heavily weighted toward long-term equity awards. These awards
encourage sustained performance and positive shareholder returns.
Enhance the long-term value of the business. Our incentive compensation design and the performance
measures we select encourage executive officers to focus on enhancing the longer-term value of the
Company and avoid excessive risk-taking.
Pay-for-performance. A substantial portion of the total compensation of our executive officers is earned
based on achievement of enterprise-wide goals that affect shareholder value.
•
•
.
Our Compensation Committee uses the following principles to implement our compensation philosophy and achieve
our executive compensation program objectives:
Compensation Program Principles
Foster an entrepreneurial spirit that reflects innovative thinking and action and effective and accountable
management, and leverages the ingenuity of our employees.
•
•
5
The Compensation Committee believes that total compensation for the named executive officers should be heavily
weighted toward long-term performance-based compensation, but it does not target a specific mix of annual and
long-term compensation or cash and equity compensation and does not formulaically set compensation amounts.
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
1
Audit
4 Committee
Matters
Target
Award Value
(% of Salary)
($)
Actual
Award Paid
($)
2,600,000
200%
Percentage
2,750,000
(% of Target)
D. Ellen Wilson
Stephen J. Hemsley
Larry C. Renfro
David S. Wichmann
106%
Name
Paid
Award
Target
2015 Annual Cash Incentive Awards
In 2015, the Compensation Committee evaluated the Company's 2015 performance against the performance goals,
overall business results, economic conditions, and individual performance objectives, and exercised its discretion to
adjust the 2015 annual cash incentive awards such that they represented between 106% and 148% of the targets
set at the beginning of 2015 for named executive officers. The target percentages for annual cash incentive awards
to our named executive officers and the actual 2015 annual cash incentive awards paid are set forth in the table
below. An explanation of how the individual amounts were determined follows the table.
Other
Information
Marianne D. Short
185%
185%
3,000,000
Board of
Directors
88
38
Mr. Wichmann's individual performance considerations included assumption of the role of President of
UnitedHealth Group and oversight leadership of UnitedHealthcare's businesses in addition to his Chief
Financial Officer responsibilities; continued growth at UnitedHealthcare; strategic leadership of the
Company's significant merger and acquisition agenda; leadership in developing new business platforms
addressing multibillion dollar growth opportunities; developing and implementing more modern and
engaging approaches to serving care providers and consumers through intuitive technologies;
enterprise-wide technological advancement and simplification initiatives; expanded development of global
businesses and operations; and continued balance sheet, cash flow and capital management disciplines.
Mr. Renfro's individual performance considerations included assumption of the role of Vice Chair of
UnitedHealth Group in addition to his responsibilities as CEO of Optum; significant progress towards the
multi-year "One Optum" strategic direction, related development of large-scale business partnerships and
continued growth; related organizational and operational simplification initiatives; recruitment of high level
senior talent from nontraditional sources to strengthen and diversify the Optum leadership team; successful
large scale integration activities focused on the care delivery business; and realization of significant year
one synergies in the ongoing integration of the Catamaran acquisition.
For Mr. Hemsley, the Compensation Committee coordinates a formal performance evaluation by all
non-management directors. The 2015 performance evaluation focused on the following areas: strategic
focus; leadership and organization effectiveness; vision and values; corporate reputation; stakeholder
relations; Board relations; and overall performance. The Compensation Committee concluded that
Mr. Hemsley's performance was outstanding and distinctive in each category. Mr. Hemsley's annual bonus
award reflects a downward adjustment to the Compensation Committee's recommended award amount
pursuant to a request from Mr. Hemsley.
•
.
•
In determining the 2015 annual cash incentive award amounts, the Compensation Committee took into account the
Company's performance against the 2015 annual performance goals set forth in the table above, business results
described under "Context for the 2015 Annual Cash Incentive Plan Performance Goals" and a qualitative
assessment of individual performance and accomplishments. Individual factors considered are as follows:
148%
2,035,000
1,000,000
100%
141%
1,125,000
800,000
100%
147%
3,000,000
2,035,000
Meeting
147%
675,000
5
Corporate
Governance
Annual
2
1
Board of
Audit
1
2
Directors
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
5
Meeting
Other
Information
The target percentages for long-term cash incentive awards to our named executive officers and the actual
long-term cash incentive awards paid for the 2013-2015 performance period are set forth in the table below:
Long-Term Cash Incentive Award
Name
Stephen J. Hemsley
David S. Wichmann
Larry C. Renfro
Directors
Corporate
Governance
3
Executive
Compensation
Executive
Compensation
3
Audit
2
Audit
Board of
Directors
1
Audit
37
34
4 Committee
Matters
The target opportunities established for the named executive officers are intended to increase collaboration,
teamwork and accountability across the enterprise, to recognize the skills and versatility of each executive officer
and to reflect relative contributions to the success of the overall enterprise. At the end of the fiscal year, the
Compensation Committee reviews the Company's achievement of the performance goals set at the beginning of
the year and determines annual cash incentive awards based on such performance. In determining these awards,
the Compensation Committee has the ability to use its discretion to increase or decrease the actual awards made
in view of actual performance, individual contributions and overall business and market conditions.
Determination of 2015 Annual Cash Incentive Award Opportunities
While the Company uses defined performance measures and weightings to determine an overall funding level for
the Company's bonus pool, individual annual cash incentive awards are not purely formulaic. In determining the
amount of the actual annual incentive award to be paid, the Compensation Committee considers the CEO's
recommendations for executive officers, the business performance underlying each of the performance measures,
macroeconomic factors disproportionately impacting business performance, individual executive performance,
market positioning, teamwork and related matters. The Compensation Committee retains discretion to pay an
annual incentive award that is higher or lower than the performance level achieved based on these considerations
if threshold performance is achieved on any performance measure. However, the overall pool cannot be exceeded.
Non-financial performance measures were at target levels except for customer and physician satisfaction, which
was between threshold and target performance levels. Adjusted earnings per share increased 7% in 2015, and the
Company's total shareholder return was 18%, reflecting continued successful performance in an uncertain
environment.
Revenues were significantly above target levels even after excluding revenues from acquisitions that were not
contemplated when targets were established. Operating income for 2015 was below target after excluding the
income from acquisitions that were not contemplated when the targets were established. This shortfall to target can
be primarily attributed to the performance of the Company's individual health insurance exchange products, both for
2015 results and due to a reserve established in 2015 for anticipated 2016 losses. Cash flows from operations for
2015 were significantly above target due to improved working capital related principally to the Company's strong
growth.
With respect to these initiatives, the Company significantly exceeded its enrollment targets, adding 1.4 million new
members, due in part to a significant increase in exchange participation and enrollment. UnitedHealthcare
significantly improved its Medicare Star ratings and Optum achieved its combined revenue and earnings growth
projections. In addition, the amount of medical spend covered under value-based arrangements increased to
$45 billion, the consolidated operating cost ratio decreased to 15.5%, and the Company achieved or made
substantial progress on all of the other initiatives listed above.
Other
Information
Meeting
5
4 Committee
Matters
Annual
At the beginning of each year, the Compensation Committee approves an “annual cash incentive target
opportunity" for each executive officer as a percentage of the executive officer's base salary.
2
Annual
3
Board of
Directors
1
Audit
40
40
A continued movement to managed care in state-based Medicaid programs and faster than anticipated
enrollment of individuals who became eligible with the expansion of Medicaid in 2014;
Factors that positively or negatively influenced our results subsequent to the approval of the long-term business
plan in early 2013 included:
To achieve maximum performance for both the long-term cash incentive plan and the performance share plan, the
Company would have to achieve cumulative three-year earnings per share ("EPS") performance of $18.24 and an
average return on equity ("ROE") of 18.5%. These maximum performance levels corresponded to a compound
annual growth rate in EPS of 8.6% over the three-year period, with EPS growth in the 5% to 6% range in 2013,
6% to 7% in 2014, and over 14% in 2015, reflecting sequestration in 2013 and the commencement of the insurer's
fee in 2014. The Company had a compound annual EPS growth rate of 4.4% over the three-year performance
period. The resulting cumulative EPS of $17.21 and accompanying ROE of 17.6% were both between the target
and maximum performance levels.
Effective cross-enterprise collaboration among various business units for the benefit of customers and our
overall reputation and performance.
•
Ongoing improvements to our consolidated operating cost ratio on a comparable business mix basis; and
Development and expansion of the Optum Pharmacy Care Services platform and capabilities, including
successful insourcing of the UnitedHealthcare commercial business;
Continued growth and alignment of the Optum businesses, driving distinctive revenue, margin and earnings
performance;
Continue to enhance the quality and operations of our government businesses to compensate for continued
expected funding pressures;
Delivery of more effective and comprehensive clinical management;
An expectation that medical cost trends would be consistent with historical levels and that there would not
be net favorable development in previously reported medical cost payable estimates;
Continued downward rate pressure in government businesses;
Commercial fee-based enrollment growth of over 4 million, including 3 million enrollees resulting from the
implementation of the Company's TRICARE contract;
•
•
•
2
Corporate
Governance
3
Executive
Compensation
41
11
For the 2013-2015 performance period, the target opportunity for each executive officer was 50% of base salary,
and the maximum cash incentive award that an executive officer could earn was set by the Compensation
Committee to be equal to two times the applicable long-term cash incentive target opportunity. In choosing this
target opportunity, the Compensation Committee believed it was important to provide the same relative target
opportunity to all of the named executive officers to increase collaboration, teamwork and accountability across the
enterprise and to recognize the skills and versatility of each executive officer.
At the beginning of each three-year performance period, the Compensation Committee approves a "long-term cash
incentive target opportunity” for each executive officer as a percentage of the executive officer's average base
salary over the performance period. At the end of a performance period, the Compensation Committee reviews the
Company's achievement of the performance goals set at the beginning of the performance period and determines
long-term cash incentive awards based on such performance. In determining these awards, the Compensation
Committee has the ability to use its discretion to increase or decrease the actual awards in view of actual
performance, individual contributions and overall business and market conditions.
2013-2015 Long-Term Cash Incentive Awards
Similar to the annual incentive plan, the Company's long-term incentive plan allows for adjustments to the
Company's reported results in determining long-term incentive plan awards, namely adjustments that account for
the impact of changes in accounting principles, extraordinary items and unusual or non-recurring gains or losses.
No adjustments were made to the Company's financial results in determining long-term incentive award and
performance share payout levels for the 2013-2015 performance period.
Greater than anticipated downward rate pressure in Medicare Advantage payment rates received from the
federal government.
Significant devaluation of the Brazilian Real against the U.S. Dollar; and
•
Charges taken in 2015 to establish reserves for anticipated future losses for individual health insurance
exchange products and for a new state Medicaid managed care plan;
•
⋅
•
Delayed implementation of the employer mandate, originally scheduled to become effective in 2014;
Continued relatively favorable medical cost trend experience over the three-year period;
Other
Information
•
•
Meeting
5
4 Committee
Matters
Annual
Significant losses in individual health insurance exchange products in 2015;
•
•
•
$17.21
Actual
2013-2015
Performance
Maximum
Performance
$18.24
18.5%
Threshold
Target
Weight Performance Performance
50% $15.89
$16.87
50%
14.5%
16.5%
Cumulative Earnings Per Share
Return on Equity
Performance Measure
2013-2015
The long-term cash incentive award and performance share programs create a financial incentive for achieving or
exceeding three-year financial goals for the enterprise. The earned long-term cash incentive award and
performance shares for the 2013-2015 performance period were based on achieving the following performance
results versus the pre-set goals:
2013-2015 Long-Term Cash Incentive and Performance Share Goals and Context
Long-Term Awards
17.6%
Long-term incentive compensation, consisting of the long-term cash incentive program and equity awards,
represents the largest portion of executive officer compensation. This combination of long-term incentives provides
a compelling performance-based compensation opportunity, aids in aligning and retaining the senior management
team and accelerates the optimization of business unit capabilities across the enterprise.
The Compensation Committee did not make specific assessments of, quantify or otherwise assign relative
weightings to the factors listed above as it reached its decisions with respect to any of the named executive
officers. See the 2015 Summary Compensation Table and other related compensation tables below for details
regarding 2015 total compensation.
Ms. Wilson's individual performance considerations included her strong leadership as a UnitedHealth Group
executive in general; assumption of additional enterprise responsibilities as part of the Office of the Chief
Executive; leadership of the Human Capital department; talent management and development activities;
leadership in succession planning and executive recruiting matters; helping achieve record high levels of
employee engagement; and strengthening the enterprise compensation and benefits programs.
Ms. Short's individual performance considerations included her strong leadership as a UnitedHealth Group
executive in general; assumption of additional enterprise responsibilities as part of the Office of the Chief
Executive; leadership of the legal department; oversight of enterprise-wide compliance and privacy matters;
successful reincorporation of the Company in Delaware; participation in cost management initiatives; and
distinctive leadership and judgment in ongoing litigation and business matters.
•
Other
Information
Meeting
5
4 Committee
Matters
Marianne D. Short
Executive
Compensation
Long-Term Incentive Compensation
Corporate
Governance
The performance measures and goals for the 2013-2015 performance period were established during the first
quarter of 2013 based on the Company's long-term business plan. The first year of the long-term business plan
was based on the Company's 2013 business plan. Subsequent years were based on assumptions and growth
initiatives developed in conjunction with the Company's business units and reviewed by the Board of Directors. Due
to uncertainty of the financial impact of U.S. Congressional activities at the time, the Company's long-term business
plan specifically excluded the impact of sequestration (federal budget cuts arising from the Budget Control Act of
2011). The financial impact of sequestration was therefore excluded from the initial targets set for the 2013-2015
long-term cash incentive and performance share programs. For consistency with the actual results, the targets
used for determining payouts under these programs incorporate the impact of sequestration.
Audit
•
Commercial risk-based enrollment declines in 2013 and 2014, followed by modest growth in 2015 from
expansion in new and existing markets, products, services and distribution;
Medicare, Medicaid and international enrollment growth in all years, including significant growth in 2014
from Medicaid expansion;
•
•
-
Modest economic growth, with a gradual increase in interest rates and a stable Brazilian Real — U.S.
Dollar exchange rate;
•
Other key assumptions and elements of the long-term business plan were:
Information
39
Meeting
4 Committee
Matters
Other
Annual
Executive
Compensation
3
Corporate
Governance
Directors
2
1
Board of
5
D. Ellen Wilson
Board of
(% of 3-Year
Equity Awards — 2015
The aggregate number of shares subject to equity awards made in 2015 for all employees was approximately 1%
of the Company's shares outstanding at the end of 2015.
The Company does not pay dividend equivalents on performance shares granted to employees. Unvested shares
of RSUs receive dividend equivalents, which are subject to the same terms as the RSUs and will be forfeited if the
underlying RSUs do not vest. The determination to pay dividend equivalents on RSUs was made after considering
market practices.
The Compensation Committee's equity award policy requires that all grants of equity be made at set times. We do
not have a specific program, plan or practice to time equity compensation awards to named executive officers in
coordination with our release of material information.
Awards of equity-based compensation to our executive officers serve the purposes described above under
"Long-Term Incentive Compensation." The Compensation Committee determined that equity-based compensation
for 2015 should include grants of performance shares, RSUs and non-qualified stock options to achieve balance
and effectiveness in our equity-based compensation and to align the interests of our executive officers and our
shareholders. Performance share grants were selected to ensure a strong pay-for-performance alignment of the
Company's compensation program with shareholder interests. The Compensation Committee's decision to grant
performance shares was informed, in part, by past discussions held between the Company and certain of its
shareholders regarding the merits of performance shares in a pay-for-performance executive compensation
program. RSU grants were selected because they are full value shares with time vesting and, as such, provide
added retention value. Non-qualified stock options were selected because they have value only if the Company's
stock price increases and, as such, provide incentives for sustained long-term stock appreciation.
Equity Award Practices
Equity Awards
Information
Meeting
5
4 Committee
Matters
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Audit
42
Ms. Wilson did not receive performance shares as part of her 2013 equity grant because she was not an executive
officer at that time.
In February 2015, the Compensation Committee granted the following target number of performance shares, RSUs
and stock options to our named executive officers:
Name
Stephen J. Hemsley
David S. Wichmann
11,070
34,375
7,113
14,225
73,185
15,142
30,284
73,185
15,142
30,284
D. Ellen Wilson
103,678
42,902
(#)
(#)
(#)
Annual
Stock Option
Award
Annual
RSU
Award
Target Number
of Performance
Shares
D. Ellen Wilson
Marianne D. Short
Larry C. Renfro
21,451
5,535
140%
34,856
2,503
50%
50%
50%
2,503
1,959
1,439
658,333 1,316,666 922,000 140%
490,481 980,962 686,700 140%
490,481
383,974 767,948 537,600 140%
282,051 564,102 394,900 140%
980,962 686,700 140%
The primary factor considered by the Compensation Committee in the determination of the long-term cash incentive
award amounts was achievement of 2013-2015 long-term incentive plan EPS and ROE between target and
maximum goals. Ms. Wilson, who became Executive Vice President, Human Capital in May 2013, received a
prorated payout of the 2013-2015 long-term cash incentive award.
2013-2015 Performance Share Awards
The use of performance shares as a component of the overall equity awards granted was based upon the
Compensation Committee's desire to encourage superior performance and build executive ownership; consideration
of competitive market data; the value of utilizing a balanced system to facilitate prudent decision-making and
mitigate risk; and conversations with shareholders about the desirability of this type of equity award as a
component of a pay-for-performance program. The actual shares that were earned for the 2013-2015 performance
period were above target due to the Company's strong ROE and earnings growth performance and are set forth in
the table below as well as reflected in the 2015 Option Exercises and Stock Vested table:
Long-Term Performance Shares
Name
(#)
Target
Percentage
Threshold Target
Shares Shares
(#)
Maximum
Shares
(#)
Actual
Shares Paid
Paid
Award
(% of
(#)
Target)
50%
3,359
50%
Target)
17,428
89
Marianne D. Short
140%
54,899
78,426
39,213
Larry C. Renfro
140%
54,899
24,400
78,426
200
David S. Wichmann
140%
91,496
130,708
65,354
333
Stephen J. Hemsley
($)
($)
39,213
26,751
200
43
Our annual cash bonus program includes a variety of financial and non-financial measures that require
substantial performance on a broad range of initiatives;
•
•
•
•
Our compensation programs are balanced, focused on long-term pay-for-performance, allow for discretion, and are
overseen by an independent Compensation Committee. The Compensation Committee believes that the design of
the compensation program for our executive officers does not encourage excessive or unnecessary risk-taking, as
illustrated by the following list of features:
Consideration of Risk in Named Executive Officer Compensation
Information
Meeting
5
4 Committee
Matters
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
1
Audit
45
Our equity awards are delivered through a balanced mix of performance shares, RSUs and stock options
to encourage sustained performance over time;
We have stock ownership guidelines for our executive officers;
We generally require executive officers to hold, for at least one year, one-third of the net shares acquired
upon vesting or exercise of any equity award granted; and
We have a clawback policy that entitles the Board of Directors to seek reimbursement from any executive
involved in fraud or misconduct causing a restatement of financials, or violation of certain employment
agreement provisions, including any non-compete, non-solicit or confidentiality provisions. The executive
would be required to reimburse the Company the entire amount of a bonus paid, not just the amount that
would not have been earned had the executive received a lower award based on the restated earnings.
Threshold
Award
The grant date fair values and terms of these equity awards are discussed in the 2015 Grants of Plan-Based
Awards table.
Target Maximum
Actual
Paid
Award
Award
Award
Award
Average
45
Value
Value
Paid
(% of
Base Salary)
($)
($)
46
46
Internal Revenue Code Section 162(m) imposes a $1 million corporate deduction limit for compensation to the
Company's CEO and its three other highest-paid executive officers (other than the CFO) employed at the end of
the year, unless the compensation is "performance-based," as defined in Section 162(m), and provided under a
plan that has been approved by the shareholders. As part of the federal health care reform legislation enacted in
2010, Section 162(m) was revised as it pertains to compensation paid by health insurers, including the Company.
Starting in 2013, an annual tax deduction limit of $500,000 per person applies to compensation that we pay to any
of our employees and certain service providers, regardless of whether such compensation is deemed performance-
based under Section 162(m) or is provided pursuant to a shareholder-approved plan. Any outstanding stock options
and SARS that were granted prior to 2010 are not subject to the tax deduction limitation.
Accounting and Tax Considerations
Value
The Compensation Committee plans to review our clawback policy and revise it as necessary to comply with any
forthcoming SEC rules implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act.
In addition, our Compensation Committee retains discretion to adjust compensation for quality of performance,
adherence to Company values and other factors.
Potential Impact on Compensation from Executive Misconduct/Compensation Clawbacks
Executive Stock Ownership Guidelines and Stock Retention Policy
Other Compensation Practices
The Company has a policy of entering into employment agreements with each of our named executive officers.
These employment agreements are described in greater detail in “Executive Employment Agreements."
Employment Agreements and Post-Employment Payments and Benefits
We do not believe that providing generous executive perquisites is either necessary to attract and retain executive
talent or consistent with our pay-for-performance philosophy. Therefore, other than the benefits described above,
we do not provide perquisites such as excise tax gross-ups, company automobiles, security services, private jet
services, financial planning services, club memberships or apartments to our executive officers. We prohibit
personal use of corporate aircraft by any executive officer unless the Company is reimbursed for the full
incremental cost to the Company of such use. Because there is essentially no incremental cost to the Company,
we permit an executive officer's family member to accompany the executive officer on a business flight on
Company aircraft provided a seat is available.
Perquisites
In addition to generally available benefits, our executive officers are eligible to receive supplemental long-term
disability coverage equal to 60% of base salary and all of our named executive officers, other than Mr. Hemsley,
receive supplemental group term life insurance coverage of $2 million. Executive officers are also eligible to
participate in our non-qualified Executive Savings Plan. See the 2015 Non-Qualified Deferred Compensation table
for additional information regarding contributions, earnings and distributions for each named executive officer under
the Executive Savings Plan. Our Executive Savings Plan does not provide for guaranteed or above-market interest.
As part of our continued focus on the community, the Company implemented an Executive Board Service Matching
Gift Program. This program is available to approximately 16,500 employees, including the named executive officers.
This program provides for Company matching contributions on a 1:1 or 2:1 basis to certain charitable and nonprofit
organizations up to a maximum amount of $10,000 per organization and a maximum annual Company match
amount of $40,000 per employee. In order to receive the matching contribution, the employee must serve on the
board of the charitable or nonprofit organization and make an equivalent personal financial contribution.
Benefits
Other Compensation
Meeting
The Compensation Committee believes that executive stock ownership aligns management's interests with those of
shareholders and fosters a long-term outlook, while also mitigating compensation risk. Under our stock ownership
guidelines, each executive officer must beneficially own at least the following amounts of the Company's common
stock within five years of the executive officer's election or appointment as an executive officer:
5
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
If the Board of Directors determines that an executive officer has engaged in fraud or misconduct, the Board of
Directors may take a range of actions to remedy the misconduct, prevent its recurrence and impose such discipline
as would be appropriate, including, without limit: (i) terminating employment and (ii) initiating legal action against
the executive officer. In addition, with respect to our senior executives, including our named executive officers, if
the fraud or misconduct causes, in whole or in part, a material restatement of the Company's financial statements,
action may include (a) seeking reimbursement of the entire amount of cash incentive compensation awarded to the
executive officer, if the executive officer would have received a lower (or no) cash incentive award if calculated
based on the restated financial results; (b) canceling all outstanding vested and unvested equity awards subject to
the clawback policy and requiring the executive officer to return to the Company all gains from equity awards
realized during the 12-month period following the filing of the incorrect financial statements; and (c) seeking
reimbursement of the entire amount of any bonus paid.
1
Audit
4 Committee
Matters
•
Information
•
In general, SEC rules prohibit uncovered short sales of our common stock by our executive officers, including the
named executive officers. Accordingly, our insider trading policy prohibits short sales of our common stock by all
employees and directors. Our insider trading policy prohibits hedging transactions by all directors, executive officers
and employees and requires advance approval of the Compensation Committee of any pledging of common stock
by directors, executive officers and other members of management. Pledges that existed prior to the policy's
adoption in November 2012 have been grandfathered. In 2015, no executive officer or director sought or received
advance approval from the Compensation Committee regarding pledging transactions.
for the CEO, eight times base salary;
Stock options and stock appreciation rights ("SARS") do not count towards satisfying the ownership requirements
under the guidelines, regardless of their vesting status, and performance shares do not count towards satisfying the
ownership requirements until they are vested. Time-based RSUs and restricted stock awards are counted toward
the satisfaction of the ownership requirements. The Compensation Committee periodically reviews compliance with
the ownership requirements. As of March 23, 2016, all of our named executive officers were in compliance with the
ownership requirements, including Mr. Hemsley, who directly owned shares with a value equal to 312 times his
base salary.
Information
Other
Meeting
5
Transactions in Company Securities; Prohibition on Hedging
4 Committee
Matters
Annual
3
Executive
Compensation
Corporate
Governance
Directors
2
1
Board of
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44
for other executive officers who are not direct reports of the CEO, two times base salary.
•
for executive officers who are direct reports of the CEO, three times base salary; and
The Board has established a stock retention policy for executive officers that are subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which includes our named executive officers.
Under this policy, Section 16 officers are required to retain for at least one year one-third of the net shares
acquired upon the vesting or exercise of any equity awards.
RSU Award (4)
2/10/2015
2/10/2015
Stock Option Award (4)
11,070 22,140
||
683,974
2/10/2015
Performance Share Award (4)(5)
675,000 1,350,000
1,449 341,987
2015-17 Long-Term Incentive Award(3)
47
| | | |
554
26,751
1,206,298
603,149
108.97
603,235
*
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation
program necessary for an understanding of the information disclosed in this table.
(1) The actual value to be realized by a named executive officer depends upon the appreciation in value of the
Company's stock and the length of time the award is held. No value will be realized with respect to any stock
option award if the Company's stock price does not increase following the grant date. For a description of the
assumptions used in computing grant date fair value for stock option awards pursuant to FASB ASC Topic
718, see Note 12 to the Consolidated Financial Statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2015. The grant date fair value of each RSU award and targeted
grant date value of each performance share award was computed in accordance with FASB ASC Topic 718
based on the closing stock price on the grant date.
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607,500
2
= = = - - - 5,535 2
Annual Cash Incentive Award (2)
Annual Cash Incentive Award (2)
775,156
60,568
3
=== 15,142 73,185
11
108.97
3,300,047
1,650,024
1,650,322
Marianne D. Short
2015-17 Long-Term Incentive Award (3)
720,000
1,718
800,000 1,600,000
405,449
810,898
Performance Share Award(4)(5)
2/10/2015
RSU Award(4)
2/10/2015
Stock Option Award(4)
2/10/2015
|| 8 ||
60
14,225
| |8 | |
28,450
7,113 34.
34,375
108.97
5
1,550,098
775,104
D. Ellen Wilson
Executive
Compensation
3
4 Committee
Matters
Termination Provisions
For awards prior to 2016, the target number of performance shares
will immediately vest upon a change in control.* For awards
granted in 2016 and going forward, performance shares have
double-trigger vesting at change in control.
If the executive officer is retirement-eligible, upon retirement, the
number of performance shares that are earned at the end of the
performance period based on actual performance, if any, will vest
as if the executive officer had been continuously employed
throughout the entire performance period, provided the executive
officer had served for at least one year of the performance period.
Upon death, disability or termination of employment for Good
Reason or other than for Cause (as these terms are defined in the
award agreement), the executive officer will receive at the end of
the applicable performance period, a pro rata number of
performance shares that are earned, if any, based on the number
of full months employed plus, if applicable, the number of months
for any severance period.
Unless the executive officer is retirement-eligible, award is subject
to earlier termination upon certain events related to termination of
employment.
Unvested award will vest in full upon death or disability.
Unvested award will vest in full if, within two years of a change in
control, an executive terminates employment for Good Reason or is
terminated without Cause (i.e., "double trigger” vesting), as these
terms are defined in the award agreement.
Beginning with performance share awards granted in 2016, unvested awards will vest if, within two years of a change
in control, an executive terminates employment for Good Reason or is terminated without Cause (i.e., "double trigger"
vesting). The number of performance awards that vest will be dependent upon the performance vesting criteria that
have been satisfied.
Except as provided in footnote 4 to the Outstanding Equity Awards at 2015 Fiscal Year-End table with respect to
Mr. Hemsley.
(5) Amounts represent the estimated future number of performance shares that may be earned under our 2011
Stock Incentive Plan at each of the threshold, target and maximum levels. The performance share award will
be paid out in shares of Company common stock. The number of performance shares that the executive
officer will receive will be determined at the conclusion of the 2015-2017 performance period and will be
dependent upon the Company's achievement of a cumulative EPS measure and an average ROE measure
approved by the Compensation Committee. The Compensation Committee has the discretion to reduce the
number of performance shares an executive officer is entitled to receive. The estimated threshold award
represents the number of performance shares that may be awarded if threshold performance is achieved on
one of the performance measures.
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Other
Information
Outstanding Equity Awards at 2015 Fiscal Year-End
The following table presents information regarding outstanding equity awards held at the end of fiscal year 2015 by
our named executive officers.
Option/SAR Awards
Stock Awards
Number of
30,284
•
•
•
•
5
Meeting
Other
Information
(2) Amounts represent estimated payouts of annual cash incentive awards granted under our Executive Incentive
Plan in 2015. The Executive Incentive Plan permits a maximum annual bonus pool for executive officers equal
to 2% of the Company's net income (as defined in the plan) and no executive officer may receive more than
25% of such annual bonus pool. The Compensation Committee has generally limited annual cash incentive
payouts to not more than two times the target amount, and the maximum amounts shown for each named
executive officer equal two times each executive officer's target amount. In order for any amount to be paid,
the Company must achieve approved performance measures of (i) revenue, (ii) operating income, (iii) cash
flow, (iv) consumer, customer and physician satisfaction, (v) employee engagement and (vi) employee
teamwork. The estimated threshold award represents the amount that may be paid if threshold performance is
achieved on each of the performance measures. Once threshold performance is achieved, the Compensation
Committee has the discretion to pay an award. The actual annual cash incentive amounts earned in
connection with the 2015 awards are reported in the 2015 Summary Compensation Table.
(3) Amounts represent estimated future payouts of long-term cash incentive awards granted under our Executive
Incentive Plan in 2015 for the 2015-2017 performance period to be paid in 2018. The Executive Incentive Plan
permits a maximum long-term bonus pool for executive officers equal to 2% of the Company's average net
income (as defined in the plan) during the performance period and no executive officer may receive more than
25% of such long-term bonus pool. The Compensation Committee has limited the long-term cash incentive
payout maximum amount to not more than two times each named executive officer's target amount, which is
reflected in the maximum payout column. In 2015, upon recommendation by management, the Compensation
Committee approved a cumulative EPS measure and an average ROE measure for the 2015-2017 incentive
period, either one of which must be achieved before the threshold amount shown above becomes earned and
payable. Each measure is weighted equally. The Compensation Committee will determine whether the goals
have been achieved at the end of the performance period. The estimated threshold award represents the
amount that may be paid if threshold performance on one of the performance measures is exceeded. Once
threshold performance is achieved, the Compensation Committee has the discretion to pay an award ranging
from 0% up to a maximum of 200% of target. The estimated threshold, target and maximum awards listed in
the table were computed based on participants' estimated average salary over the 2015-2017 performance
period. This three-year average salary was determined using participants' actual 2015 salaries earned and
estimates of salaries for 2016 and 2017.
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5
Meeting
Other
Information
(4) Amounts represent grants under the 2011 Stock Incentive Plan with the terms set forth below. In addition, the
RSUs are eligible to receive dividend equivalents, which are subject to the same terms as the RSUs and will
be forfeited if the underlying RSUs do not vest. No dividend equivalents are paid on performance shares.
*
Award Type and Vesting Terms
Performance Share Award
(3-year performance period
with cliff vesting)
**
RSU Award
(4-year ratable vesting**)
and
Stock Option Award
(4-year ratable vesting)
4 Committee
Matters
1,650,024
1,650,322
Information
| |
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(7) The amount of Mr. Hemsley's supplemental retirement benefit was frozen in 2006 based on his then current
age and average base salary and converted into a lump sum of $10,703,229. As such, there was no increase
in the benefit payable to Mr. Hemsley under his supplemental retirement benefit in fiscal year 2015.
(8) Reflects a sign-on bonus paid to Ms. Short in connection with her joining the Company as an executive
officer.
Corporate
Governance
(b) The Company provides each of Messrs. Wichmann and Renfro and Mses. Short and Wilson a $2 million
face value term life insurance policy. The 2015 annual premiums paid by the Company on behalf of
Mr. Wichmann were less than $10,000.
As permitted by SEC rules, we have omitted perquisites and other personal benefits that we provided to
certain named executive officers in 2015 if the aggregate amount of such compensation to each of such
named executive officers was less than $10,000.
$10,320
$15,840
$15,840
Insurance
Premiums (b)
$10,000
(a) The Company has adopted a policy pursuant to which it will match certain charitable contributions made
by an executive officer if the executive officer also serves on the board of the charitable organization. The
amount included represents a donation to a charitable organization made by the Company under this
policy.
3
Executive
Compensation
Annual
Threshold
($)
Grant
Date
All Other
Stock
Awards:
Number
of Shares
of Stock
Under Equity Incentive
Plan Awards
Estimated Future Payouts
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
Stephen J. Hemsley
Name
The following table presents information regarding each grant of an award under our compensation plans made
during 2015 to our named executive officers for fiscal year 2015.
2015 Grants of Plan-Based Awards*
Number of
Meeting
5
4 Committee
Matters
Other
$ 50,308
Target Maximum
($)
($)
$ 58,731
$130,500
$124,500
Company Matching
Contributions
Under 401(k)
Savings Plan
Company Matching
(6) All other compensation includes the following:
(5) Named executive officers participate in our Executive Savings Plan, which is a non-qualified deferred
compensation plan. The Executive Savings Plan does not credit above-market earnings or preferential
earnings to the amounts deferred, and accordingly, no non-qualified deferred compensation earnings have
been reported. Under the Executive Savings Plan, there are no measuring investments tied to Company stock
performance. The measuring investments are a collection of unaffiliated mutual funds identified by the
Company.
Information
Contributions
Under Executive
Savings Plan
Meeting
4 Committee
Matters
Other
Annual
Executive
Compensation
3
Corporate
Governance
5
Company Matching
Contributions Under
Executive Board
Service Matching
Program(a)
Name
Year
$11,550
2015
D. Ellen Wilson
$11,925
2015
Marianne D. Short
$11,925
2015
Larry C. Renfro
$11,925
2015
David S. Wichmann
$11,925
2015
Stephen J. Hemsley
$124,500
Threshold
(#)
Target
(#)
Maximum
(#)
RSU Award (4)
128
2/10/2015
Performance Share Award(4)(5)
558,333 1,116,666
4,070,000
2/10/2015
2,035,000
2015-17 Long-Term Incentive Award (3)
Annual Cash Incentive Award (2)
Larry C. Renfro
2/10/2015
Stock Option Award (4)
2/10/2015
1,831,500
2,366
Stock Option Award (4)
| | | |│
2/10/2015
15
- - - 15,142 73.185 108.97
60,568
30,284
5
|ཧཱུཾ། | |
21,451
།ཙྪ།།
85,804
--- --- - 103,678 108.97 2.
4,675,031
2,337,515
2,337,939
│༄| |
| |  ྂ | |
| | | |
| | ༅ | |
RSU Award (4)
128
2/10/2015
Performance Share Award (4)(5)
($)(1)
Awards
SAR
or Option/
of Stock
Fair Value
Grant Date
SAR
Awards
($/Sh)
or Grant
Price of
Option/
Exercise
(#)
SAR
Awards:
Number of
Securities
Underlying
Options/
SARS
All Other
Option/
(#)
or Units
Annual Cash Incentive Award (2)
3,300,047
2,340,000 2,600,000 5,200,000
2,790 658,333 1,316,666
558,333 1,116,666
2,366
2015-17 Long-Term Incentive Award (3)
2,035,000 4,070,000
1,831,500
Annual Cash Incentive Award (2)
David S. Wichmann
2/10/2015
Stock Option Award(4)
2/10/2015
RSU Award (4)
42,902
182
2/10/2015
Performance Share Award (4)(5)
2015-17 Long-Term Incentive Award (3)
Number
of
150,000
Securities
Larry C. Renfro
David S. Wichmann
Stephen J. Hemsley
Name
(2) Reflects the vesting of a portion of the RSUs granted. The value realized on vesting was computed based on
the following:
Information
Marianne D. Short
Meeting
4 Committee
Matters
Other
Annual
Executive
Compensation
3
Corporate
Governance
5
D. Ellen Wilson
Date of
Award
Vesting
2/9/2011
$609,722
$109.84
5,551
$907,714
$107.60
8,436
$2,526,986
$107.60
23,485
2/7/2012 2/7/2015
2/6/2013 2/6/2015
2/12/2014 2/12/2015
Value Realized
on Vesting
Market Price
at Vesting
Number of Shares
Acquired on Vesting
Date
2
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55
Option Awards
Number of
Shares
Acquired on
Exercise
(#)
D. Ellen Wilson
Marianne D. Short
Larry C. Renfro
David S. Wichmann
Stephen J. Hemsley
Name
The following table presents information regarding the exercise of stock options during fiscal year 2015 by our
named executive officers and vesting of restricted stock awards held by our named executive officers for fiscal year
2015.
2015 Option Exercises and Stock Vested
(6) Vest 100% at the end of the three-year performance period. The number of performance shares that the
executive officer will receive is dependent upon the achievement of a cumulative EPS measure and an
average ROE measure approved by the Compensation Committee. The number of performance shares
reported above for grants made in 2015 and 2014 is at the target number established by the Compensation
Committee because we currently believe that is the probable outcome of the performance conditions based on
the Company's performance through December 31, 2015.
(5) Vest 100% on February 12, 2017. These RSUs are eligible to and did receive dividend equivalents converted
into additional shares; accordingly, the number of shares shown has been rounded to the nearest whole
share.
(4) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date, other than for
retirement eligible executive officers. A portion of a retirement eligible executive officer's award that otherwise
would have vested on the next specified vesting date is cancelled to pay applicable FICA taxes owed by the
executive officer. The cancellation occurs in the year of grant if the executive officer is retirement eligible
during that year or in the first year the executive officer becomes retirement eligible. The remainder of the
award vests proportionally over the remaining vesting period. Mr. Hemsley is retirement eligible. These RSUs
are eligible to and did receive dividend equivalents converted into additional shares; accordingly, the number
of shares shown has been rounded to the nearest whole share. For more information on RSUs cancelled in
2015, please see the 2015 Option Exercises and Stock Vested table.
Information
Meeting
5
Value
Realized on
2/9/2015
Stock Awards
Number of
Shares
Acquired on
Vesting
(#)
129,957
(1) Computed by determining the market value per share of the shares acquired based on the difference
between: (a) the per share market value of our common stock at exercise, defined as the closing price on the
date of exercise, or the weighted average selling price if same-day sales occurred, and (b) the exercise price
of the stock options.
2,160,865(2)
19,468
1,178,310(4)
16,275
4,136,704(2)(3)
36,112
15,786,538(2)(3)
142,158
15,786,538(2)(3)
142,158
9,404,060(4)
165,000
14,925,534(2)(3)(5)
Value
Realized on
Vesting
($)
Exercise
($)(1)
4 Committee
Matters
63,030
$6,712,065
3,375
$721,996
$107.60
6,710
2/7/2015
$678,428
$107.60
$117.66
11/3/2011 11/3/2015
2/7/2012
2/6/2013 2/6/2015
2/12/2014 2/12/2015
$297,996
$109.84
2,713
$968,292
$107.60
5,766
$363,150
3,617
$109.84
2/6/2013
on Vesting
Value Realized
Period
Market Price
at End of
Performance
Number of
Shares Acquired
on Vesting
Performance
Period
Completion Date
Date of
Award
D. Ellen Wilson
Marianne D. Short
Larry S. Renfro
Stephen J. Hemsley
David S. Wichmann
Name
(3) Also reflects the performance shares earned for the 2013-2015 performance period that ended on
December 31, 2015 because performance targets were met. The value shown as realized on
December 31, 2015 is based on the number of shares earned for the 2013-2015 performance period using
the per share closing market price of our common stock on December 31, 2015, although shares were not
issued until Compensation Committee certification of results on February 9, 2016:
$397,291
8,999
2/6/2015
2/6/2013
2/12/2014 2/12/2015
$446,939
$446,939
$109.84
4,069
2/12/2015
2/12/2014
$544,671
$107.60
5,062
2/6/2015
2/6/2013
$1,624,545
$107.60
15,098
2/7/2015
2/7/2012
2/9/2011
$106.49
2/9/2015
$106.49
$109.84
4,069
2/12/2015
2/12/2014
$544,671
$107.60
5,062
2/6/2015
2/6/2013
$1,624,545
$107.60
15,098
2/7/2015
2/7/2012
$6,712,065
63,030
Other
Annual
Executive
Compensation
53,389(6)
2/12/2014
2/9/2020
33.00
2/12/2014 20,670(4) 2,431,619
5,046,991
6,280,682
42,902(6)
2,447,030
20,801(4)
2/10/2015
Vested ($)(2)
Vested (#)
($)(2)
2/10/2015
2/23/2009 169,683
29.74
2/23/2019
2/12/2024
70.24
37,764(3)
12,587
2/12/2014
2/10/2025
108.97
73,185(3)
2/10/2015
David S. Wichmann
2/6/2013 17,139(4) 2,016,232
1/31/2016
59.42
1/31/2006 200,000
2/12/2014 28,063(5) 3,301,331
Awards:
Market
Value of
Unearned
Shares or
Units That
Have Not
Plan
Incentive
Equity
Exercise/
Shares or
Units of
Stock
Option/
Option/
SAR
Options/
SARS (#)
Unexercised
Options/
SARS (#)
Exercisable
Grant
Name
SAR
Option/
Unexercised
Date of
Underlying
Underlying
Unexercisable
2/6/2013
Grant
Price ($)
2/10/2015
Number of
Unearned
Shares or
Units That
Plan Awards:
Equity
Incentive
Market
Value of
Shares or
Units of
Stock
That Have
Have Not
Not Vested
That
Have Not
Vested (#)
Stock
Award
Grant Date
SAR
Expiration
Date(1)
2/10/2025
2/12/2024
2/6/2023
57.38
49,656(3)
70.24
62,939(3)
2/12/2014 20,979
2/6/2013 49,656
2/9/2010 114,036
103,678(3) 108.97
Stephen J. Hemsley
29,793
29,794(3)
57.38
11,189
19,864
16,275
2/10/2015
2/12/2014
2/6/2013
11/3/2011
D. Ellen Wilson
2/12/2014 14,698(5) 1,729,073
2/6/2013 18,282(4) 2,150,694
2,512,320
21,356(6)
8,268(4) 972,648
1,673,429
14,225(6)
2/10/2015
2/12/2014
2/12/2014
7,225(4) 849,949
2/10/2015
108.97 2/10/2025
70.24 2/12/2024
57.38 2/6/2023
34,375(3)
25,176(3)
26,484(3)
8,392
26,483
26,751(3)
33,568(3)
19,865(3)
2/10/2015
2/12/2014
2/6/2013
108.97 2/10/2025
70.24 2/12/2024
57.38 2/6/2023
46.18 11/3/2021
2/10/2015
3
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(3) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date.
(2) Based on the per share closing market price of our common stock on December 31, 2015 of $117.64.
(1) The expiration date shown is the latest date that stock options/SARs may be exercised. Stock options/SARs
may terminate earlier in certain circumstances, such as in connection with the named executive officer's
termination of employment.
6,856(4) 806,540
2/12/2014 11,024(4) 1,296,863
2/12/2014 14,698(5) 1,729,073
2/6/2013
-
1,302,275
11,070(6)
2/10/2015 5,622(4) 661,372
Securities
Marianne D. Short
2/6/2013
2/10/2015
Larry C. Renfro
150,000
5/2/2006
Directors
5/28/2007
25,000
5/28/2007
6/5/2008 203,642
29.74
113,122
2/23/2009
33.00
76,024
2/9/2010
2/12/2014
10,284(4) 1,209,810
2/6/2013
73,185(3)
37,764(3)
29,794(3)
2/12/2014 44,094(5) 5,187,218
3,768,480
32,034(6)
2/12/2014 12,402(4) 1,458,971
2/12/2014
3,562,610
30.284(6)
2/10/2015 15,381(4) 1,809,421
2/10/2015
2/12/2014 44,094(5) 5,187,218
2/6/2013 10,284(4) 1,209,810
3,768,480
32,034(6)
3,562,610
30,284(6)
15,381(4) 1,809,421
2/10/2015
2/10/2015
2/12/2014 12,402(4) 1,458,971
2/12/2014
2/6/2023
2/9/2020
2/23/2019
33.94 6/5/2018
54.41 5/28/2017
54.41 5/28/2017
48.58 5/2/2016
108.97 2/10/2025
70.24 2/12/2024
57.38 2/6/2023
12,587
29,793
2
Amount of
Long-Term Cash
Incentive Award
Deferred
Board of
William C. Ballard, Jr.
Gail R. Wilensky, Ph.D.
Compensation Committee Interlocks and Insider Participation
During fiscal 2015, Messrs. Ballard and Lawson and Dr. Wilensky served on the Compensation Committee. None
of these persons has ever been an officer or employee of the Company or any of its subsidiaries and has no
interlocking relationships requiring disclosure under applicable SEC rules.
47
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Executive
Compensation
Annual
Other
4 Committee
Matters
5
Rodger A. Lawson (Chair)
The Compensation Committee has reviewed and discussed the above Compensation Discussion and Analysis with
management. Based on its review and discussions, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in the proxy statement and incorporated by
reference into the Company's Annual Report on Form 10-K for the year ended December 31, 2015. This report
was provided by the following independent directors who comprise the Compensation Committee:
Compensation Committee Report
Humana Inc.
Humana Inc.
International Business Machines Corp.
Johnson & Johnson
JPMorgan Chase & Co.
MasterCard Incorporated
McKesson Corporation
Medtronic plc
Merck & Co. Inc.
MetLife, Inc.
Microsoft Corporation
Morgan Stanley
Oracle Corporation
Pfizer Inc.
Procter & Gamble Co.
Prudential Financial, Inc.
Target Corp.
Meeting
The Allstate Corporation
U.S. Bancorp
United Parcel Service, Inc.
Visa, Inc.
Walgreens Boots Alliance, Inc.
Wells Fargo & Company
Managed Care Companies
Aetna Inc.
Anthem Inc.
CIGNA Corp.
The Goldman Sachs Group, Inc.
The Travelers Companies, Inc.
Information
2015 Summary Compensation Table*
The following table provides certain summary information for the years ended December 31, 2015, 2014 and 2013
relating to compensation paid or granted to, or accrued by us on behalf of, our named executive officers.
2,337,939
3,672,000
145,679
14,518,164
2014 1,300,000
7,625,114
1,874,728
($)
3,949,000
14,856,321
2013 1,300,000
5,625,019
1,875,011
3,100,000
173,254
12,073,284
107,479
Gilead Sciences Inc.
Total
($)(5)
Change in
Pension Value
and
Non-Qualified
Deferred
Salary
Bonus
Stock
Awards
Option/SAR
Awards
Name and Principal Position
Compensation
($)(6)
Year ($)(1)
Stephen J. Hemsley
CEO
2015 1,350,000
($)(2)
7,012,546
($)(3)
Non-Equity
Incentive Plan
Compensation
($)(4)
Compensation All Other
Earnings
($)
David S. Wichmann
General Mills, Inc.
FedEx Corporation
Number of
Options
Exercised
Exercise
Date
Date of
Award
D. Ellen Wilson
David S. Wichmann
Name
(4) The value was computed as described in footnote 1 above and was based on the following:
$2,870,416
$117.64
24,400
$6,458,318
$117.64
54,899
12/31/2015
12/31/2015
1
Stock Splits
Since Date
of Award
Market Price
at Exercise
Exercise
Price
5/2/2005 2/17/2015
5/2/2005 2/17/2015
10/31/2005 2/17/2015
11/3/2011
66
56
(5) Also reflects the cancellation on December 16, 2015 of 989 RSUs granted on February 10, 2015 with a value
of $117,523 for the payment of FICA tax liability. The value realized was computed based on a closing stock
price of $118.83 on December 16, 2015.
$46.1800
$118.58
16,275
4/20/2015
$6,458,318
$59.0000
$49.7886
$109.76
2:1
$48.3550
$109.76
2:1
75,000
25,000
65,000
$109.76
$117.64
54,899
12/31/2015
AbbVie Inc.
Aetna Inc.
American Express Co.
American International Group, Inc.
Ameriprise Financial, Inc.
AmerisourceBergen Corporation
Amgen Inc.
Anthem Inc.
Bank of America Corporation
Berkshire Hathaway Inc.
Best Buy Co., Inc.
Biogen Inc.
Bristol-Myers Squibb Company
Abbott Laboratories
Cardinal Health, Inc.
Cisco Systems, Inc.
CVS Health Corporation
Citigroup, Inc.
Eli Lilly and Company
Peer Group
Hewlett-Packard Company
Express Scripts Holding Company
Cargill, Incorporated
General Electric Company
3M Company
Information
2/6/2013
$10,763,589
$117.64
91,496
12/31/2015
Audit
Board of
Directors
Peer Group and Managed Care Companies
2
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Meeting
Corporate
Governance
2015 1,150,000
2/6/2013
2/6/2013
1,650,322
$4,675,031
$9,350,062
$1,650,024
$3,300,047
$6,600,094
$1,650,024
$3,300,047
$2,337,515
$6,600,094
$1,550,098
$3,100,196
$ 603,149
$1,206,298
$2,412,596
See the 2015 Grants of Plan-Based Awards table for more information on stock awards granted in 2015.
(3) The actual value to be realized by a named executive officer depends upon the performance of the
Company's stock and the length of time the award is held. No value will be realized with respect to any award
if the Company's stock price does not increase following the award's grant date or if the executive officer does
not satisfy the vesting criteria.
$ 775,104
The amounts reported in this column for 2015 reflect the aggregate grant date fair value of stock options
granted in 2015 computed in accordance with FASB ASC Topic 718. For a description of the assumptions
used in computing the aggregate grant date fair value, see Note 12 to the Consolidated Financial Statements
included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. These same
assumptions have been used in computing aggregate grant date fair values since fiscal year 2009.
Maximum
Restricted
Stock Units
2
Directors
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
Target
5
Other
Information
(2) The amounts reported in this column reflect the aggregate grant date fair value of the RSUs and performance
shares (at target) granted in 2015, 2014 and 2013 and are computed in accordance with FASB ASC Topic
718, based on the closing stock price on the grant date. The grant date fair value of RSUs granted in 2015
and the grant date fair value of performance shares granted in 2015 if target performance and maximum
performance is achieved are as follows:
Name
Stephen J. Hemsley
David S. Wichmann
Larry C. Renfro
Marianne D. Short
D. Ellen Wilson
Performance Shares
Meeting
1
(4) Amounts reported include both annual and long-term cash incentive awards to our named executive officers
under our 2008 Executive Incentive Plan. The 2015 annual incentive awards, including amounts deferred by
the named executive officers, were the following:
Stephen J. Hemsley
David S. Wichmann
2013-2015
$686,700
Larry C. Renfro
2013-2015
$686,700
Marianne D. Short
2013-2015
$922,000
$537,600
2013-2015
$394,900
49
49
$41,202
Audit
4,950,071
D. Ellen Wilson
Name
Period
2013-2015
Name
Larry C. Renfro
Marianne D. Short
D. Ellen Wilson
Total Amount of
Annual Cash
Incentive Award
Amount of Annual
Cash Incentive
Award Deferred
$2,750,000
$3,000,000
Stephen J. Hemsley
David S. Wichmann
$3,000,000
$165,000
$180,000
$180,000
$ 67,500
$300,000
The long-term cash incentive awards for the 2013-2015 incentive period under our 2008 Executive Incentive
Plan, including amounts deferred by the named executive officers, were the following:
Total Amount of
Long-Term Cash
Incentive Award
$1,125,000
$1,000,000
Board of
8,115,567
48
1,125,003
3,858,526
| | | | | |
144,724
11,581,817
99,499
114,061
12,142,565
152,265
11,589,358
54,540
49,928
12,097,606
9,301,434
Marianne D. Short
2015 832,693
2,325,202
775,156
1,662,600
86,496
5,682,147
3,375,092
892,885
3,643,102
1,124,841
Audit
3,686,700
President and CFO
2014 900,000
6,375,123
1,124,841
3,643,102
2013 892,885
3,375,092
Executive Vice President
and Chief Legal Officer
D. Ellen Wilson
Executive Vice President,
Human Capital
1,125,003
Larry C. Renfro
2015 1,150,000
4,950,071
1,650,322
3,686,700
Vice Chairman and
CEO, Optum
2014
900,000
6,375,123
2,608,526
2014 750,000
2013
1,809,447
Name
(1) Amounts reported reflect the base salary earned by named executive officers in the years ended
December 31, 2015, 2014 and 2013. Amounts reported for 2015, which had one additional pay period, include
the following amounts deferred by the named executive officers under our Executive Savings Plan:
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation
program necessary for an understanding of the information disclosed in this table. Please see "Executive
Employment Agreements" below for a description of the material terms of each named executive officer's
employment agreement.
*
4,591,683
82,178
1,394,900
603,235
701,923
2015
6,027,355
48
65,744
990,384
1,000,017
6,333,656
100,691
1,482,981
749,909
3,250,075
721,154 250,000(8) 3,000,056
Amount
Deferred
Stephen J. Hemsley
David S. Wichmann
Larry C. Renfro
$69,000
$84,231
$81,000
D. Ellen Wilson
2013
Marianne D. Short
$69,000
$49,961
21,216,486
Long-Term Cash Incentive (2)
1,600,000
1,600,000
Annual Cash Incentive (1)
3,487,000
Cash Payments
Insurance Benefits
24,727,514 23,387,514 5,142,222 22,288,708
Total(4)
Acceleration of Equity (3)
1,072,222 1,072,222
21,216,486
4,070,000
4,070,000 4,070,000
1,072,222 1,072,222
2,000,000 660,000
17,585,292 17,585,292
Marianne D. Short
29,428,486
Reasonable non-business use of corporate aircraft(5)
799,786
Insurance Benefits
Acceleration of Equity (3)
18,911,527
4,070,000 4,070,000 4,070,000
1,072,222 1,072,222
2,000,000 660,000
17,585,292 17,585,292
1,072,222 1,072,222
21,216,486
Total(4)
25,873,527
24,727,514
23,387,514
5,142,222 22,288,708
Larry C. Renfro
Cash Payments
8,212,000
Annual Cash Incentive (1)
Long-Term Cash Incentive (2)
799,786
1,600,000
799,786
799,786
Summary of Compensation Components
Messrs. Wichmann and Renfro and Mses. Short and Wilson have entered into employment agreements with the
Company. Under those agreements, they each report to the CEO of the Company. The table below and the
narrative that follows summarize the material terms of their respective employment agreements.
David S. Wichmann, Larry C. Renfro, Marianne D. Short and D. Ellen Wilson
Pursuant to the employment agreement, Mr. Hemsley is subject to provisions prohibiting his solicitation of the
Company's employees and customers or competing with the Company during the term of the employment
agreement and the longer of two years following termination or the period that severance payments are made to
him under the employment agreement. In addition, he is prohibited at all times from disclosing confidential
information related to the Company.
Non-Solicitation, Non-Competition and Confidentiality Provisions
As defined in the employment agreement, "Good Reason" generally means (a) an assignment of duties
inconsistent with his position or duties or other diminution of duties, (b) a relocation of primary work location by
more than 25 miles, (c) failure by the Board of Directors to elect Mr. Hemsley as CEO, (d) failure by the Board of
Directors to nominate Mr. Hemsley to serve on the Board of Directors, (e) the Company's failure to pay or provide
Mr. Hemsley's base salary, incentive compensation or other benefits, or (f) any other material breach of
Mr. Hemsley's employment agreement that is not remedied.
Other
Information
Meeting
5
4 Committee
Matters
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Audit
59
59
As defined in the employment agreement, "Cause" generally means (a) willful and continued failure to perform his
duties after written notice and a failure to remedy the deficiency, (b) a violation of the Company's Code of Conduct
that is materially detrimental to the Company and is not remedied after written notice, (c) engaging in fraud,
material dishonesty or gross misconduct in connection with the Company's business, (d) conviction of a felony, or
(e) willful and material breach of the employment agreement that is not remedied after written notice.
Material Definitions
If Mr. Hemsley's employment is terminated by the Company for Cause, by Mr. Hemsley without Good Reason or
because of his retirement or upon expiration of the term of the employment agreement, he will not be entitled to
any further compensation from the Company other than earned but unpaid salary and benefits.
If Mr. Hemsley's employment is terminated because of his death or permanent disability, the Company will pay him
or his beneficiaries a lump sum in an amount equal to two years total compensation of base salary plus the
average bonus for the last two calendar years, excluding any special or one-time bonus or incentive compensation
payments.
If Mr. Hemsley's employment is terminated by the Company without Cause, other than upon expiration of the term
of the employment agreement, or by Mr. Hemsley for Good Reason, the Company will pay Mr. Hemsley a lump
sum in an amount equal to his annual base salary for 12 months.
Upon termination of Mr. Hemsley's employment for any reason, he is entitled to a previously accrued and vested
lump sum supplemental retirement benefit of $10,703,229 to be paid six months and one day after his termination.
Under the employment agreement, Mr. Hemsley receives a base salary of $1,300,000, with any increases at the
sole discretion of the Compensation Committee and ultimately the independent members of the Board of Directors.
The employment agreement does not set any minimum or target level for any bonus or other incentive
compensation. All bonus and incentive compensation awards are solely at the discretion of the Compensation
Committee. Mr. Hemsley is eligible to participate in the Company's generally available employee benefit programs.
Termination Provisions
Summary of Compensation Components
On November 7, 2006, the Board of Directors entered into an employment agreement with Mr. Hemsley to serve
as CEO. On December 14, 2010, the employment agreement was amended to extend the employment period to
December 1, 2014. The employment agreement extends automatically for additional one-year periods after
December 1, 2014 unless sooner terminated in accordance with its terms. During the period of his employment, the
Board of Directors will nominate Mr. Hemsley for election to the Board of Directors by the shareholders of the
Company.
Stephen J. Hemsley
Compensation Component
Long-Term Cash Incentive (2)
David S.
Wichmann
Renfro
Insurance Benefits
2,000,000
Acceleration of Equity(3)
11,679,435
11,022,506
480,000
11,022,506
12,975,448
Total(4)
15,166,435
15,422,292 13,902,292 2,399,786 13,775,234
D. Ellen Wilson
Cash Payments
Annual Cash Incentive (1)
2,937,000
1,350,000
1,350,000 1,350,000
Long-Term Cash Incentive (2)
Insurance Benefits
Acceleration of Equity (3)
Total (4)
676,282
676,282
2,000,000
405,000
6,405,203
9,342,203
7,948,106 7,948,106
Base salary(1)
D. Ellen
Wilson
Marianne D.
Short
Larry C.
Annual Cash Incentive (1)
7,400,000
Cash Payments
Each employment agreement and each executive officer's employment may be terminated (a) by mutual agreement
(b) by the Company with or without Cause, (c) by the executive officer and (d) upon the executive officer's death or
disability that renders him or her incapable of performing the essential functions of his or her job, with or without
reasonable accommodation. Each executive officer may also terminate his or her employment agreement and
employment at any time for Good Reason. If the executive officer's employment is terminated by the Company
without Cause or by the executive officer for Good Reason, the Company will provide the executive officer with
outplacement services consistent with those provided to similarly situated executives and pay the executive officer
severance compensation equal to the sum of (a) 200% of his or her annualized base salary as of his or her
termination date, (b) 200% of the average of his or her last two calendar year bonuses, excluding any equity
awards and any special or one-time bonus or incentive compensation payments, and (c) $12,000 to offset the costs
of benefit continuation coverage. The severance compensation will be payable over a 24-month period for
Mr. Wichmann and Mses. Short and Wilson and will be payable over a 12-month period for Mr. Renfro.
Applicable definitions for the employment agreements follow.
Term
Cause
Good Reason
*
Means:
Definition
Material failure to follow the Company's reasonable direction or to perform any duties
reasonably required on material matters;
A material violation of, or failure to act upon known or suspected violations of, the
Company's Code of Conduct;
Conviction of any felony, commission of any criminal, fraudulent or dishonest act, or any
conduct that is materially detrimental to the Company's interests; or
Material breach of the employment agreement.
The Company must provide the executive officer with written notice of Cause within 120 days
of discovery, and the executive officer will have 60 days to remedy the conduct, if the conduct
is reasonably capable of being remedied.
Termination Provisions and Material Definitions
Exists if the Company:
Moves the executive officer's primary work location more than 50 miles;
Makes changes that substantially diminish the executive officer's duties or responsibilities*;
or
Changes the executive officer's reporting relationship.
The executive officer must give the Company written notice of the circumstances constituting
Good Reason within 120 days of becoming aware of the circumstances, and the Company will
have 60 days to remedy the circumstances.
For Mr. Renfro, "Good Reason" also exists if the Company makes a change so that he no longer holds the positions of
Vice Chair of the Company and CEO of Optum, Inc. or other equivalent positions.
Non-Solicitation, Non-Competition and Confidentiality Provisions
Pursuant to their respective employment agreements, each executive officer is subject to provisions prohibiting his
or her solicitation of the Company's employees or competing with the Company during the term of the employment
agreement and for two years following termination for any reason. In addition, each executive officer is prohibited at
all times from disclosing confidential information related to the Company.
61
Audit
Reduces the executive officer's base salary or long- or short-term target bonus percentage
other than in connection with a general reduction affecting a group of similarly situated
employees;
Board of
Information
5
Generally available employee benefit programs
✓
✓
(1)
(2)
Any adjustments to base salary, actual bonuses payable and stock-based awards are at the discretion of the Compensation Committee.
Benefit provided at the Company's expense.
(3)
(4)
(5)
Annual benefit covers 60% of eligible base salary in the event of a qualifying long-term disability, subject to the terms of the policy.
Mr. Renfro's employment agreement (a) states that for purposes of determining his eligibility for retirement, he will receive two years of
service credit for each year he remains employed with the Company after age 59 and (b) clarifies that he will be deemed eligible for
retirement if, prior to otherwise becoming eligible for retirement, his employment is terminated by the Company without Cause or he
resigns for Good Reason.
Meeting
Required to reimburse the Company for full incremental costs associate with such use.
60
Audit
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
60
1
2
Directors
✓
✓
✓
Stock-based awards (1)
Participation in incentive compensation plans (1)
We have entered into an employment agreement with each of the named executive officers. The following is a
summary of the material terms of those agreements.
Disability Retirement
($)
($)
In Control
($)
1,300,000
Additional service credit(4)
✓
SERP
Acceleration of Equity (3)
Total(4)
10,703,229
28,398,374
40,401,603
7,400,000
5,200,000 5,200,000 5,200,000
1,316,666 1,316,666
10,703,229 10,703,229
420,000
22,940,231 22,940,231 28,398,374 28,398,374
47,560,126 47,980,126 45,618,269 40,418,269
1,316,666
10,703,229
1,316,666
10,703,229
David S. Wichmann
Insurance Benefits
$2 million term life insurance policy (2)
✓
✓
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
5
Meeting
Other
Information
Potential Payments Upon Termination or Change in Control
The following table describes the potential payments to named executive officers upon termination of employment
or a change in control of the Company as of December 31, 2015. Amounts are calculated based on the benefits
available to the named executive officers under existing plans and arrangements, including each of their
employment agreements described under "Executive Employment Agreements."
Name
Stephen J. Hemsley
Cash Payments
Annual Cash Incentive(1)
Long-Term Cash Incentive (2)
For Good Reason
or Not For Cause
($)
Change
Death
($)
One-time sign-on equity award and bonus
Long-term disability policy (2)(3)
✓
✓
✓
6,962,000
Executive Employment Agreements
3
Meeting
Directors
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
5
Meeting
Other
Information
2
(2) With respect to "Death,” “Disability” and “"Retirement,” represents the maximum amount the Compensation
Committee may in its discretion determine, but is not required, to pay the executive officer (or the executive
officer's estate, if applicable) based upon the portion of the incentive periods the executive officer served prior
to death, disability or retirement and measurement of Company and executive performance based on
performance through the end of the fiscal year of the Company which ends closest to the executive officer's
date of death, disability or retirement, calculated at the achievement of the maximum performance target, as
more fully described in footnote 3 to the 2015 Grants of Plan-Based Awards table. With respect to "Change in
Control," represents the amount payable by the Company or its successor to each executive officer (or to be
credited to the named executive officer's account in the Company's Executive Savings Plan if a timely deferral
election is in effect), which is a prorated portion of the maximum long-term cash incentive award for which the
executive officer is eligible for the 2014-2016 and 2015-2017 performance periods.
For "For Good Reason or Not for Cause," the amount includes the value of unvested equity awards held by
the named executive officer that will not immediately vest upon termination but will continue to vest through
any applicable severance. For “Retirement,” the amount includes the value of certain unvested equity awards
granted in 2013, 2014 and 2015 that will continue to vest and be exercisable for a period of five years (but
not after the award's expiration date). The value of the awards that will not immediately vest is based on their
intrinsic values on December 31, 2015. However, because these awards would continue to vest after
termination of employment or retirement, the actual value the named executive officer would receive is not
determinable. At December 31, 2015, Mr. Hemsley had met the retirement eligibility provisions. Mr. Renfro's
employment agreement provides that he will be deemed retirement eligible if he terminates employment for
Good Reason or his employment is terminated by the Company without Cause.
(4) Does not include value of benefits, plans or arrangements that would be paid or available following termination
of employment that do not discriminate in scope, terms or operation in favor of our executive officers and that
are generally available to all salaried employees or accrued balances under any non-qualified deferred
compensation plan that is described above.
63
Audit
Board of
2
Directors
Corporate
Governance
3
Executive
Compensation
(3) Represents the (i) unvested RSUs multiplied by the closing stock price on December 31, 2015 ($117.64),
(ii) intrinsic value of the unvested stock options, which is calculated based on the difference between the
closing price of our stock on December 31, 2015 ($117.64) and the exercise or grant price of the unvested
stock options as of that date, and (iii) the number of performance shares earned if target performance is
achieved multiplied by the closing stock price on December 31, 2015 ($117.64). If maximum performance is
achieved for the performance shares, the amounts for Acceleration of Equity would be (a) for "For Good
Reason or Not for Cause," $39,726,048 for Mr. Hemsley; $26,242,616 for Mr. Wichmann; $28,547,575 for
Mr. Renfro; $15,865,184 for Ms. Short; and $7,707,478 for Ms. Wilson; (b) for "Death” and “Disability,"
$28,809,761 for Mr. Hemsley; $21,285,188 each for Messrs. Wichmann and Renfro; $13,255,313 for
Ms. Short; and $8,382,198 for Ms. Wilson; (c) for "Retirement," $39,726,048 for Mr. Hemsley; and (d) for
"Change in Control," $39,726,048 for Mr. Hemsley; $28,547,575 each for Messrs. Wichmann and Renfro;
$17,161,197 for Ms. Short; and $10,118,564 for Ms. Wilson.
Annual
1
Audit
The following table presents information regarding the present value of accumulated benefits payable under our
non-qualified defined-benefit pension plans covering our named executive officers for fiscal year 2015.
2015 Pension Benefits
Information
Meeting
5
4 Committee
Matters
Other
Annual
Executive
Compensation
3
Board of
Corporate
Governance
Board of
Directors
Audit
11,974,388 10,379,388 2,026,282
676,282
676,282
8,816,290
9,492,572
(1) Represents the maximum amount the Compensation Committee may in its discretion determine, but is not
required, to pay the executive officer (or the executive officer's estate, if applicable) based upon a prorated
portion of the award that the executive officer would have received but for his or her death, disability or
retirement, calculated at the achievement of the maximum performance target, as more fully described in
footnote 2 to the 2015 Grants of Plan-Based Awards table. For the purposes of this table, the potential
amounts have not been prorated because the table assumes a death, disability or retirement as of
December 31, 2015.
62
62
2
Number of
Years
Credited
4 Committee
Matters
Meeting
3
Corporate
Governance
2
Board of
Directors
Audit
65
The Audit Committee has adopted a Policy for Approval of Independent Auditor Services (the "Policy") outlining the
scope of services that the independent registered public accounting firm may provide to the Company. The Policy
sets forth guidelines and procedures the Company must follow when retaining the independent registered public
accounting firm to perform audit, audit-related, tax and other services. The Policy also specifies certain non-audit
services that may not be performed by the independent registered public accounting firm under any circumstances.
Pursuant to these guidelines, the Audit Committee approves fee thresholds annually for each of these categories,
and services within these thresholds are deemed pre-approved.
While it is not the duty of the Audit Committee to plan or conduct audits, the Audit Committee discusses with the
Company's independent registered public accounting firm and the internal auditors the overall scope and plans for
their respective audits. The Company's independent registered public accounting firm is responsible for performing
an independent audit of the Company's consolidated financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States), expressing an opinion as to the conformity of the
consolidated financial statements with generally accepted accounting principles in the United States of America,
and auditing management's assessment of the effectiveness of internal control over financial reporting. The Audit
Committee's responsibility is to monitor and oversee these processes. The Audit Committee meets regularly with
the internal auditors and independent registered public accounting firm, with and without management present, to
discuss the results of their examinations, the evaluation of the Company's internal control over financial reporting
and the overall quality of the Company's accounting.
The Audit Committee has responsibility for selecting and evaluating the independent registered public accounting
firm, which reports directly to the Audit Committee, overseeing the performance of the Company's internal audit
function, and assisting the Board of Directors in its oversight of enterprise risk management. Management has
primary responsibility for the Company's consolidated financial statements and the overall reporting process, for
maintaining adequate internal control over financial reporting and, with the assistance of the Company's internal
auditors, for assessing the effectiveness of the Company's internal control over financial reporting.
Deloitte & Touche LLP ("Deloitte") has served as the Company's independent registered public accounting firm
since 2002.
The Audit Committee of our Board of Directors is comprised of three non-employee directors, all of whom are audit
committee financial experts, as defined by the SEC. The Board of Directors has determined that all of the members
of the Audit Committee are independent within the meaning of the listing standards of the NYSE, the rules of the
SEC and the Company's Standards for Director Independence. The Audit Committee operates under a written
charter adopted by the Board of Directors which you may access in the corporate governance section of our
website at www.unitedhealthgroup.com/About/Corporate Governance.aspx.
Executive
Compensation
Audit Committee Report
Other
Information
Meeting
4 Committee 5
Matters
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
1
AUDIT COMMITTEE MATTERS
5
Annual
4 Committee 5
Matters
Other
Information
PROPOSAL 2 — ADVISORY APPROVAL OF THE
COMPANY'S EXECUTIVE COMPENSATION
The Board of Directors recognizes the significant interest of shareholders in executive compensation matters. As
required by the Exchange Act, we are seeking shareholders' views on our executive compensation philosophy and
practices through an advisory vote on the following resolution at the Annual Meeting:
"Resolved, that the shareholders approve, on an advisory basis, the compensation of the named executive
officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC,
including the Compensation Discussion and Analysis, the compensation tables and the related narrative
disclosures."
The Compensation Discussion and Analysis, the compensation tables and the related narrative disclosures appear
on pages 29-63 of this proxy statement.
As discussed in the Compensation Discussion and Analysis, the Board of Directors believes that our executive
compensation program attracts and retains highly qualified executives while linking executive compensation directly
to Company-wide performance and long-term shareholder interests. In deciding how to vote on this proposal, the
Board of Directors asks you to consider the key points with regard to our executive compensation program included
in the "Executive Summary" section on pages 27-28 of this proxy statement.
This advisory proposal, commonly referred to as a “say-on-pay” proposal, is not binding on the Board of Directors.
Although the voting results are not binding, the Board and the Compensation Committee will review and consider
them when evaluating our executive compensation program. More than 95% of the votes cast were in favor of our
executive compensation program at each of our annual meetings since our inaugural vote in 2011. The next
say-on-pay advisory vote will occur at our 2017 Annual Meeting of Shareholders. The next advisory vote regarding
the frequency of say-on-pay votes will also occur at our 2017 Annual Meeting of Shareholders.
In addition to our annual advisory vote to approve the Company's executive compensation, we are committed to
ongoing engagement with our shareholders on executive compensation and corporate governance issues. These
engagement efforts take place throughout the year where appropriate through meetings, telephone calls and
correspondence involving our senior management, directors and representatives of our shareholders.
For these reasons, the Board of Directors recommends that you vote FOR approval of the compensation of
the named executive officers, as disclosed in this proxy statement. Executed proxies will be voted FOR
approval of the compensation of the named executive officers unless you specify otherwise.
64
Other
Audit
66
Michele J. Hooper
Robert J. Darretta
Glenn M. Renwick, Chair
Members of the Audit Committee
Based upon the Audit Committee's review of the financial statements, independent discussions with management
and Deloitte, and the Audit Committee's review of the representation of management and the report of the
independent registered public accounting firm to the Audit Committee, and subject to the limitations of the Audit
Committee's role, the Audit Committee recommended to the Board of Directors that the audited consolidated
financial statements for the years ended December 31, 2015, December 31, 2014 and December 31, 2013 be
included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed with the
SEC.
The Audit Committee discussed with Deloitte matters required to be discussed by Public Company Accounting
Oversight Board Auditing Standard No. 16 (Communications with Audit Committees) and Rule 2-07 of
Regulation S-X. Deloitte also provided to the Audit Committee the written disclosures and the letter required by
applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte's communications
with the Audit Committee concerning independence, and the Audit Committee discussed with Deloitte the
accounting firm's independence. In considering the independence of Deloitte, the Audit Committee took into
consideration whether the provision of non-audit services is compatible with maintaining the independence of
Deloitte. In connection with its selection of Deloitte as the Company's independent registered public accounting firm
for the year ending December 31, 2016, the Audit Committee conducted a performance evaluation of Deloitte's
services.
Management represented to the Audit Committee that the Company's consolidated financial statements were
prepared in accordance with generally accepted accounting principles. The Audit Committee has reviewed and
discussed with management and Deloitte in separate sessions the Company's consolidated financial statements for
the years ended December 31, 2015, December 31, 2014 and December 31, 2013, management's annual report
on the Company's internal control over financial reporting and Deloitte's attestation. The Audit Committee also
discussed with management and Deloitte the process used to support certifications by the Company's CEO and
CFO that are required by the SEC and the Sarbanes-Oxley Act of 2002 to accompany the Company's periodic
filings with the SEC and the process used to support management's annual report on the Company's internal
controls over financial reporting.
Information
Meeting
99
Name
Stephen J. Hemsley
David S. Wichmann
(5) Under our Executive Savings Plan, unless an employee in the plan elects to receive distributions during the
term of his or her employment with the Company, benefits will be paid no earlier than at the beginning of the
year following the employee's termination. However, upon a showing of severe financial hardship, an
employee may be allowed to access funds in his or her deferred compensation account earlier. Benefits can
be received either as a lump sum payment, in five or ten annual installments, in pre-selected amounts and on
pre-selected dates, or a combination thereof. An employee may change his or her election with respect to the
timing and form of distribution for such deferrals under certain conditions. However, for deferrals relating to
services performed on or after January 1, 2004, employees may not accelerate the timing of the distributions.
(6) This column includes the amounts shown in columns (b) and (c) as well as the following amounts reported in
the summary compensation table for prior years:
(4) Amounts deferred are credited with earnings from measuring investments selected by the employee from a
collection of unaffiliated mutual funds identified by the Company. The Executive Savings Plan does not credit
above-market earnings or preferential earnings to amounts deferred. The returns on the mutual funds
available to employees during 2015 ranged from -13.68% to 1.75%, with a median return of - 1.51% for the
year ended December 31, 2015. Employees may change their selection of measuring investments on a daily
basis.
(2) Named executive officers are eligible to participate in our Executive Savings Plan, which is a non-qualified
deferred compensation plan. Under the plan, employees may generally defer up to 80% of their eligible annual
base salary (100% prior to January 1, 2007) and up to 100% of their annual and long-term cash incentive
awards. Amounts deferred, including Company credits, are credited to a bookkeeping account maintained for
each participant, and are distributable pursuant to an election made by the participant as to time and form of
payment that is made prior to the time of deferral. The Company maintains a Rabbi Trust for the plan. The
Company's practice is to set aside amounts in the Rabbi Trust to be used to pay for all benefits under the
plan, but the Company is under no obligation to do so except in the event of a change in control.
(3) For the first 6% of the employee's base salary and annual incentive award deferrals under our Executive
Savings Plan, the Company provides a matching credit of up to 50% of amounts deferred at the time of each
deferral. This matching credit does not apply to deferrals of long-term cash incentive awards or other special
incentive awards.
Information
Other
Meeting
5
4 Committee
Matters
Annual
Executive
Compensation
Amount
Corporate
Governance
Board of
Directors
Audit
57
(1) All amounts in these columns have been reported as compensation in the 2015 Summary Compensation
Table.
669,893
(19,714)
50,308
376,731
795,012
(14,919)
2
58,731
Previously
Reported
5
4 Committee
Matters
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
1
Name
Audit
58
D. Ellen Wilson
$691,870
Marianne D. Short
$554,037
Larry C. Renfro
$1,873,448
David S. Wichmann
$7,340,476
Stephen J. Hemsley
59
387,461
791,181
(15,742)
David S. Wichmann
Stephen J. Hemsley
Name (a)
The following table presents information as of the end of 2015 regarding the non-qualified deferred compensation
arrangements for our named executive officers for fiscal year 2015.
2015 Non-Qualified Deferred Compensation
(1) Upon termination of Mr. Hemsley's employment for any reason, a lump-sum benefit of $10,703,229 will be
paid six months and one day after his termination. In the event of Mr. Hemsley's death prior to payment of his
entire supplemental retirement benefit, his surviving spouse will receive any unpaid benefit. The dollar amount
of this lump sum benefit was frozen in 2006 and will not vary, regardless of Mr. Hemsley's age, years of
service or average compensation at the time of his actual termination.
D. Ellen Wilson
Marianne D. Short
N/A
N/A
Larry C. Renfro
N/A
Retirement Pay
Supplemental Executive
10,703,229(1)
_(1)
Payments
During Last
Fiscal Year
($)
Present
Value of
Accumulated
Benefit ($)
(#)
Plan Name
Individual Agreement for
Service
Larry C. Renfro
N/A
Marianne D. Short
D. Ellen Wilson
Executive
Contributions
124,500
249,000
4,750,944
55,692
124,500
287,586
9,947,966
11,565
130,500
261,000
(e)
(d)
(c)
(b)
($)(5)
Aggregate
Withdrawals/
Distributions
in Last FY
($)(4)
($)(1)(3)
($)(1)(2)
Aggregate
Earnings
Registrant
Contributions
in Last FY
in Last FY
($)(6)
(f)
Information
Aggregate
Balance at
Last FYE
1
The SEC has an informational website that provides shareholders with general information about how to cast their
vote and why voting should be an important consideration for shareholders. You may access that information at
www.sec.gov/spotlight/proxymatters.shtml or at www.investor.gov.
Other
4 Committee
Matters
5
6
Meeting
Information
5.
How many shares must be present to hold the Annual Meeting?
In order to conduct the Annual Meeting, holders of a majority of the shares entitled to vote as of the close of
business on the record date must be present in person or by proxy. This constitutes a quorum. Your shares are
counted as present if you attend the Annual Meeting and vote in person, if you vote your proxy over the Internet or
by telephone, or by mail. Abstentions and broker non-votes will be counted as present for purposes of establishing
a quorum. If a quorum is not present, we will adjourn the Annual Meeting until a quorum is obtained.
6. How can I access the proxy materials for the Annual Meeting?
Shareholders may access the proxy materials, which include the Notice of Annual Meeting of Shareholders, Proxy
Statement (including a form of proxy card) and Annual Report for the year ended December 31, 2015 on the
Internet at www.unitedhealthgroup.com/proxymaterials. We will also provide a hard copy of any of these documents
free of charge upon request to: UnitedHealth Group Incorporated, 9900 Bren Road East, Minnetonka, Minnesota
55343, Attention: Secretary to the Board of Directors.
Instead of receiving future copies of our proxy materials by mail, you can elect to receive an e-mail that will provide
electronic links to these documents. Opting to receive your proxy materials online will save the cost of producing
and mailing documents to your home or business, will give you an electronic link to the proxy voting site and will
also help preserve environmental resources.
Shareholders of Record. If you vote on the Internet at www.proxyvote.com, simply follow the prompts for enrolling
in the electronic proxy delivery service. You also may enroll in the electronic proxy delivery service at any time by
going directly to www.unitedhealthgroup.com and following the enrollment instructions.
Street Name Holders. If you hold your shares in a bank or brokerage account, you also may have the opportunity
to receive the proxy materials electronically. Please check the information provided in the proxy materials you
receive from your bank or broker regarding the availability of this service.
7. How do I attend the Annual Meeting? What do I need to bring?
Annual
Executive
Compensation
3
Corporate
Governance
Questions and Answers About the Annual Meeting and Voting
1. What is the purpose of the Annual Meeting?
At the Annual Meeting, shareholders will act upon the matters outlined in the Notice of Annual Meeting of
Shareholders. These include the election of directors, an advisory vote to approve our executive compensation,
and ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm.
Also, once the business of the Annual Meeting is concluded, management of the Company will give a business
update. Management, Chairs of each standing Board committee and representatives of Deloitte & Touche LLP will
be available to respond to questions from shareholders.
2.
What is a proxy?
It is your legal designation of another person to vote the stock you own in the manner you direct. That other
person is called a proxy. If you designate someone as your proxy in a written document, that document also is
called a proxy or a proxy card. We have designated Dannette L. Smith and Amy L. Schneider to serve as proxies
for the Annual Meeting. The Board of Directors will use the proxies at the 2016 Annual Meeting of Shareholders.
The proxies also may be voted at any adjournments or postponements of the meeting.
3.
To attend the Annual Meeting, you will need to bring an admission ticket and valid photo identification.
Only our shareholders are entitled to attend the meeting. The procedure you must follow in order to attend the
meeting depends on whether you are a shareholder of record or a street name holder of our common stock.
What is a proxy statement?
4. What is the difference between a shareholder of record and a shareholder who holds
stock in street name?
Shareholders of Record. If your shares are registered in your name with our transfer agent, Wells Fargo
Shareowner Services, you are a shareholder of record with respect to those shares and the Notice of Internet
Availability of Proxy Materials ("Notice") or the proxy materials were sent directly to you by Broadridge Financial
Solutions.
Street Name Holders. If you hold your shares in an account at a bank or broker, then you are the beneficial owner
of shares held in "street name." The Notice or proxy materials were forwarded to you by your bank or broker, who
is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you
I have the right to direct your bank or broker on how to vote the shares held in your account.
69
Audit
Board of
Directors
2
The Company's Board of Directors is soliciting proxies for use at the 2016 Annual Meeting of Shareholders. A
proxy statement is a document we give you when we are soliciting your vote pursuant to SEC regulations.
Shareholders of Record. If you are a shareholder of record and received a Notice, the Notice is your admission
ticket. If you are a shareholder of record and received proxy materials by mail, your admission ticket is attached to
your proxy card. You will need to bring the Notice or the admission ticket and valid photo identification with you to
the Annual Meeting in order to be admitted to the meeting.
Street Name Holders. If you hold your shares in street name, bring with you to the Annual Meeting valid photo
identification and your most recent brokerage statement or a letter from your broker or other nominee indicating
that you hold our shares. We will use that statement or letter to verify your ownership of common stock and admit
you to the Annual Meeting; however, you will not be able to vote your shares at the Annual Meeting without a legal
proxy, as described in Question 8.
Please note that use of cameras, phones or other similar electronic devices and the bringing of large bags, packages or
sound or video recording equipment will not be permitted in the meeting room. Attendees will also be required to
comply with meeting guidelines and procedures that will be available at the meeting. A copy of the meeting guidelines
and procedures is also available on our website at www.unitedhealthgroup.com/Investors/Annual Meeting.aspx.
If you are a shareholder of record, you will receive only one Notice or proxy card for all the shares of common
stock you hold:
•
in certificate form;
•
in book-entry form; and
•
in any Company benefit plan.
What shares are included on the Notice, proxy card or voting instruction form?
If you hold your shares in street name, you will receive one Notice or voting instruction form for each account you
have with a bank or broker. If you hold shares in multiple accounts, you may need to provide voting instructions for
each account.
10. How can I listen to the live webcast of the Annual Meeting?
You can listen to the live webcast of the Annual Meeting by logging on to our website at www.unitedhealthgroup.com
and clicking on "Investors" and then on the link to the webcast. An archived copy of the webcast will also be
available on our website for 14 days following the Annual Meeting.
11. What different methods can I use to vote?
By Written Proxy. All shareholders of record who received proxy materials by mail can vote by written proxy card. If
you received a Notice or the proxy materials electronically, you may request a proxy card at any time by following
the instructions on the Notice or on the voting website. If you are a street name holder, you will receive instructions
on how you may vote from your bank or broker, unless you previously enrolled in electronic delivery.
By Telephone or Internet. All shareholders of record can vote by telephone from the United States and Canada,
using the toll-free telephone number on the proxy card, or through the Internet using the procedures and
instructions described on the Notice or proxy card. Street name holders may vote by Internet or telephone if their
bank or broker makes those methods available, in which case the bank or broker will enclose the instructions with
the proxy materials. The Internet and telephone voting procedures are designed to authenticate shareholders'
71
Audit
If you hold shares in our 401(k) savings plan and do not vote your shares or specify your voting instructions on
your proxy card, the administrators of the 401(k) savings plan will vote your 401(k) plan shares in the same
proportion as the shares for which they have received voting instructions. To allow sufficient time for voting by
the 401(k) administrators, your voting instructions must be received by 11:59 p.m. Eastern Time on
June 1, 2016.
ANNUAL MEETING
9.
How can I vote at the Annual Meeting if I own shares in street name?
70
70
Audit
Board of
Directors
2
Corporate
Governance
3
If you are a street name holder, you may not vote your shares at the Annual Meeting unless you obtain a legal
proxy from your bank or broker. A legal proxy is a bank's or broker's authorization for you to vote the shares it
holds in its name on your behalf. To obtain a legal proxy, please contact your bank or broker for further
information.
Executive
Compensation
Other
4 Committee
Matters
5
6
Meeting
Information
8.
Annual
Meeting
5
4 Committee
Matters
2015
$17,576,000
2014
$16,138,000
4,501,000
3,554,000
$22,077,000
$19,692,000
Year
842,000
623,000
296,000
Tax Fees (2)
All Other Fees (3)
Total
$23,542,000
$20,698,000
710,000
(1) Audit-Related Fees for 2015 and 2014 include benefit plan and other required audits, an audit of one of our
subsidiaries, certain AICPA agreed-upon procedures, internal control assessments and due diligence services.
(2) Tax Fees include tax compliance, planning and support services. In 2015 and 2014 approximately $439,000
and $311,000, respectively, of Tax Fees were related to international tax services. In 2015 and 2014
approximately $148,000 and $123,000, respectively, of Tax Fees were related to tax compliance (review and
preparation of corporate and expatriate tax returns, review of the tax treatment for certain expenses and claims
for refunds).
Total Audit and Audit-Related Fees
Fee Category
Audit Fees
76
Audit
Board of
1
2
Directors
Corporate
Governance
Audit-Related Fees (1)
Executive
3
Compensation
4 Committee 5
Matters
Meeting
Other
Information
Disclosure of Fees Paid to Independent Registered Public
Accounting Firm
Aggregate fees billed to the Company for the fiscal years ended December 31, 2015 and 2014 represent fees
billed by the Company's principal independent registered public accounting firm, Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates, which includes Deloitte Consulting
(collectively, "Deloitte & Touche"). The Audit Committee pre-approved the audit and non-audit services provided in
the years ended December 31, 2015 and 2014 by Deloitte & Touche, as reflected in the table below.
Annual
Board of
(3) All Other Fees include consulting fees and in 2015 also include fees relating to communications training.
The Audit Committee has reviewed the nature of non-audit services provided by Deloitte & Touche and has
concluded that these services are compatible with maintaining the firm's ability to serve as our independent
registered public accounting firm.
The Audit Committee is directly responsible for the appointment, evaluation, compensation, retention and oversight
of the independent registered public accounting firm retained to audit the Company's financial statements. The
Audit Committee has appointed Deloitte & Touche LLP ("Deloitte”) as our independent registered public accounting
firm for the year ending December 31, 2016. Deloitte has been retained as our independent registered public
accounting firm since 2002. The Audit Committee is responsible for approving audit fees associated with the
retention of Deloitte. In order to assure continuing auditor independence, the Audit Committee periodically
considers whether there should be a regular rotation of our independent registered public accounting firm. Further,
as part of the Audit Committee's assessment of Deloitte and in conjunction with the mandated rotation of the audit
firm's lead engagement partner, in November 2015, the Audit Committee interviewed candidates to become
Deloitte's new lead engagement partner and following those interviews, selected the individual who will become the
new lead engagement partner in 2017.
The Board of Directors has proposed that shareholders ratify the appointment of Deloitte at the Annual Meeting. If
shareholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment but is
not obligated to appoint another independent registered public accounting firm. The Audit Committee evaluates, at
least every three years, whether to rotate our independent registered public accounting firm.
Representatives of Deloitte are expected to be present at the meeting, will have an opportunity to make a
statement and will be available to respond to questions from shareholders.
The Board of Directors recommends that you vote FOR ratification of the appointment of Deloitte as our
independent registered public accounting firm for the year ending December 31, 2016. Executed proxies
will be voted FOR ratification of this appointment unless you specify otherwise.
68
98
Audit
REGISTERED PUBLIC ACCOUNTING FIRM
Board of
2
Directors
Corporate
Governance
3
Executive
Compensation
Annual
Other
1
Audit Committee's Consideration of Independence of Independent
Registered Public Accounting Firm
RATIFICATION OF INDEPENDENT
PROPOSAL 3
Audit and Non-Audit Services Approval Policy
The Audit Committee has adopted a Policy for Approval of Independent Auditor Services (the "Policy") outlining the
scope of services that Deloitte & Touche may provide to the Company. The Policy sets forth guidelines and
procedures the Company must follow when retaining Deloitte & Touche to perform audit, audit-related, tax and
other services. The Policy also specifies certain non-audit services that may not be performed by Deloitte & Touche
under any circumstances. Pursuant to these guidelines, the Audit Committee approves fee thresholds annually for
each of these categories, and services within these thresholds are deemed pre-approved. The Audit Committee
20
67
Audit
Board of
Directors
2
-
Corporate
Governance
Executive
Compensation
Annual
4 Committee
Matters
5
Meeting
Other
Information
has delegated authority to the Chair of the Audit Committee to pre-approve permitted audit and non-audit services
between regularly scheduled quarterly Audit Committee meetings, provided that such pre-approvals are presented
to the Audit Committee at its next scheduled meeting. All fees reported above were approved pursuant to the
Policy. The services provided by our independent registered public accounting firm and related fees are discussed
with the Audit Committee and the Policy is evaluated and updated periodically by the Audit Committee.
3
1
Information
Directors
The Board of Directors recommends a vote FOR each of the director nominees.
•
The Board of Directors recommends a vote FOR advisory approval of the Company's executive
compensation.
⋅
The Board of Directors recommends a vote FOR ratification of the appointment of Deloitte & Touche LLP
as our independent registered public accounting firm.
20. What if I do not specify a choice for a matter when returning a proxy?
Shareholders should specify their choice for each matter in the manner described in the Notice or on their proxy
card. If no specific instructions are given, proxies that are signed and returned will be voted:
•
⋅
•
FOR the advisory approval of our executive compensation;
•
FOR the ratification of the appointment of Deloitte & Touche LLP as the Company's independent registered
public accounting firm.
74
Audit
2
FOR the election of all director nominees;
Corporate
Governance
The Board of Directors makes the following recommendation with regard to each proposal:
The proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting
firm must be approved by the holders of a majority of the shares of common stock present and entitled to vote in
person or by proxy at the Annual Meeting in order to pass. For the advisory vote to approve our executive
compensation, there is no minimum approval necessary for the proposal since it is an advisory vote; however, the
Board of Directors will consider the results of the advisory vote when considering future executive compensation
decisions.
Annual
Other
4 Committee
Matters
5
6
Meeting
Information
19. What is the Board's recommendation with regard to each proposal?
17. What are my choices when voting on each of the other proposals considered at the
Annual Meeting?
•
vote for the proposal;
•
vote against the proposal; or
•
abstain from voting on the proposal.
18. What vote is needed to approve each of the other proposals?
For each of the other proposals shareholders may:
Executive
Compensation
3
Annual
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
2
6
Information
at the 2017 Annual Meeting, must comply with the "advance notice" deadlines in our Bylaws. As such, these
shareholder proposals must be received no earlier than February 6, 2017, and no later than the close of business
on March 8, 2017. These shareholder proposals must be in writing and received within the "advance notice"
deadlines described above at our principal executive offices at UnitedHealth Group Center, 9900 Bren Road East,
Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors. These shareholder proposals must be
in the form provided in our Bylaws and must include the information set forth in the Bylaws. If we do not receive a
shareholder proposal and the required information by the "advance notice" deadlines described above, the
proposal may be excluded from consideration at the 2017 Annual Meeting. The "advance notice" requirement
described above supersedes the notice period in SEC Rule 14a-4(c)(1) of the federal proxy rules regarding the
discretionary proxy voting authority with respect to such shareholder business.
25. How are proxies solicited and what is the cost?
We bear all expenses incurred in connection with the solicitation of proxies. We have engaged D.F.
King & Co., Inc., to assist with the solicitation of proxies for a base fee of $22,000 plus expenses. We will
reimburse brokers, fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of
common stock.
Our directors, officers and employees may also solicit proxies by mail, telephone and personal contact. They will
not receive any additional compensation for these activities.
2
26. Where can I find more information about my voting rights as a shareholder?
Meeting
Executive
Compensation
Board of
Directors
75
Other
4 Committee
Matters
5
6
Meeting
Information
21. Are my shares voted if I do not provide a proxy?
Audit
If you are a shareholder of record and do not provide a proxy, you must attend the Annual Meeting in order to
vote. If you hold shares through an account with a bank or broker, your shares may be voted by the bank or broker
on some matters if you do not provide voting instructions. Banks and brokers have the authority under NYSE rules
to vote shares for which their customers do not provide voting instructions on routine matters. The ratification of
Deloitte & Touche LLP as our independent registered public accounting firm is considered a routine matter. The
election of directors and the advisory vote to approve our executive compensation are not considered routine and
banks and brokers cannot vote shares without instruction on those matters. Shares that banks and brokers are not
authorized to vote are counted as "broker non-votes."
Abstentions have no effect on the election of directors and have the effect of an "AGAINST" vote on the proposal
seeking advisory approval of our executive compensation and the ratification of the appointment of the Company's
independent registered public accounting firm. Broker non-votes have no effect on the vote for any matter at the
meeting.
23. Does the Company have a policy about directors' attendance at the Annual Meeting
of Shareholders?
The Company expects directors to attend the Annual Meeting, absent a compelling reason. All of our directors
attended the 2015 Annual Meeting.
24. What are the deadlines for submitting director nominees and other shareholder
proposals for the 2017 Annual Meeting?
Shareholder Director Nominations for Inclusions in the Company's Proxy Materials (Proxy Access). To be
considered for inclusion in our proxy statement for our 2017 Annual Meeting, director nominations submitted
pursuant to Section 3.04 of our Bylaws must be received at our principal executive offices at UnitedHealth Group
Center, 9900 Bren Road East, Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors, no
earlier than November 23, 2016 and no later than December 23, 2016, and must be submitted in accordance with
Section 3.04 of our Bylaws. If we do not receive the information required by our Bylaws by the deadline described
above, the director nominee will be excluded from our proxy statement for our 2017 Annual Meeting.
Other Shareholder Proposals to Be Considered for Inclusion in the Company's Proxy Materials. To be considered
for inclusion in our proxy statement for our 2017 Annual Meeting, shareholder proposals submitted pursuant to
SEC Rule 14a-8 must be received no later than December 23, 2016 and be submitted in accordance with
Rule 14a-8. These shareholder proposals must be in writing and received by the deadline described above at our
principal executive offices at UnitedHealth Group Center, 9900 Bren Road East, Minnetonka, Minnesota 55343,
Attention: Secretary to the Board of Directors. If we do not receive a shareholder proposal by the deadline
described above, the proposal may be excluded from our proxy statement for our 2017 Annual Meeting.
Other Shareholder Proposals for Presentation at the 2017 Annual Meeting. A shareholder proposal that is not
submitted for inclusion in our proxy statement for our 2017 Annual Meeting, but is instead sought to be presented
22. How are abstentions and broker non-votes counted?
3
Board of
Directors
3
Corporate
Governance
•
signing another proxy card with a later date and delivering it to an officer of the Company before the
Annual Meeting;
•
voting again over the Internet or by telephone prior to 11:59 p.m., Eastern Time, on June 5, 2016;
•
voting at the Annual Meeting; or
13. If I submit a proxy, may I later revoke it and/or change my vote?
•
Street name holders may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
•
submitting new voting instructions in the manner provided by your bank or broker; or
•
contacting your bank or broker to request a legal proxy in order to vote your shares in person at the
Annual Meeting.
72
Audit
notifying the Secretary to the Board of Directors in writing before the Annual Meeting.
Board of
Directors
vote at the Annual Meeting and any adjournments or postponements of the Annual Meeting.
receive notice of the Annual Meeting; and
Corporate
Governance
Executive
Compensation
Annual
Other
4 Committee
Matters
5
6
•
Meeting
identities, allow shareholders to vote their shares and to confirm that their instructions have been properly
recorded.
In Person. All shareholders of record may vote in person at the Annual Meeting. Street name holders may vote in
person at the Annual Meeting if they have a legal proxy, as described in Question 8.
The Notice is not a proxy card and it cannot be used to vote your shares.
12. What is the record date and what does it mean?
The record date for the Annual Meeting is April 8, 2016. Only owners of record of shares of common stock of the
Company at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting, or
at any adjournments or postponements of the Annual Meeting. On April 8, 2016, there were 950,209,407 shares of
common stock issued, outstanding and entitled to vote. Each owner of record on the record date is entitled to one
vote for each share of common stock held.
The record date was established by our Board of Directors as required by the Delaware General Corporation Law.
Owners of record of common stock at the close of business on the record date are entitled to:
•
Information
2
Shareholders of record may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
3
15. How may I confirm my vote was counted?
We are offering our shareholders the opportunity to confirm their votes were cast in accordance with their
instructions. Vote confirmation is consistent with our commitment to sound corporate governance standards and an
important means to increase transparency. Beginning May 23, 2016 and for up to two months after the Annual
Meeting, you may confirm your vote beginning 24 hours after your vote is received, whether it was cast by proxy
card, electronically or telephonically. To obtain vote confirmation, log onto www.proxyvote.com using your control
number (located on your Notice or proxy card) and receive confirmation on how your vote was cast. If you hold
your shares through a bank or brokerage account, the ability to confirm your vote may be affected by the rules of
your bank or broker and the confirmation will not confirm whether your bank or broker allocated the correct number
of shares to you.
16. What are my choices when voting for director nominees and what vote is needed to
elect directors?
In the vote on the election of director nominees, shareholders may:
•
vote in favor of a nominee;
•
Carl T. Hagberg & Associates to act as independent inspector of the election.
vote against a nominee; or
abstain from voting with respect to a nominee.
A director nominee will be elected if the number of votes cast "for" the nominee exceeds the number of votes cast
"against" the nominee. To address a provision in Delaware law that allows a director who has not been re-elected
to remain in office until a successor is elected and qualified, we have a policy requiring any director who does not
receive a greater number of votes "for" than "against” his or her election in an uncontested election to tender his
or her resignation from the Board of Directors following certification of the shareholder vote. Under this policy, the
Board of Directors will determine whether to accept or reject the offer to resign within 90 days of certification of the
shareholder vote. The text of this policy appears in our Principles of Governance, which is available on our website
at www.unitedhealthgroup.com.
The Board of Directors recommends a vote FOR each of the nominees.
73
Audit
Board of
Directors
Corporate
Governance
•
We have retained Broadridge Financial Solutions to tabulate the votes. We have retained
2
if a shareholder makes a written comment on the proxy card or otherwise communicates his or her vote to
management; or
to allow the independent inspectors of the election to certify the results of the vote.
Executive
Compensation
Annual
Other
4 Committee
Matters
6
Meeting
5
14. Are votes confidential? Who counts the votes?
We hold the votes of all shareholders in confidence from directors, officers and employees except:
as necessary to meet applicable legal requirements and to assert or defend claims for or against the
Company;
•
in the case of a contested proxy solicitation;
•
•
Information
Board of
Directors
Annual
Executive
Compensation
3
Corporate
Governance
2
Audit
•
80
Any member of the Audit Committee who has an interest in the transaction under discussion will abstain from
voting on the approval of the related-person transaction, but may, if so requested by the Chair of the Audit
Committee, participate in some or all of the Audit Committee's discussions of the related-person transaction. Any
related-person transaction that is not approved or ratified, as the case may be, will be voided, terminated or
amended, or other actions will be taken in each case as determined by the Audit Committee so as to avoid or
otherwise address any resulting conflict of interest.
Under the policy, the Company determines whether a transaction falls under the definition of a related-person
transaction requiring review by the Audit Committee. In determining whether to approve or ratify a related-person
transaction, the Audit Committee will consider, among other things, whether the terms of the related-person
transaction are fair to the Company and on terms at least as favorable as would apply if the other party was not an
affiliate; the business reasons for the transaction; whether the transaction could impair the independence of a
director under the Company's Standards for Director Independence; and whether the transaction would present an
improper conflict of interest for any director or executive officer of the Company.
Any transaction that involves the providing of compensation to a director or executive officer in connection
with his or her duties to the Company or any of its subsidiaries, including the reimbursement of business
expenses incurred in the ordinary course.
Interests arising solely from the ownership of a class of the Company's equity securities if all holders of
that class of equity securities receive the same benefit on a pro rata basis.
Indemnification and advancement of expenses made pursuant to the Company's Certificate of Incorporation
or Bylaws or pursuant to any agreement or instrument.
Other
60
4 Committee
Matters
0.34
GAAP and adjusted net earnings and earnings per share are attributable to UnitedHealth Group common
shareholders.
5,960
GAAP diluted earnings per share
EA
$
6.01
SA
$
84
5.70
0.44
Adjusted diluted earnings per share
$
6.45
$
6.04
1
Intangible amortization, net of tax effects per share
•
(4) Includes 3,340 shares held by Mr. Darretta in a margin account for which no loans are outstanding. To
discourage pledging shares of the Company's common stock, our insider trading policy requires advance
approval of the Compensation Committee of any pledging of common stock by directors, executive officers
and other members of management. Pledges that existed prior to the policy's adoption in November 2012
have been grandfathered. Mr. Darretta continues to satisfy our stock ownership guidelines when pledged
shares are excluded from his individual holdings. The three-month average trading volume for the Company's
common stock was 3,676,424 as of March 23, 2016.
Related-person transactions under the policy do not include:
1
Board of
Audit
79
12
In accordance with the requirements of advance notice described in our Bylaws, no shareholder nominations or
shareholder proposals will be presented at the 2016 Annual Meeting. We know of no other matters that may come
before the Annual Meeting. However, if any matters calling for a vote of the shareholders, other than those referred
to in this proxy statement, should properly come before the meeting, the persons named as proxies will vote on
such matters according to their individual judgment.
Other Matters at Meeting
2
We have been notified that some banks and brokers will household proxy materials. If your shares are held in
"street name" by a bank or broker, you may request information about householding from your bank or broker.
P.O. Box 64854, St. Paul, Minnesota 55164-0854, telephone (800) 468-9716. Your householding election will apply
to all materials mailed more than 30 days after your request is received.
If you participate in householding but wish to receive a separate copy of the Notice, this proxy statement or our
2015 Annual Report to Shareholders, please notify us at: Secretary to the Board of Directors, UnitedHealth Group
Center, 9900 Bren Road East, Minnetonka, Minnesota 55343, telephone (877) 536-3550. You may opt-in or opt-out
of householding at any time by contacting our transfer agent, Wells Fargo Shareowner Services, at
We have adopted "householding” procedures that allow us to deliver one Notice or single copies of proxy
statements and annual reports to any household at which two or more shareholders reside who share the same
last name or whom we believe to be members of the same family. Each registered shareholder living in that
household will receive a separate proxy card if the householded proxy materials are received by mail.
Householding Notice
(6) Includes 24,000 shares held in a charitable foundation which are beneficially owned by Mr. Hemsley.
(7) Includes the indirect holdings included in footnotes 3, 5 and 6.
(5) Includes the following number of shares held in trust for the individuals pursuant to our 401(k) plan:
Mr. Hemsley 305.0780 shares; and Mr. Wichmann - 228.6168 shares. Pursuant to the terms of the 401(k)
plan, a participant has sole voting power over his or her shares; however, the plan trustee votes all unvoted
shares in the same proportions as the actual proxy votes submitted by plan participants.
$
Your participation in the householding program is encouraged. As an alternative to householding, you may choose
to receive documents electronically. Instructions for electing electronic delivery are described in Question 6 of the
"Questions and Answers About the Annual Meeting and Voting" section of this proxy statement.
•
Directors
3
A director, executive officer or shareholder beneficially owning more than 5% of our common stock, or any
of their respective immediate family members, in which the Company or its subsidiaries is directly or
indirectly a participant and the amount involved exceeds $120,000; provided that if a director is an
executive officer of an entity that is a party to a transaction with the Company or its subsidiaries, and the
director was actively involved in the transaction, then the amount shall be $1.00.
A director or an immediate family member of a director in which an executive officer of the Company is
directly or indirectly a participant and the amount involved exceeds $1.00; or
•
The Board of Directors has adopted a written Related-Person Transactions Approval Policy, which is administered
by the Audit Committee. A copy of the policy is available on our website at www.unitedhealthgroup.com. Under the
policy, "related-person" transactions are prohibited unless approved or ratified by the Audit Committee. In general,
a related-person transaction is any transaction or series of transactions (or amendments thereto) directly or
indirectly involving:
Approval or Ratification of Related-Person Transactions
Certain Relationships and Transactions
OTHER INFORMATION
Corporate
Governance
Matters
Meeting
6
5
4 Committee
Other
Annual
Executive
Compensation
Information
6,236
5
341
Annual
Other
4 Committee
Matters
5
6
Meeting
Information
Executive
Compensation
other Brazilian health plans. Amil also has a right of first offer and a right of first refusal to purchase interests in
these hospitals should Dr. Bueno or his affiliates determine to transfer their interests to third parties within ten
years from the date of the closing, or October 26, 2022.
LAVE BRAS Gestão de Têxteis S.A. ("LAVE BRAS"). Dr. Bueno has an indirect minority interest in LAVE BRAS, a
privately-held Brazilian company that provides industrial laundry services to hospitals. In 2015, Amil paid LAVE
BRAS and its subsidiaries $3.1 million for industrial laundry services provided to Amil's hospitals. The Company
believes that the contract terms are equal to or better than what could be obtained from unaffiliated third parties.
Federação Nacional de Saúde Suplementar. Dr. Bueno is a vice president of Federação Nacional de Saúde
Suplementar, a consortium of major health care providers in Brazil that partner together to exchange experiences,
promote organized debates about major challenges of the sector, and strengthen institutional representation before
society and government. In 2015, Amil paid Federação Nacional de Saúde Suplementar approximately $1.1 million
in membership and related fees.
Property Leases. Dr. Bueno has an indirect majority ownership interest in entities from which Amil leases medical
facilities and office space. Amil paid approximately $12.6 million for property leases to the entities in 2015.
Employment of Family Members of Executive Officer
Matt Renfro, Larry Renfro's son, and Paul Leary, Larry Renfro's brother-in-law, are employed at Optum. The
compensation paid to each of these employees is consistent with the Company's overall compensation principles
based on the employees' years of experience, performance and positions within the Company.
Transactions with 5% Shareholders
BlackRock Inc. beneficially owns approximately 7.1% of our common stock. The Company paid BlackRock
$2.7 million for investment management fees in 2015. BlackRock maintains a self-funded health insurance plan
through the Company and paid the Company $1.8 million for administrative services in 2015.
Aeromil Táxi Aéreo Limitada ("Aeromil”). In connection with the Company's acquisition of Amil, Amil sold 80% of
Aeromil, an air taxi business, to Dr. Bueno to comply with Brazilian restrictions on foreign ownership of such
businesses. Aeromil provides on-demand emergency medical transport services to Amil. The cost to Amil for such
services is based on the operating costs (including utilization and maintenance) of the relevant aircraft. From
January 1, 2015 to December 31, 2015, Amil paid Aeromil $405,200 for emergency medical transport services.
Amil is entitled to receive dividends equaling 99.9% of the profits of Aeromil and has an irrevocable option to
purchase all of Dr. Bueno's shares in Aeromil at a price of approximately $15 million, the price paid by Dr. Bueno
for his stake in Aeromil. Amil's call option has an indefinite term so long as each party holds stock in Aeromil.
Dr. Bueno is restricted from selling his shares in Aeromil except pursuant to Amil's call option.
FMR LLC beneficially owns 5.92% of our common stock. The Company and its employees paid Fidelity
Management & Research Company ("Fidelity”), a wholly owned subsidiary of FMR LLC, $1.6 million in investment
and benefits management fees in 2015. Fidelity maintains a self-funded health insurance plan through the
Company and paid the Company $15.4 million for administrative services and $411,400 for software products in
2015.
3
Directors
Information
6
Meeting
Information
As required under SEC rules, transactions in which the Company was or is to be a participant and the amount
involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest,
are disclosed below.
Related-Person Transactions
Transactions with Edson Bueno
Corporate
Governance
Set forth below is information regarding certain business relationships between Amil and related persons, most of
which existed prior to the closing of the acquisition of a majority interest in Amil by the Company in October 2012.
At the time of the Amil acquisition, we reviewed the various business relationships then in effect and determined it
was in the best interest of Amil and the Company that they be preserved. We also believed, and continue to
believe, that Dr. Bueno's experience and knowledge of international health care and integrated care systems, and
training and experience as a physician and entrepreneur with deep expertise across the continuum of care, make
him a valuable member of our Board. Dr. Bueno and his business partner, Dr. Dulce Pugliese, continue to own
approximately 10% of Amil's outstanding common shares and have committed to retain such shares for at least
five years from the date of the Company's acquisition of Amil, or October 26, 2017, subject to certain exceptions.
Dr. Bueno has the right to put the shares to the Company and the Company has the right to call the Amil shares
upon expiration of the five-year term, unless accelerated upon certain events, at a fair market value to be
determined by appraisal firms selected by the Company and Dr. Bueno.
Diagnosticos da America S.A. ("DASA"). As of December 31, 2015, Dr. Bueno owned directly and through an
affiliated entity a minority interest in DASA and had voting control over a majority of DASA's shares. Dr. Bueno's
son is the president of DASA. DASA provides vaccinations, diagnostic services and laboratory and pathology tests
to many customers in Brazil, including Amil plan members. Services outside of São Paulo, Brazil are provided
pursuant to a contract which automatically renews for successive 36-month terms. Services in São Paulo are
provided pursuant to a contract with a term ending in 2026 (which is renewable for successive 15-year terms). Amil
generally receives a discount on services provided to its members ranging from 2% to 12.5%, depending on
volume. Amil has granted DASA the exclusive right to provide laboratory and pathology testing services at
approximately 64 locations in São Paulo during the term of the contract and receives a discount on services
ranging from 4% to 15%, depending on volume. From January 1, 2015 to December 31, 2015, Amil paid DASA
$84.9 million, which reflects discounts over market rates in part due to exclusivity arrangements. The Company
believes that the contract terms are equal to or better than what could be obtained from unaffiliated third parties.
Hospital Investments. Dr. Bueno indirectly owns a majority interest in seven hospitals located in Rio de Janeiro,
São Paulo and Brasilia that provide medical services to Amil plan members. Services to Amil plan members
represent approximately 26% of the aggregate revenue of these hospitals during the period from January 1, 2015
through December 31, 2015. The services are provided pursuant to contracts between Amil and each individual
hospital. The contracts will expire in 2022. From January 1, 2015 to December 31, 2015, Amil paid these hospitals
$64.4 million for services to Amil plan members. The Company believes that the contract terms are equal to what
could be obtained from unaffiliated third parties and are comparable to, or lower than, rates that are charged to
81
Audit
Board of
1
2
The Audit Committee of the Board of Directors has ratified the relationships set forth below. U.S. dollar amounts
have been converted into U.S. dollars based on an exchange rate of R$3.90 to US$1.00, the average exchange
rate for the year ended December 31, 2015. These exchange rates are the same exchange rates used for financial
reporting purposes.
$
88
Audit
APPENDIX A – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Use of Non-GAAP Financial Measures
Adjusted earnings per share is a non-GAAP financial measure and should not be considered a substitute for or
superior to a financial measure calculated in accordance with GAAP. Management believes that the use of
adjusted earnings per share provides investors and management useful information about the earnings impact of
acquisition-related intangible asset amortization. This non-GAAP measure does not reflect all of the expenses
associated with the operations of our business as determined in accordance with GAAP. As a result, one should
not consider this measure in isolation.
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED NET EARNINGS AND EARNINGS PER SHARE¹
(in millions, except per share data)
(unaudited)
Year Ended
December 31, 2015
88
Year Ended
December 31, 2014
Adjusted net earnings
$
5,813
$
5,619
Intangible amortization, net of tax effects
423
GAAP net earnings
82
83
Section 16(a) Beneficial Ownership Reporting Compliance
Board of
1
2
Directors
Corporate
Governance
3
Executive
Compensation
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own
more than 10% of our common stock, to file initial reports of ownership and reports of changes in ownership with
the SEC and the NYSE. Executive officers, directors and greater-than-10% beneficial owners are required by SEC
rules to furnish us with copies of all Section 16(a) reports they file. Dr. Bueno had one untimely Form 4 in 2015
relating to a non-qualified stock option grant. Except for the foregoing, based solely on our review of these reports
and written representations from our executive officers and directors, we believe that all of our executive officers
and directors complied with all Section 16(a) filing requirements during 2015.
Annual
4 Committee
Matters
5
6
Meeting
Information
The Vanguard Group ("Vanguard") owns 5.71% of our common stock. Vanguard purchases health insurance
through the Company and paid the Company $817,600 in insurance premiums in 2015.
Wellington Management Group LLP ("Wellington") owns 5.65% of our common stock. The Company paid
Wellington $4.6 million in investment management fees in 2015. Wellington maintains a self-funded health
insurance plan through the Company and paid the Company $1.3 million for administrative services in 2015.
Other
Meeting
33,929
5
Annual
Executive
Compensation
3
Corporate
Governance
Directors
2
1
Other
Board of
77
(4) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by Wellington
Management Group LLP on February 11, 2016. Wellington Management Group LLP reported having shared
voting power over 13,643,685 shares and shared dispositive power over 53,813,453 shares.
(3) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by The
Vanguard Group on February 11, 2016. The Vanguard Group reported having sole voting power over
1,778,075 shares, shared voting power over 95,500 shares, sole dispositive power over 52,637,742 shares
and shared dispositive power over 1,859,202 shares.
(2) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by FMR LLC
on February 12, 2016. FMR LLC reported having sole voting power over 5,702,785 shares and sole
dispositive power over 56,428,041 shares.
(1) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by
BlackRock, Inc. on February 10, 2016. BlackRock, Inc. reported having sole voting power over 58,544,953
shares, sole dispositive power over 67,830,137 shares, and shared voting and dispositive power over 37,994
shares.
5.65%
53,813,453
Audit
5.71%
4 Committee
Matters
6
8,416,905
Edson Bueno, M.D.
132,892
65,000
67,892(2)
William C. Ballard, Jr.
Stock
Outstanding
5
Total(1)
Number of Shares
Deemed Beneficially
Owned as a Result of
Equity Awards Exercisable
or Vesting Within 60 Days
of March 23, 2016
Ownership of
Common Stock
Identity of Group
Name of Beneficial Owner or
The following table provides information about the beneficial ownership of our common stock as of March 23, 2016
by each director and nominee for director, each named executive officer, and by all of our current directors,
executive officers and director nominees as a group. As of March 23, 2016, there were 953,814,834 shares of our
common stock issued, outstanding and entitled to vote.
Information
Meeting
Percent of
Common
305,466
54,496,944
56,428,041
Information
Meeting
6
5
4 Committee
Matters
Other
Annual
Security Ownership of Certain Beneficial Owners and Management
Executive
Compensation
Corporate
Governance
Directors
2
1
Board of
Audit
6
3
5.92%
The following table provides information about shareholders known to us to beneficially own more than 5% of the
outstanding shares of our common stock, based solely on the information filed by such shareholders in 2016 for
the year ended December 31, 2015 on Schedule 13G under the Exchange Act.
67,868,131
Boston, Massachusetts 02210
280 Congress Street
c/o Wellington Management Company LLP
Wellington Management Group LLP(4)
Malvern, Pennsylvania 19355
100 Vanguard Boulevard
Boston, Massachusetts 02210
Amount and Nature of
Beneficial Ownership
245 Summer Street
New York, New York 10055
55 East 52nd Street
BlackRock, Inc. (1)
Name and Address of Beneficial Owner
7.10%
Class
Percent of
FMR LLC (2)
*
The Vanguard Group(3)
Richard T. Burke
14,639,447(7)
All current directors, executive officers and
89,919
75,136
14,783
D. Ellen Wilson
*
1,109,633
96,870
31,768
Marianne D. Short
*
241,605
88,161
153,444
647,714
65,102
*
15,749,080
*
4 Committee
Matters
8,722,371
Other
Annual
Executive
Compensation
3
Corporate
Governance
1.65%
2
Audit
78
(3) Includes 86,000 shares held in trust for the benefit of Mr. Burke's children. Mr. Burke does not have voting or
investment power over these shares and disclaims beneficial ownership of these shares.
-
—
(1) Unless otherwise noted, each person and group identified possesses sole voting and investment power with
respect to the shares shown opposite such person's or group's name. Shares not outstanding but deemed
beneficially owned by virtue of the right of an individual to acquire them within 60 days of March 23, 2016 are
treated as outstanding only when determining the amount and percent owned by such individual or group.
(2) Includes the following number of vested deferred stock units which are considered owned under the
Company's stock ownership guidelines for directors: Mr. Ballard - 19,592 deferred stock units;
Mr. Burke 19,592 deferred stock units; Mr. Darretta - 36,539 deferred stock units; Ms. Hooper - 25,989
deferred stock units; Mr. Lawson 18,063 deferred stock units; Mr. Renwick - 37,456 deferred stock units;
Dr. Shine 28,055 deferred stock units; and Dr. Wilensky - 19,592 deferred stock units.
Less than 1%.
Board of
Directors
88,161
director nominees as a group (15 individuals)
David S. Wichmann
Larry C. Renfro
25,063
0
25,063(2)
Rodger A. Lawson
*
64,359
35,000
Michele J. Hooper
*
96,500
56,621
39,879(2)(4)
2,205,552
86,870
559,553(5)
2,118,682(2)(3)
Robert J. Darretta
*
Glenn M. Renwick
29,359(2)
67,200
142,362
39,496(2)
3,060,886(5)(6)
Stephen J. Hemsley
120,882
53,682(2)
Gail R. Wilensky, Ph.D.
3,203,248
28,680
625
28,055(2)
Kenneth I. Shine, M.D.
*
*
73,425
*
-
Pay-for-performance · A substantial portion of the total compensation of our executive officers is earned
based on achievement of enterprise-wide goals that drive shareholder value.
•
Enhance the value of the business ·
Reward long-term growth and focus management on sustained success and shareholder value creation
Compensation of our executive officers is weighted toward equity awards that encourage sustained
performance and drive shareholder returns.
longer-term value of the Company and avoid excessive risk-taking.
.
Standard benefits and very limited perquisites
perquisites to our executive officers.
Incentive compensation is designed to grow and sustain the
Environmental Policy - We seek to minimize our environmental impact and to heighten our employees'
awareness of the importance of the environment.
2
Our Overall Compensation Program Principles
Our executive compensation program uses a mix of base salary, annual and long-term cash incentives, equity
awards and broad-based benefits to attract and retain highly qualified executives and maintain a strong relationship
between executive pay and Company performance. Shareholders expressed strong support for our executive
compensation program at our 2016 Annual Meeting of Shareholders, with more than 96% of the votes cast in favor
of our Say-on-Pay proposal.
Executive Compensation
Our Board of Directors, assisted by its committees, oversees management's enterprise-wide risk management
activities. Risk management activities include assessing and taking actions necessary to mitigate and manage risk
incurred in connection with the long-term strategic direction and operation of our business.
Enterprise-Wide Risk Oversight
See the "Corporate Governance" portion of this proxy statement for further information on our governance
practices.
Absence of Rights Plan - We do not have a shareholder rights plan, commonly referred to as a "poison
pill."
Political Contributions Disclosure We publicly disclose our political contributions and public advocacy
efforts and the contributions of our federal and state political action committees.
- We provide standard employee benefits and very limited
Short Selling and Hedging Transactions in Company Securities · Our insider trading policy prohibits all
directors, executive officers and employees from engaging in short sales and hedging transactions relating
to our common stock, and requires advance approval of the Compensation Committee of any pledging of
common stock by directors, executive officers and other members of management.
•
Summary of Compensation Paid to Stephen Hemsley, our CEO, in 2016
•
Base salary $1.3 million, which is unchanged since 2006.
Our 2011 Stock Incentive Plan prohibits the repricing of stock options and stock appreciation rights without
shareholder approval.
.
Independent Compensation Consultant Our Compensation and Human Resources Committee (the
"Compensation Committee”) uses an independent compensation consultant that performs no consulting or
other services for the Company.
control arrangements for equity grants.
Double-trigger change
Performance-based compensation arrangements, including performance-based equity awards, that use a
variety of performance measures, with different measures used for annual and long-term plans.
No excise tax gross-ups and very limited perquisites.
•
•
•
We maintain strong governance standards in the oversight of our executive compensation policies and practices,
including:
Strong Governance Standards in Oversight of Executive Compensation Policies
3
Information regarding compensation paid to each of our named executive officers in 2016 is described in the
"Compensation Discussion and Analysis" section.
Company matching contributions - $133,425 under our 401(k) and executive savings plan.
Performance shares with a target grant date fair value of $4.675 million, restricted stock
units with a grant date fair value of $2.337 million and stock options with a grant date fair value of
$2.337 million.
Equity awards
•
Cash incentive awards · Annual cash incentive award of $4 million and long-term cash incentive award of
$908,500, which reflect the Company's performance against pre-set goals and continued strong leadership
by Mr. Hemsley.
-
•
•
material restatement or in the event of a senior executive's violation of non-compete, non-solicit or
confidentiality provisions.
Revenues increased 17.7% to $184.8 billion from $157.1 billion in 2015;
Stock Retention Policy We generally require executive officers to hold, for at least one year, one-third of
the net shares acquired upon vesting or exercise of any equity award. Our directors are required to hold all
equity awards granted until completion of service on the Board, or until they have met our stock ownership
requirements.
.
•
•
.
•
•
•
•
•
•
1
We are a diversified health and well-being company whose mission is to help people live healthier lives and to help
make the health system work better for everyone. We achieved strong business results in 2016, including:
Business Results
This summary highlights information contained elsewhere in this proxy statement. We encourage you to review the
entire proxy statement. This proxy statement and our Annual Report for the year ended December 31, 2016 are
first being mailed to the Company's shareholders and made available on the Internet at
www.unitedhealthgroup.com/proxymaterials on or about April 21, 2017. Website addresses included throughout this
proxy statement are for reference only. The information contained on our website is not incorporated by reference
into this proxy statement.
Proxy Summary
==
91
90
880
•
87
Operating earnings increased 17.3% year-over-year to $12.9 billion, and net earnings attributable to
UnitedHealth Group common shareholders increased to over $7 billion and were supported by cash flows
from operations of $9.8 billion;
Adjusted earnings per share¹ increased 24.8% to $8.05 per share from $6.45 per share in 2015;
Return on equity exceeded 19% in 2016;
Total shareholder return, which is defined as the increase in stock price, together with dividends paid, was
38% in 2016 and 120% over the 2014-2016 time period;
—
Proxy Access A shareholder or group of shareholders who have owned at least 3% of our common
stock for at least three years, and who complies with specified procedural and disclosure requirements,
may include in our proxy materials shareholder-nominated director candidates for up to 20% of the Board.
Chief Executive Officer ("CEO") Succession Planning · - Our succession plan, which is reviewed annually
by our Board of Directors, addresses both an unexpected loss of our CEO and longer-term succession.
Stock Ownership Guidelines · - Each of our executive officers and directors were in compliance with our
stock ownership guidelines as of March 14, 2017. Mr. Hemsley, our CEO, owned shares equal to
424 times his base salary as of March 14, 2017.
-
Nominating Advisory Committee - Our Nominating Advisory Committee, comprised of long-term
shareholders of the Company and a member of the medical community, provides our Nominating and
Corporate Governance Committee (the "Nominating Committee”) with additional input regarding desirable
characteristics of director candidates and the composition of our Board.
shareholders. We have an independent Chair of our Board of Directors, and nine of our ten directors are
independent.
•
•
•
•
•
Clawback Policy - We have adopted a clawback policy that entitles the Board of Directors to seek
reimbursement from our senior executives if they are involved in fraud or misconduct that causes a
Our directors are elected annually by a majority vote of our
UnitedHealth Group is committed to meeting high standards of ethical behavior, corporate governance and
business conduct in everything we do, every day. This commitment has led us to implement many governance best
practices, including the following:
Corporate Governance
1
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix in this proxy statement for
a reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
UnitedHealth Group was recognized for 2016 as a "Winning 'W' Company" by 2020 Women on Boards for
having 20% of our Board seats held by women.
Dr. Wilensky was included in the 2016 NACD Director 100 list of the most influential people in the
boardroom; and
Ms. Hooper was included in Savoy magazine's 2016 Most Influential Black Corporate Directors and
In 2016, three UnitedHealth Group directors were included in the list of top ten directors in The Street
article, "Here Are the 10 Directors You Want on Your Company's Board;"
UnitedHealth Group was named to both the Dow Jones Sustainability World and North America Indices for
the 18th consecutive year;
Our annual cash dividend rate increased to $2.50 per share, paid quarterly, representing a 25% increase
over the annual cash dividend rate of $2.00 per share paid quarterly since the second quarter of 2015;
UnitedHealth Group was the top ranking company in the insurance and managed care sector on Fortune's
2017 "World's Most Admired Companies" list, based on 2016 results. This is the seventh consecutive year
UnitedHealth Group has ranked No. 1 overall in its sector;
Board Structure and Composition
Annual advisory shareholder votes to approve the Company's executive compensation.
Criteria for Nomination to the Board
•
Meeting
5
4 Committee
Matters
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Audit
5
LO
AGAINST
Lobbying Disclosure
Board Recommendation
Shareholder Proposal Regarding
5
Page 72
The Board does not believe the proposal is in the
best interests of the Company or our shareholders
and is redundant to existing comprehensive state and
federal public disclosure requirements.
Disclosure
Regarding Lobbying
Other
Information
AGAINST
BOARD OF DIRECTORS
Director Nomination Process
86
6
CO
Each of our director nominees has satisfied all the core director criteria set forth in the skills matrix, except that
Mr. Hemsley is not an independent director because he is our CEO.
Ability to work collegially and collaboratively with other directors and management.
Understanding of and experience with complex public companies or like organizations; and
•
Risk oversight ability with respect to the particular skills of the individual director;
•
Standing and reputation in the individual's field;
•
High integrity and ethical standards;
•
Service on no more than three public company boards other than the Company;
Independence under the Company's Standards for Director Independence and New York Stock Exchange
("NYSE") listing requirements, subject to waiver by the Nominating Committee;
•
a list of core criteria that every member of the Board should meet and a list of
skills and attributes to be represented collectively on the Board. The following are core director criteria that should
be satisfied by each director or nominee:
―
The skills matrix has two sections
The Nominating Committee developed and maintains a skills matrix to assist it in considering the appropriate
balance of experience, skills and attributes required of a director and to be represented on the Board as a whole.
The skills matrix is based on the Company's strategic plan and is regularly reviewed and updated by the
Nominating Committee. The key features of the skills matrix are also discussed with members of our Nominating
Advisory Committee and their feedback is considered by the Nominating Committee when it updates the skills
matrix. The Nominating Committee evaluates Board candidates against the skills matrix when determining whether
to recommend candidates for initial election to the Board and when determining whether to recommend currently
serving directors for reelection to the Board.
The Nominating Committee analyzes, on an annual basis, director skills and attributes, and recommends to the
Board of Directors appropriate individuals for nomination as Board members.
Proposal 1 - Election of Directors
Shareholder Proposal
5
FOR
FOR
For Each Candidate
Board Recommendation
Reasons for Recommendation
The Board and Nominating Committee believe that
the nine Board candidates possess the experience,
skills, attributes and diversity to effectively monitor
performance, provide oversight and advise
management on the Company's strategy.
2
"Say-on-Pay" vote)
Compensation (a
Company's Executive
FOR
Advisory Approval of the
2
Election of Directors
1
FOR
Election of nine directors
1
Proposal
Board
Recommendation
Voting Matters and Vote Recommendations
A clawback policy entitling the Board of Directors to seek reimbursement from senior executives if they are
involved in fraud or misconduct that causes a material restatement or in the event of a senior executive's
violation of non-compete, non-solicit or confidentiality provisions.
A stock retention policy requiring executive officers to hold, for at least one year, one-third of the net
shares acquired upon vesting or exercise of any equity award.
Advisory Approval of
Executive Compensation
Our executive compensation program is designed to
attract and retain highly qualified executives and to
maintain a strong link between pay and the
achievement of enterprise-wide goals. We emphasize
and reward teamwork and collaboration among
executive officers, which we believe fosters Company
growth and performance, optimizes the use of
enterprise-wide capabilities, drives efficiencies and
integrates products and services for the benefit of our
customers and other stakeholders.
Board Recommendation
FOR
Board Recommendation
Ratification of Independent
Registered Public Accounting Firm
4
Page 71
Based on the Audit Committee's assessment of
Deloitte & Touche's qualifications and performance, it
believes their retention for fiscal year 2017 is in the
best interests of the Company.
Accounting Firm
FOR
Ratification of Independent
Registered Public
4
EVERY
YEAR
Stock ownership guidelines requiring executive officers to beneficially own specified amounts of the
Company's common stock within five years of their appointment as an executive officer.
Board Recommendation
3
Page 67
The Board believes holding an annual advisory
Say-on-Pay vote is a best practice, consistent with our
current practice and consistent with our policy of
seeking regular input from shareholders on corporate
governance and executive compensation matters.
the Frequency of Holding
Future Say-on-Pay Votes
EVERY YEAR
Advisory Vote Regarding
3
Page 66
Page 6
More
Information
Advisory Approval of Frequency of
Future Say-on-Pay Votes
86
Page
76
1
Proxy Summary...
84
Table of Contents
The Notice of Internet Availability of Proxy Materials, Notice of Annual Meeting of Shareholders,
Proxy Statement and Annual Report are available at www.unitedhealthgroup.com/proxymaterials.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 5, 2017:
April 21, 2017
Board of
Directors
Secretary to the Board of Directors
Dannett L. Smitt
By Order of the Board of Directors,
Important. Even if you plan to attend the Annual Meeting, we still encourage you to submit
your proxy by Internet, telephone or mail prior to the meeting. If you later choose to revoke
your proxy or change your vote, you may do so by following the procedures described
under Question 13 of the "Questions and Answers About the Annual Meeting and Voting"
section in the attached proxy statement.
To attend the Annual Meeting, you will need to bring an admission ticket and valid photo
identification. You may attend the Annual Meeting by following the procedures described
under Question 7 of the "Questions and Answers About the Annual Meeting and Voting"
section in the attached proxy statement.
To transact other business that properly may come before the Annual Meeting or any
adjournments or postponements of the meeting.
To consider a shareholder proposal set forth in the attached proxy statement, if
properly presented at the Annual Meeting.
public accounting firm for the Company for the year ending December 31, 2017.
Dannette L. Smith
To ratify the appointment of Deloitte Touche LLP as the independent registered
Proposal 1 - Election Of Directors.
2017 Director Nominees.
Director Compensation.
2016 Director Compensation Table
15
14
14
14
13
13
Director Nomination Process
9
6
1
Other Compensation..
Director Deferral Plan.....
Stock Ownership Guidelines..
Equity-Based Compensation
Cash Compensation
6
An advisory vote regarding the frequency of holding future Say-on-Pay votes.
An advisory vote to approve the compensation paid to the Company's named executive
officers as disclosed in the attached proxy statement (a "Say-on-Pay" vote).
To elect the nine nominees set forth in the attached proxy statement to the Company's
Board of Directors.
UNITEDHEALTH GROUP
Richard T. Burke
Chair of the Board
Stephen J. Hemsley
Chief Executive Officer
ем
Sincerely,
Every shareholder vote is important, and we encourage you to vote as promptly as possible. If you cannot attend
the meeting in person, you may listen to the meeting via webcast. Instructions on how to access the live webcast
are included in the proxy statement.
Different methods you can use to vote your proxy, including by Internet, telephone and mail.
Notice of 2017 Annual Meeting of Shareholders
•
•
Attached you will find a notice of meeting and proxy statement that contain further information about the items
upon which you will be asked to vote and the meeting itself, including:
As a shareholder of UnitedHealth Group, you play an important role in our company by considering and taking
action on the matters set forth in the attached proxy statement. We appreciate the time and attention you invest in
making thoughtful decisions.
We cordially invite you to attend our 2017 Annual Meeting of Shareholders. We will hold our meeting on Monday,
June 5, 2017, at 10:00 a.m. Central Time in the lower level conference center at 300 North LaSalle, Chicago,
Illinois 60654.
Dear Shareholder:
UNITEDHEALTH GROUP
9900 Bren Road East, Minnetonka, Minnesota 55343
April 21, 2017
How to obtain admission to the meeting if you plan to attend; and
Date
Time
Location
•
•
•
•
•
•
April 11, 2017. Only shareholders of record of the Company's common stock at the close
of business on the record date are entitled to receive notice of, and to vote at, the Annual
Meeting and any adjournments or postponements of the meeting.
Chicago, Illinois 60654
300 North LaSalle
Lower Level Conference Center
10:00 a.m. Central Time
June 5, 2017
Webcast
Proxy Voting
Admission to the
Annual Meeting
Items of Business
Record Date
16
Overview........
You can listen to the live webcast of the Annual Meeting by logging on to our website at
www.unitedhealthgroup.com and clicking on "Investors" and then on the link to the
webcast. See Question 10 of the "Questions and Answers About the Annual Meeting and
Voting" section in the attached proxy statement.
Principles of Governance...
Other Information
6
Annual Meeting
5
Audit Committee
Matters
4
Page
Audit Committee Report
¡
Proposal 3 - Advisory Approval Regarding the Frequency of Holding
Future Say-on-Pay Votes..
66
64
60
59
58
-
67
68
87
Disclosure of Fees Paid to Independent Registered Public Accounting Firm .. 70
Audit Committee's Consideration of Independence of Independent
Registered Public Accounting Firm…....
72
Appendix A Reconciliation of Non-GAAP Financial Measures.
Section 16(a) Beneficial Ownership Reporting Compliance......
Certain Relationships and Transactions
Other Matters at Meeting..
Security Ownership of Certain Beneficial Owners and Management
Householding Notice ......
18
71
Ratification of Independent Registered Public Accounting
70
70
77
-
Proposal 5
-
Proposal 4
Firm......
Audit and Non-Audit Services Approval Policy.
Potential Payments Upon Termination or Change in Control
Proposal 2 - Advisory Approval of the Company's Executive
Compensation.
Executive Employment Agreements......
- Shareholder Proposal Regarding Lobbying Disclosure .....
Questions and Answers About the Annual Meeting and Voting ..
2016 Pension Benefits
24
Board Committees..
24
23
21
20
20
20
2222222
Board Meetings and Annual Meeting Attendance...
Risk Oversight …...
Independent Board Leadership.
Director Independence.
Code of Conduct: Our Principles of Ethics & Integrity.
Corporate
Governance
2
2016 Non-Qualified Deferred Compensation
Communication with the Board of Directors
27
Compliance and Ethics....
28
Executive Summary ..
56
55
Outstanding Equity Awards at 2016 Fiscal Year-End..
52
2016 Grants of Plan-Based Awards....
49
2016 Option Exercises and Stock Vested..
3
Compensation Discussion and Analysis
2016 Summary Compensation Table.
30
Compensation Committee Report.........
Executive
Compensation
48
Compensation Committee Interlocks and Insider Participation..
48
88
Hospital Investments. Dr. Bueno indirectly owned a majority interest in seven hospitals located in Rio de Janeiro,
São Paulo and Brasilia that provide medical services to Amil plan members. Services to Amil plan members
represent approximately 26% of the aggregate revenue of these hospitals during the period from January 1, 2016
through December 31, 2016. The services are provided pursuant to contracts between Amil and each individual
hospital. The contracts will expire in 2022. From January 1, 2016 to December 31, 2016, Amil paid these hospitals
$202.7 million for services to Amil plan members. Amil also has a right of first offer and a right of first refusal to
purchase interests in these hospitals had Dr. Bueno or his affiliates determined to transfer their interests to third
parties within ten years from the date of the closing, or October 26, 2022.
Diagnosticos da America S.A. ("DASA"). As of December 31, 2016, Dr. Bueno owned directly and through an
affiliated entity a minority interest in DASA and had voting control over a majority of DASA's shares. Dr. Bueno's
son is the president of DASA. DASA provides vaccinations, diagnostic services and laboratory and pathology tests
to many customers in Brazil, including Amil plan members. Services outside of São Paulo, Brazil are provided
pursuant to a contract which automatically renews for successive 36-month terms. Services in São Paulo are
provided pursuant to a contract with a term ending in 2026 (which is renewable for successive 15-year terms). Amil
generally receives a discount on services provided to its members ranging from 2% to 12.5%, depending on
volume. Amil has granted DASA the exclusive right to provide laboratory and pathology testing services at
approximately 64 locations in São Paulo during the term of the contract and receives a discount on services
ranging from 4% to 15%, depending on volume. From January 1, 2016 to December 31, 2016, Amil paid DASA
$171.2 million, which reflects discounts over market rates in part due to exclusivity arrangements.
The Nominating Committee of the Board of Directors has ratified the relationships set forth below. U.S. dollar
amounts have been converted into U.S. dollars based on an exchange rate of R$3.2551 to US$1.00, the average
exchange rate for the year ended December 31, 2016. These exchange rates are the same exchange rates used
for financial reporting purposes.
Set forth below is information regarding certain business relationships between Amil and related persons, most of
which existed prior to the closing of the acquisition of a majority interest in Amil by the Company in October 2012.
At the time of the Amil acquisition, we reviewed the various business relationships then in effect and determined it
was in the best interest of Amil and the Company that they be preserved. We also believed that Dr. Bueno's
experience and knowledge of international health care and integrated care systems, and training and experience as
a physician and entrepreneur with deep expertise across the continuum of care, made him a valuable member of
our Board. Dr. Bueno passed away in February 2017. At that time, Dr. Bueno and his business partner, Dr. Dulce
Pugliese, continued to own approximately 10% of Amil's outstanding common shares and had committed to retain
such shares for at least five years from the date of the Company's acquisition of Amil, or October 26, 2017, subject
to certain exceptions. Dr. Bueno had the right to put the shares to the Company and the Company had the right to
call the Amil shares upon expiration of the five-year term, unless accelerated upon certain events, at a fair market
value to be determined by appraisal firms selected by the Company and Dr. Bueno.
Transactions with our Former Director, Edson Bueno
Related-Person Transactions
As required under SEC rules, transactions in which the Company was or is to be a participant and the amount
involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest,
are disclosed below.
Other
Information
5
4 Committee
Matters
Executive
Compensation
Audit
Annual
Meeting
5
2
Employment of Family Members of Executive Officer
3
Property Leases. Dr. Bueno had an indirect majority ownership interest in entities from which Amil leases medical
facilities and office space. Amil paid approximately $11.9 million for property leases to the entities in 2016.
Medical Supplies Providers. Dr. Bueno had an indirect majority ownership interest in entities from which Amil
purchases medical supplies. Amil paid approximately $25.7 million for medical supplies to the entities in 2016.
Federação Nacional de Saúde Suplementar. Dr. Bueno was a vice president of Federação Nacional de Saúde
Suplementar, a consortium of major health care providers in Brazil that partner together to exchange experiences,
promote organized debates about major challenges of the sector, and strengthen institutional representation before
society and government. In 2016, Amil paid Federação Nacional de Saúde Suplementar approximately $638,700 in
membership and related fees.
LAVE BRAS Gestão de Têxteis S.A. ("LAVE BRAS"). Dr. Bueno had an indirect minority interest in LAVE BRAS, a
privately-held Brazilian company that provides industrial laundry services to hospitals. In 2016, Amil paid LAVE
BRAS and its subsidiaries $4.7 million for industrial laundry services provided to Amil's hospitals.
Board of
Directors
Aeromil Táxi Aéreo Limitada ("Aeromil”). In connection with the Company's acquisition of Amil, Amil sold 80% of
Aeromil, an air taxi business, to Dr. Bueno to comply with Brazilian restrictions on foreign ownership of such
businesses. Aeromil provides on-demand emergency medical transport services to Amil. The cost to Amil for such
services is based on the operating costs (including utilization and maintenance) of the relevant aircraft. From
January 1, 2016 to December 31, 2016, Amil paid Aeromil $10.8 million for emergency medical transport services.
Amil is entitled to receive dividends equaling 99.9% of the profits of Aeromil and has an irrevocable option to
purchase all of Dr. Bueno's shares in Aeromil at a price of approximately $15 million, the price paid by Dr. Bueno
for his stake in Aeromil. Amil's call option has an indefinite term so long as each party holds stock in Aeromil.
Dr. Bueno was restricted from selling his shares in Aeromil except pursuant to Amil's call option.
Meeting
4 Committee
Matters
Annual
Executive
Compensation
3
Corporate
Governance
Other
Information
Corporate
Governance
Certain Relationships and Transactions
Board of
Directors
Matt Renfro, Larry Renfro's son, and Paul Leary, Larry Renfro's brother-in-law, are employed at Optum. The
compensation paid to each of these employees is consistent with the Company's overall compensation principles
based on the employees' years of experience, performance and positions within the Company.
Audit
Board of
1
2
Directors
Corporate
Governance
Executive
3
Compensation
4 Committee
Matters
5
Annual
Meeting
Other
Information
OTHER INFORMATION
Approval or Ratification of Related-Person Transactions
The Board of Directors has adopted a written Related-Person Transactions Approval Policy, which is administered
by the Nominating Committee. A copy of the policy is available on our website at www.unitedhealthgroup.com.
Under the policy, "related-person" transactions are prohibited unless approved or ratified by the Nominating
Committee. In general, a related-person transaction is any transaction or series of transactions (or amendments
thereto) directly or indirectly involving:
Audit
87
80
Any member of the Nominating Committee who has an interest in the transaction under discussion will abstain from
voting on the approval of the related-person transaction, but may, if so requested by the Chair of the Nominating
Committee, participate in some or all of the Nominating Committee's discussions of the related-person transaction.
Any related-person transaction that is not approved or ratified, as the case may be, will be voided, terminated or
amended, or other actions will be taken in each case as determined by the Nominating Committee so as to avoid
or otherwise address any resulting conflict of interest.
Under the policy, the Company determines whether a transaction falls under the definition of a related-person
transaction requiring review by the Nominating Committee. In determining whether to approve or ratify a related-
person transaction, the Nominating Committee will consider, among other things, whether the terms of the related-
person transaction are fair to the Company and on terms at least as favorable as would apply if the other party
was not an affiliate; the business reasons for the transaction; whether the transaction could impair the
independence of a director under the Company's Standards for Director Independence; and whether the transaction
would present an improper conflict of interest for any director or executive officer of the Company.
Any transaction that involves the providing of compensation to a director or executive officer in connection
with his or her duties to the Company or any of its subsidiaries, including the reimbursement of business
expenses incurred in the ordinary course.
2
Interests arising solely from the ownership of a class of the Company's equity securities if all holders of
that class of equity securities receive the same benefit on a pro rata basis.
•
•
Related-person transactions under the policy do not include:
A director, executive officer or shareholder beneficially owning more than 5% of our common stock, or any
of their respective immediate family members, in which the Company or its subsidiaries is directly or
indirectly a participant and the amount involved exceeds $120,000; provided that if a director is an
executive officer of an entity that is a party to a transaction with the Company or its subsidiaries, and the
director was actively involved in the transaction, then the amount shall be $1.00.
A director or an immediate family member of a director in which an executive officer of the Company is
directly or indirectly a participant and the amount involved exceeds $1.00; or
•
Indemnification and advancement of expenses made pursuant to the Company's Certificate of Incorporation
or Bylaws or pursuant to any agreement or instrument.
Transactions with 5% Shareholders
FMR LLC beneficially owned approximately 5.94% of our common stock as of December 31, 2016. The Company
and its employees paid Fidelity Management & Research Company ("Fidelity"), a wholly owned subsidiary of
FMR LLC, $5.8 million in investment and benefits management fees in 2016. Fidelity maintains a self-funded health
insurance plan through the Company and paid the Company $17.5 million for administrative services,
approximately $2.8 million for in-house fitness service management fees and approximately $782,300 for software
products in 2016.
$
Year Ended
December 31, 2016
Year Ended
December 31, 2015
$
7,017
$
882
650
350
(454)
(227)
$
7,795
$
6,236
7.25
$
BlackRock Inc. beneficially owned approximately 7.3% of our common stock as of December 31, 2016. The
Company paid BlackRock $3.1 million for investment management fees in 2016. BlackRock maintains a self-funded
health insurance plan through the Company and paid the Company $1.8 million for administrative services in 2016.
91
GAAP and adjusted net earnings are attributable to UnitedHealth Group common shareholders.
1
6.45
$
Adjusted diluted earnings per share
8.05
(0.23)
(0.47)
0.36
0.67
0.91
6.01
$
Tax effect per share
5,813
Intangible amortization per share
Meeting
5
4 Committee
Matters
Other
Penn Treaty impact per share
Executive
Compensation
Information
3
Directors
2
1
Board of
Audit
89
Corporate
Governance
Section 16(a) Beneficial Ownership Reporting Compliance
Annual
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own
more than 10% of our common stock, to file initial reports of ownership and reports of changes in ownership with
the SEC and the NYSE. Executive officers, directors and greater-than-10% beneficial owners are required by SEC
rules to furnish us with copies of all Section 16(a) reports they file. Based solely on our review of these reports and
written representations from our executive officers and directors, we believe that all of our executive officers and
directors complied with all Section 16(a) filing requirements during 2016.
GAAP diluted earnings per share
Adjusted net earnings
Penn Treaty impact
Tax effect
GAAP net earnings
Intangible amortization
(unaudited)
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED NET EARNINGS AND EARNINGS PER SHARE¹
(in millions, except per share data)
Use of Non-GAAP Financial Measures
-
-
Appendix A Reconciliation of Non-GAAP Financial Measures
90
90
Adjusted net earnings per share is a non-GAAP financial measure. Non-GAAP financial measures should be
considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with
GAAP. Management believes that the use of adjusted net earnings per share provides investors and management
useful information about the earnings impact of acquisition-related intangible asset amortization and the earnings
impact of the recognition of the Company's estimated share of guaranty association assessments resulting from the
liquidation of Penn Treaty.
60
2007
2017
64
2000
65
70
1993
61
2008
82
2009
73
The director nominees, if elected, will serve until the 2018 Annual Meeting or until their successors are elected and
qualified. Following is a brief biographical description of each director nominee. A table listing the areas of
expertise in the skills matrix that are held by each director and that, in part, led the Board to conclude that each
respective director should continue to serve as a member of the Board is included on page 7.
1977
2011
73
5
76
William C. Ballard, Jr.
6
Meeting
Information
The Board of Directors recommends that you vote FOR the election of each of the nominees. Executed
proxies will be voted FOR the election of each nominee unless you specify otherwise.
Name
William C. Ballard, Jr.
Richard T. Burke
Timothy P. Flynn
Stephen J. Hemsley
Michele J. Hooper
Rodger A. Lawson
Glenn M. Renwick
Kenneth I. Shine, M.D.
Gail R. Wilensky, Ph.D.
Age
Director Since
1993
Director since 1993
2
Richard T. Burke
Mr. Hemsley is CEO of UnitedHealth Group and has served in that capacity since 2006. He has been a member of
the Board of Directors since 2000. Mr. Hemsley joined the Company in 1997 as Senior Executive Vice President
and became Chief Operating Officer in 1998. Mr. Hemsley served as President and Chief Operating Officer from
1999 to 2006 and as President and CEO from 2006 to November 2014. Mr. Hemsley currently serves as a director
of Cargill, Inc.
Michele J. Hooper
Director since 2007
Ms. Hooper is President and CEO of The Directors' Council, a private company she co-founded in 2003 that works
with corporate boards to increase their independence, effectiveness and diversity. She was President and CEO of
Voyager Expanded Learning, a developer and provider of learning programs and teacher training for public
schools, from 1999 until 2000. Prior to that, she was President and CEO of Stadtlander Drug Company, Inc., a
provider of disease-specific pharmaceutical care, from 1998 until Stadtlander was acquired in 1999. Ms. Hooper is
a nationally recognized corporate governance expert. Ms. Hooper currently serves as a director of PPG
Industries, Inc.
Rodger A. Lawson
Director since 2011
Mr. Lawson currently serves as Executive Chair of the Board of Directors of E*TRADE Financial Corporation, a
financial services company, and has served in that capacity since September 2016. Mr. Lawson previously served
as Chair of the Board of E*TRADE from May 2014 to September 2016. Prior to joining E*TRADE, Mr. Lawson was
President of Fidelity, a mutual fund and financial services company, from 2007 to 2010. Prior to joining Fidelity,
Mr. Lawson was Vice Chairman of Prudential Financial from 2002 to 2007 where he was responsible for the
International Operating Division and for Global Marketing Communications. Mr. Lawson served as Executive Vice
President of Prudential from 1996 to 2002. Prior to joining Prudential, Mr. Lawson was President and CEO of
VanEck Global from 1994 to 1996. Mr. Lawson was Managing Director and Partner-in-Charge of Private Global
Banking and Mutual Funds at Bankers Trust from 1992 to 1994. Mr. Lawson was a Managing Director and CEO at
Fidelity Investments-Retail from 1985 to 1991, and President and CEO at Dreyfus Service Corporation from 1982
to 1985.
Director since 2000
11
Board of
Directors
5
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
Audit
Stephen J. Hemsley
Mr. Flynn was the Chairman of KPMG International (“KPMG”), a global professional services organization that
provides audit, tax, and advisory services, from 2007 until his retirement in October 2011. From 2005 until 2010, he
served as Chairman and from 2005 to 2008 as Chief Executive Officer of KPMG LLP in the U.S., the largest
individual member firm of KPMG. Prior to serving as Chairman and CEO of KPMG LLP, Mr. Flynn was Vice
Chairman, Audit and Risk Advisory Services, with operating responsibility for Audit, Risk Advisory and Financial
Advisory Services practices. He has been a director of the International Integrated Reporting Council since
September 2015, and he previously served as a trustee of the Financial Accounting Standards Board, a member of
the World Economic Forum's International Business Council, and was a founding member of The Prince of Wales'
International Integrated Reporting Committee. Mr. Flynn currently serves as a director of Alcoa, JPMorgan
Chase & Co. and Wal-Mart Stores, Inc. He served as a member of the board of directors of The Chubb
Corporation from September 2013 until its acquisition in January 2016.
Director since 2017
Director since 1977
Mr. Burke is Chair of the Board of Directors of UnitedHealth Group, has been a member of our Board since 1977,
and was CEO of UnitedHealthcare, Inc., our predecessor corporation, until 1988. From 1995 until 2001, Mr. Burke
was the owner, CEO and Governor of the Phoenix Coyotes, a National Hockey League team. Mr. Burke currently
serves as a director of Meritage Homes Corporation.
10
10
Audit
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
5
6
Meeting
Other
Information
Timothy P. Flynn
Mr. Ballard served as Of Counsel to Bingham Greenebaum Doll LLP (formerly Greenebaum Doll & McDonald PLLC),
a law firm in Louisville, Kentucky, from 1992 until 2008. In 1992, Mr. Ballard retired from Humana, Inc., a company
operating managed health care facilities, after serving with Humana in various roles for 22 years, including as the
Chief Financial Officer ("CFO") and a director. In the past five years, he also served as a director of Welltower, Inc.
(formerly Health Care REIT, Inc.).
4 Committee
Matters
UnitedHealth Group embraces and encourages a culture of diversity and inclusion. We believe that valuing diversity
makes good business sense and helps to ensure our future success. Diversity is included as one of the collective
attributes in our director skills matrix. Our Board has not adopted a formal definition of diversity.
Annual
Clinical Practice
Political/Health Care Policy/Regulatory
Capital Markets
The lack of a ⚫ for a particular area does not mean that the director does not possess that qualification, skill or
experience. We look to each director to be knowledgeable in these areas; however, the indicates that the area is
a specific qualification, skill or experience that the director brings to the Board.
Our Nominating Committee strives to maintain a balance of tenure on the Board. Long-serving directors bring
valuable experience with our Company and familiarity with the successes achieved and challenges it has faced
over the years, while newer directors bring fresh perspectives and ideas. Tenure of the nine director nominees is
as follows:
Number of Director Nominees
2016
Technology/Business Processes
7
■ 0 - 5 Years
6-10 Years
■ More Than 10 Years
Audit
Board of
Directors
2
Corporate
Governance
Years of Service on the Board
3
Organizations
Diversity
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
5
Meeting
Experience with Large Complex
Other
Information
Ballard Burke Flynn Hemsley Hooper Lawson Renwick Shine Wilensky
2
Corporate Governance
Finance
Health Care Industry
Direct Consumer Markets
Social Media/Marketing
The skills matrix provides further that the Board as a whole should represent a diverse group and have expertise in
the substantive areas included in the following table, which also indicates the director nominees with expertise in
each area.
Other
Executive
Compensation
Other
Meeting
Other
Information
for a new director to possess. The Nominating Committee has an outside firm on retainer to assist in identifying
and evaluating director candidates. The Nominating Committee will also consider recommendations submitted by
shareholders for director candidates. Recommendations should be directed to the Secretary to the Board of
Directors. None of the Company's shareholders recommended candidates for the Board of Directors in connection
with the 2017 Annual Meeting.
Shareholder Director Candidates for Inclusion in our Proxy Statement (Proxy Access)
Our Bylaws provide a shareholder or group of shareholders (of up to 20) who have owned at least 3% of our
common stock for at least three years the ability to include in our proxy statement shareholder-nominated director
candidates for up to 20% of the Board. To be eligible to use this right, the shareholder(s) and the candidate(s)
must satisfy the requirements specified in our Bylaws. Our Bylaws are available at
www.unitedhealthgroup.com/About/Corporate Governance.aspx. For the 2018 Annual Meeting, director nominations
submitted under these Bylaw provisions must be received at our principal executive offices, directed to the
Secretary to the Board of Directors, no earlier than November 22, 2017 and no later than December 22, 2017.
Shareholder Nominations of Director Candidates at a Meeting
Our shareholders may also nominate candidates for election to the Board of Directors from the floor of our Annual
Meeting of Shareholders, instead of including the director candidate in our proxy statement, only by submitting timely
written notice to the Secretary to the Board in accordance with our Bylaws. The notice must include the information
required by our Bylaws, which are available at www.unitedhealthgroup.com/About/Corporate Governance.aspx. For the
2018 Annual Meeting, this notice must be received at our principal executive offices, directed to the Secretary to the
Board of Directors, no earlier than February 5, 2018 and no later than March 7, 2018.
5
2017 Director Nominees
9
Audit
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Corporate
Governance
3
Executive
Compensation
Our Certificate of Incorporation and Bylaws provide that each member of our Board of Directors is elected annually
by a majority of votes cast if the election is uncontested. The Board of Directors has nominated the nine directors
set forth below for election by the shareholders at the 2017 Annual Meeting. All of the director nominees were
elected by our shareholders at the 2016 Annual Meeting except for Mr. Flynn, who was appointed unanimously by
the Board in January 2017. All of the nominees have informed the Board that they are willing to serve as directors
if elected. If any nominee should decline or become unable to serve as a director for any reason, the persons
named as proxies will elect a replacement. After ten years of exceptional service, Mr. Darretta is not standing for
election at the 2017 Annual Meeting.
Annual
4 Committee
Matters
Executive
Compensation
4 Committee
Matters
5
Meeting
Information
Board Diversity
Our Board assesses its overall effectiveness through an annual evaluation process. This evaluation includes,
among other things, an assessment of the overall composition of the Board, including the diversity of its members.
Although the Board does not establish specific goals with respect to diversity, the Board's overall diversity is a
consideration in the director nomination process. For this year's election, the Board has nominated nine individuals;
all are incumbent nominees who collectively bring tremendous diversity to the Board. Each nominee is a strategic
thinker and has varying, specialized experience in the areas that are relevant to the Company and its businesses.
Moreover, their collective experience covers a wide range of geographies and industries, including health care,
insurance, consumer products, technology and financial services, including roles in academia and government. The
nine director nominees range in age from 60 to 82 and two of the nine director nominees are women; one is
African American; and two are citizens of other countries, specifically New Zealand and the United Kingdom.
Nominating Advisory Committee
Annual
The Board of Directors formed the Nominating Advisory Committee in 2006 to provide the Nominating Committee
with additional input from shareholders and others regarding desirable characteristics of director candidates and the
composition of the Board of Directors. The Nominating Committee considers, but is not bound by, input provided by
the Nominating Advisory Committee. The Nominating Advisory Committee currently includes four individuals
affiliated with long-term shareholders of the Company and one individual who is a member of the medical
community. Members of the Nominating Advisory Committee do not receive any compensation from the Company
for serving on the Nominating Advisory Committee. The Nominating Advisory Committee met twice in 2016. A
description of the Nominating Advisory Committee, including a description of how the members of the committee
are nominated and selected, can be found on our website at www.unitedhealthgroup.com.
In assessing current directors for potential re-nomination, the Nominating Committee reviews the directors' overall
performance on the Board of Directors and other relevant factors, including the factors listed above under "Criteria
for Nomination to the Board." All of the director nominees were elected by our shareholders at the 2016 Annual
Meeting except for Mr. Flynn, who was appointed unanimously by the Board in January 2017. With respect to that
appointment, the Nominating Committee considered a number of potential candidates and Mr. Flynn emerged as
the finalist due to his overall skill set and experience. Prior to his appointment, Mr. Flynn's profile was discussed
with the members of our shareholder Nominating Advisory Committee, which was uniformly supportive and positive.
In considering potential candidates for election to the Board, the Nominating Committee, with input from the full
Board of Directors, assesses the potential candidate's qualifications and how these qualifications fit with the desired
composition of the Board of Directors as a whole. The Nominating Committee considers views expressed by
members of the Nominating Advisory Committee and other shareholders regarding skill sets that would be valuable
8
Audit
Board of
Directors
2
Corporate
Governance
3
Process for Identifying and Evaluating Nominees; Shareholder Recommendations for
Director Candidates
6
18,000
Other
Information
2016 Director Compensation Table
The following table provides summary information for the year ended December 31, 2016 relating to compensation
paid to or accrued by us on behalf of our non-employee directors who served in this capacity during 2016.
Mr. Hemsley is an employee director and does not receive additional compensation for serving as a director.
Dr. Bueno, an employee director who passed away in February 2017, also did not receive compensation in 2016.
Mr. Flynn did not serve as a director until January 2017.
Change in Pension
Value and
Non-Qualified
Fees Earned
or Paid in
Cash
Information
Name
Stock
Awards
($)(2)
Option
Awards
($)(3)
Deferred
Compensation
Earnings
($)(4)
All Other
Compensation
Total
($)(5)
($)
($)(1)
William C. Ballard, Jr.
Meeting
4 Committee
Matters
for cash deferrals, an immediate lump sum upon the completion of his or her service on the Board of
Directors; or
16
The Director Deferral Plan does not provide for matching contributions by the Company.
Other Compensation
We reimburse directors for any out-of-pocket expenses incurred in connection with service as a director. We also
provide health care coverage to directors but only if the director is not eligible for coverage under another group
health care benefit program. Health care coverage is provided generally on the same terms and conditions as
current employees. Upon retirement from the Board of Directors, directors may continue to obtain health care
coverage under benefit continuation coverage, and after the lapse of such coverage, under the Company's
post-employment medical plan for up to a total of 96 months if they are otherwise eligible.
The Company maintains a program through which it will match up to $15,000 of charitable donations made by
each director for each calendar year. The directors do not receive any financial benefit from this program because
the charitable income tax deductions accrue solely to the Company. Donations under the program may not be
made to family trusts, partnerships or similar organizations.
Our corporate aircraft use policy prohibits personal use of corporate aircraft by any director. Because there is
essentially no incremental cost to the Company, however, the policy does permit a director's family member to
accompany the director on a business flight on Company aircraft provided a seat is available.
5
15
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
Audit
•
125,000
18,000
Glenn M. Renwick
Kenneth I. Shine, M.D.
Gail R. Wilensky, Ph.D.
-
325,189
343,189
175,142
344,784
18,000
175,280
18,000
333,280
125,000
140,000
(1) Mr. Darretta converted his $125,000 cash compensation into 957 DSUs, and Mr. Renwick converted his $150,000 cash
compensation into 1,148 DSUs.
(2) The amounts reported reflect the aggregate grant date fair value of the stock awards granted in 2016 computed in
accordance with FASB ASC Topic 718, based on the closing stock price on the grant date. The amounts reported include
for each director the aggregate grant date fair value of the annual equity award of DSUS granted in quarterly installments.
The amounts reflect the value of fractional shares issued with the quarterly installments as we round equity grants up to
the nearest whole share. For Messrs. Darretta and Renwick, we combined the cash compensation they elected to convert
into DSUs on a quarterly basis and the value of the quarterly DSU grant prior to determining the number of DSUs to be
granted each quarter. For 2016, Dr. Shine elected that all of his, and Dr. Wilensky elected that a portion of her, annual
DSU awards be granted in shares of common stock.
Board of
Directors
318,142
175,142
24,642
333,632
318,142
Richard T. Burke
425,000
175,142
24,632
624,774
Robert J. Darretta
175,142
-
300,234
Michele J. Hooper
Rodger A. Lawson
140,000
145,000
175,142
18,490
300,234
a delayed lump sum following either the fifth or tenth anniversary of the completion of his or her service on
the Board of Directors;
Other
Information
Meeting
5
Meeting
Information
Director Compensation
Our director compensation and benefit program is designed to compensate our non-employee directors fairly for
work required for a company of our size and scope and to align their interests with the long-term interests of our
shareholders. Director compensation reflects our desire to attract, retain and use the expertise of highly qualified
people serving on the Company's Board of Directors. The Compensation Committee reviews the compensation
level of our non-employee directors on an annual basis and makes recommendations to the Board of Directors. In
August 2016, the Compensation Committee, with the advice of its independent compensation consultant, undertook
an annual review of the structure and philosophy of the director compensation program. This review analyzed the
structure and the overall level and mix of compensation delivered by the Company's director compensation
program as compared to the Company's general industry peer group and also the four large publicly traded
managed health care companies. Following this review, the Compensation Committee recommended, and the
Board approved, an increase effective as of October 1, 2016 to the annual cash retainer paid to the chairs of the
Nominating Committee and Public Policy Committee from $15,000 to $20,000. The Compensation Committee's
recommendations, and the Board's subsequent approval, were made after considering the results of the market
practices review and the complexity of the Company's structure and operations.
The following table highlights the material elements of our director compensation program:
Compensation Element
4 Committee
Matters
Annual Cash Retainer
Annual Compensation Committee Chair Cash Retainer
Annual Nominating Committee Chair Cash Retainer
Annual Public Policy Committee Chair Cash Retainer
Annual Board Chair Cash Retainer
Annual Equity Award
Equity Conversion Program
Compensation Value
$125,000
$ 25,000
Annual Audit Committee Chair Cash Retainer
$ 20,000
Other
Executive
Compensation
Glenn M. Renwick
Director since 2008
Mr. Renwick is Executive Chair of the Board of Directors of The Progressive Corporation, an auto insurance
holding company, and has served in that capacity since July 2016. Mr. Renwick previously served as Chair of the
Board of Progressive from 2013 to 2016 and as President and CEO of Progressive from 2001 to 2016. Before
being named President and CEO in 2001, Mr. Renwick served as CEO-Insurance Operations and Business
Technology Process Leader at Progressive from 1998 to 2000. Prior to that, he led Progressive's Consumer
Marketing group and served as President of various divisions within Progressive. Mr. Renwick joined Progressive in
1986 as Auto Product Manager for Florida. Mr. Renwick also currently serves as a director of Fiserv, Inc.
Kenneth | Shine, M.D.
Director since 1993
Dr. Shine has been Professor of Medicine at the Dell Medical School within the University of Texas System (the
"UT System"), which consists of nine academic campuses and six health institutions, since June 2015. He served
as the Special Advisor to the Chancellor for Health Affairs of the UT System from September 2013 to June 2015,
as Executive Vice Chancellor for Health Affairs of the UT System from 2003 to September 2013, and as interim
Chancellor of the UT System from 2008 to February 2009. Dr. Shine served as President of the Institute of
Medicine at the National Academy of Sciences from 1992 until 2002. From 1993 until 2003, Dr. Shine served as a
Clinical Professor of Medicine at the Georgetown University School of Medicine. From 1971 until 1992, Dr. Shine
served in several positions at the University of California at Los Angeles School of Medicine, with his final position
being Dean and Provost, Medical Sciences, and he continues to hold the position of Professor of Medicine
Emeritus. Dr. Shine also served as Chair of the Council of Deans of the Association of American Medical Colleges
from 1991 until 1992 and as President of the American Heart Association from 1985 until 1986. He is a nationally
recognized cardiologist.
Gail R. Wilensky, Ph.D.
Annual
Director since 1993
12
12
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Board of
Directors
2
Corporate
Governance
3
Dr. Wilensky has been a senior fellow at Project HOPE, an international health foundation, since 1993. From 2008
to 2009, Dr. Wilensky was President of the Department of Defense Health Board and chaired its sub-committee on
health care delivery. From 2006 to 2008, Dr. Wilensky co-chaired the Department of Defense Task Force on the
Future of Military Health Care. During 2007 she also served as a commissioner on the President's Commission on
Care for America's Returning Wounded Warriors. From 2001 to 2003, she was the Co-Chair of the President's
Task Force to Improve Health Care for our Nation's Veterans. From 1997 to 2001, she was also Chair of the
Medicare Payment Advisory Commission. From 1992 to 1993, Dr. Wilensky served as the Deputy Assistant to
President George H. W. Bush for policy development, and from 1990 to 1992, she was the Administrator of the
Health Care Financing Administration (now known as the Centers for Medicare and Medicaid Services) directing
the Medicaid and Medicare programs for the United States. Dr. Wilensky is a nationally recognized health care
economist. Dr. Wilensky currently serves as a director of Quest Diagnostics Incorporated.
$ 20,000*
$ 20,000*
$300,000
$175,000 aggregate fair value of deferred stock units
At the director's election, cash compensation may be
converted into DSUs, or if the director has met the stock
ownership guidelines, into common stock
Stock Ownership Guidelines
Under our stock ownership guidelines, we require non-employee directors to achieve ownership of shares of the
Company's common stock (excluding stock options, but including vested DSUs and vested restricted stock units)
having a fair market value equal to five times the directors' annual base cash retainer. Non-employee directors
must comply with the stock ownership guidelines within five years of their appointment to the Board of Directors. All
of our non-employee directors have met the stock ownership requirement or have served as a director for less than
five years.
Director Deferral Plan
Under the Director Deferral Plan, subject to compliance with applicable laws, non-employee directors may elect
annually to defer receipt of all or a percentage of their compensation. Amounts deferred are credited to a
bookkeeping account maintained for each director participant that uses a collection of unaffiliated mutual funds as
measuring investments. Subject to certain additional rules set forth in the Director Deferral Plan, a participating
director may elect to receive the distribution in one of the following ways:
•
a series of five or ten annual installments following the completion of his or her service on the Board of
Directors;
14
The Company pays dividend equivalents in the form of additional DSUs on all outstanding DSUs. Dividend
equivalents are paid at the same rate and at the same time that dividends are paid to Company shareholders and
are subject to the same vesting conditions as the underlying grant.
Audit
2
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
5
Board of
Directors
If a director elects to convert his or her cash compensation into common stock or DSUs, such conversion grants
are made on the day the eligible cash compensation becomes payable to the director. The director receives the
number of shares of common stock or DSUs, as applicable, equal to the cash compensation foregone, divided by
the closing price of our common stock on the date of grant, rounded up to the nearest share. The DSUS
immediately vest upon grant. A director may only elect to receive common stock if he or she has met the stock
ownership guidelines.
The DSUS immediately vest upon grant and must be retained until completion of the director's service on the Board
of Directors. Upon completion of service, the DSUs convert into an equal number of shares of the Company's
common stock. A director may defer receipt of the shares for up to ten years after completion of service pursuant
to the Director Deferral Plan. Non-employee directors who have met their stock ownership requirement may elect to
receive common stock in lieu of DSUs and/or in-service distributions on pre-selected dates.
Non-employee directors receive annual grants of DSUS under the 2011 Stock Incentive Plan having an annual
aggregate fair value of $175,000, subject to rounding adjustments described below. The grants are in consideration
of general service and responsibilities and required meeting preparation. The grants are issued quarterly in arrears
on the first business day following the end of each fiscal quarter and prorated if the director did not serve the entire
quarter. The number of DSUs granted is determined by dividing $43,750 (the quarterly value of the annual equity
award) by the closing stock price on the grant date, rounded up to the nearest share.
* Effective October 1, 2016, the annual retainer was increased from $15,000 to $20,000.
Cash Compensation
Cash retainers are payable on a quarterly basis in arrears on the first business day following the end of each fiscal
quarter, and subject to pro rata adjustment if the director did not serve the entire quarter. Directors may elect to
receive deferred stock units ("DSUS") or common stock (if the director has met the stock ownership guidelines) in
lieu of their cash compensation or may defer receipt of their cash compensation to a later date pursuant to the
Directors' Compensation Deferral Plan ("Director Deferral Plan").
13
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Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
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5
Meeting
Information
Equity-Based Compensation
Meeting
Audit
pre-selected amounts to be distributed on pre-selected dates while the director remains a member of the
Board of Directors.
(3) The Company did not grant stock option awards to directors in 2016. As of December 31, 2016, our non-employee
directors held outstanding (and unexercised) stock option awards as follows: Mr. Ballard - 50,000 stock options;
Mr. Burke 60,750 stock options; Mr. Darretta - 56,621 stock options; Ms. Hooper - 35,000 stock options;
Mr. Renwick - 33,929 stock options; and Dr. Wilensky — 56,240 stock options.
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Meeting
Information
Director Independence
Our Board of Directors has adopted the Company's Standards for Director Independence, which are available on
our website at www.unitedhealthgroup.com. The Standards for Director Independence requirements exceed the
independence standards set by the NYSE.
3
Our Board of Directors has determined that William C. Ballard, Jr., Richard T. Burke, Robert J. Darretta, Timothy P.
Flynn, Michele J. Hooper, Rodger A. Lawson, Glenn M. Renwick, Kenneth I. Shine, M.D. and Gail R.
Wilensky, Ph.D. are each “independent" under the NYSE rules and the Company's Standards for Director
Independence and have no material relationships with the Company that would prevent the directors from being
considered independent. Stephen J. Hemsley, the Company's CEO, is not an independent director.
•
•
Mr. Burke is an owner of Rainy Partners, LLC. Rainy Partners is a customer of the Company and paid the
Company premiums for health insurance of approximately $214,000 in 2016. These premiums were
determined on the same terms and conditions as premiums for other comparable customers.
Dr. Wilensky is a Senior Fellow of Project HOPE. In 2016, Project HOPE paid the Company approximately
$1.3 million for premiums for health insurance. These premiums were determined on the same terms and
conditions as premiums and fees for other comparable customers. The Company paid Project HOPE
approximately $354,000 for network provider services and approximately $150,000 in sponsorship fees for
a workforce health and productivity project in 2016. The United Health Foundation donated approximately
$190,000 to Project HOPE in 2016 in support of disaster relief in Haiti and its annual fundraising gala. Total
fees paid by the Company and the United Health Foundation to Project HOPE during 2016 were less than
1% of Project HOPE's total revenues for 2016. Dr. Wilensky is neither directly nor indirectly involved in
these relationships.
The Board of Directors also considered relationships between the Company and organizations on which our
non-employee directors or their immediate family members serve only as directors and determined that such
relationships did not impair the directors' exercise of independent judgment.
21
21
Audit
1
In determining independence, the Board of Directors considered, among other factors, the business relationships
between the Company and our directors and nominees, their immediate family members (as defined by the NYSE)
and their affiliated companies. The Board of Directors considered whether any director or any nominee was a
director, partner, significant shareholder or executive officer of an organization that has a relationship with the
Company, and also considered charitable contributions that the Company or its affiliates made to organizations with
which such directors or nominees are or have been associated. In particular, the Board of Directors evaluated the
following relationships and determined that such relationships were in the normal course of business and did not
impair the directors' ability to exercise independent judgment:
Board of
Directors
Corporate
Governance
Board of
Directors
Other
4 Committee
Matters
5
Meeting
Information
.
Our insider trading policy prohibits all directors, executive officers and employees from engaging in short
sales and hedging transactions relating to our common stock, and requires advance approval of the
Compensation Committee of any pledging of common stock by directors, executive officers and other
members of management.
Our Board of Directors believes that effective Board-shareholder communication strengthens the Board of
Directors' role as an active, informed and engaged fiduciary, so we have a communication policy that
outlines how shareholders and other interested parties may communicate with the Board of Directors. See
"Corporate Governance Communication with the Board of Directors."
-
2
A Nominating Advisory Committee comprised of representatives from the shareholder and medical
communities provides input into the composition of our Board of Directors.
Our Certificate of Incorporation and Bylaws, together with Delaware law and NYSE and SEC rules, govern the
Company. Our Board has also adopted "Principles of Governance," which set forth many of the practices, policies
and procedures that provide the foundation for our commitment to strong corporate governance. The policies and
practices covered in our Principles of Governance include shareholder rights and proxy voting; structure,
composition and performance of the Board of Directors; stock ownership and retention requirements; Board of
Directors operation; individual director responsibilities; and Board committees. Our Principles of Governance are
reviewed at least annually by our Nominating Committee and are revised as necessary.
Code of Conduct: Our Principles of Ethics & Integrity
The Code of Conduct: Our Principles of Ethics & Integrity is posted on our website and covers our principles and
policies related to business conduct, conflicts of interest, public disclosure, legal compliance, reporting and
accountability, corporate opportunities, confidentiality, fair dealing and protection and proper use of Company assets.
Any waiver of the Code of Conduct for the Company's executive officers, senior financial officers or directors may be
made only by the Board of Directors or a committee of the Board. We will publish any amendments to the Code of
Conduct and waivers of the Code of Conduct for an executive officer or director on our website.
Compliance and Ethics
We strongly encourage employees to raise ethics and compliance concerns, including concerns about accounting,
internal controls or auditing matters. We offer several channels for employees and third parties to report ethics and
compliance concerns or incidents, including by telephone or online, and individuals may choose to remain
anonymous in jurisdictions where anonymous reporting is permissible. We prohibit retaliatory action against any
individual who in good faith raises concerns or questions regarding ethics and compliance matters or reports
suspected violations. We train all employees and periodically advise them regarding the means by which they may
report possible ethics or compliance issues and their affirmative responsibility to report any possible issues. In our
2016 employee survey, 97% of employees said they knew what to do if they believed unethical behavior or
misconduct occurred in their work area.
20
20
Audit
1
Principles of Governance
Annual
2
3
Interviewing, along with the Chair of the Nominating Committee, all Board candidates and making director
candidate recommendations to the Nominating Committee;
Assisting the Board and the Company in assuring compliance with and implementation of the Company's
Principles of Governance;
Coordinating the performance evaluations of the Board and the Board committees in conjunction with the
Committee Chairs and the Nominating Committee;
.
Working with the Nominating Committee on the membership of Board committees; and
•
Being available for communications with shareholders, as needed.
22
Audit
Serving as an ex-officio member of each committee and working with the Board Committee Chairs on the
performance of their designated roles and responsibilities;
1
2
Corporate
Governance
3
Annual
Other
4 Committee
Matters
5
Meeting
Information
Board of
Directors
Corporate
Governance
Recommending outside advisors and consultants, as necessary, who report directly to the Board on Board-
related issues;
Scheduling and leading the executive sessions of the Board's non-management directors;
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Meeting
Information
Independent Board Leadership
Our Board of Directors believes that having independent Board leadership is an important component of our
governance structure. As such, our Bylaws require the Company to have either an independent Chair of the Board
or a Lead Independent Director. Richard T. Burke serves as our independent Chair. The Company believes the
current leadership structure delineates the separate roles of managers and directors. Our CEO sets the strategic
direction for the Company, working with the Board, and provides day-to-day leadership; our independent Chair of
the Board leads the Board in the performance of its duties and serves as the principal liaison between the
independent directors and the CEO. In addition to these overall differences in duties, our Principles of Governance
outline the specific duties of the Chair of the Board or a Lead Independent Director, including:
Defining the scope, quality, quantity and timeliness of the flow of information between Company
management and the Board that is necessary to effectively and responsibly perform their duties;
Leading the Board process for hiring, terminating and evaluating the performance of the Company's CEO
and working with the Chair of the Compensation Committee on the process for compensating and
evaluating the CEO;
•
•
•
•
.
•
•
Chairing all meetings of the Board at which the Chair is present (Chair of the Board duty only);
Working with the CEO on the scheduling of Board meetings and the preparation of agendas and materials
for Board meetings;
Coordinating the preparation of agendas and materials for executive sessions of the Board's
non-management directors;
•
Executive
Compensation
3
Corporate
Governance
Principles of Governance
✓
Board of Directors Committee Charters
✓
Standards for Director Independence
✓
Code of Conduct: Our Principles of Ethics & Integrity
Related-Person Transactions Approval Policy
Board of Directors Communication Policy
Political Contributions Policy
✓
Bylaws
Corporate Environmental Policy
Board Structure and Shareholder Rights
•
All members of our Board of Directors are elected annually by our shareholders.
•
•
•
Our Certificate of Incorporation provides that, in an uncontested election, each director must be elected by
a majority vote. To address a provision Delaware law that allows a director who has not been re-elected
to remain in office until a successor is elected and qualified, we have a policy requiring any director who
does not receive a greater number of votes “for” than “against” his or her election in an uncontested
election to tender his or her resignation from the Board of Directors following certification of the shareholder
vote.
Our Bylaws provide eligible shareholders the right to include shareholder director nominees representing up
to 20% of the Board in our proxy statement.
You can access these documents at www.unitedhealthgroup.com to learn more about our corporate governance
practices. We will also provide copies of any of these documents without charge upon written request to the
Company's Secretary to the Board of Directors. Our key corporate governance practices are highlighted below.
Our Certificate of Incorporation and Bylaws do not have any supermajority shareholder approval provisions.
✓
Corporate Governance Documents
(4) The Director Deferral Plan does not credit above-market earnings or preferential earnings to the amounts deferred. There
are no measuring investments tied to Company stock performance. The measuring investments are a collection of
unaffiliated mutual funds identified by the Company.
(5) In 2016, the Company matched $15,000 in charitable contributions made by the following directors to charitable
organizations selected by the directors pursuant to the Company's Board Matching Program and also made $3,000
contributions to charitable organizations selected by the following directors in lieu of 2015 holiday gifts: Messrs. Ballard,
Burke, Lawson and Renwick; Ms. Hooper; Dr. Shine and Dr. Wilensky. In 2016, the Company also paid $6,632, $490 and
$6,642 in health care premiums on behalf of Mr. Burke, Ms. Hooper and Mr. Lawson, respectively.
17
Audit
1
Board of
Directors
Corporate
2
3
✓ Certificate of Incorporation
Governance
Annual
Other
4 Committee
Matters
5
Meeting
Information
CORPORATE GOVERNANCE
Overview
UnitedHealth Group is committed to high standards of corporate governance and ethical business conduct.
Important documents reflecting this commitment are listed below.
Executive
Compensation
We have a non-executive, independent Chair of the Board. If a future Chair of the Board is not
independent, a Lead Independent Director will be appointed by a majority vote of the independent
directors.
18
Audit
Our Board of Directors and Board committees conduct performance reviews annually.
All directors are required to complete a specified level of director training.
Guidelines and Board Policies
•
Our Board of Directors has developed a CEO succession plan with input from our CEO and reviews the
plan annually. The CEO succession plan has two components: one addressing an emergency or
unanticipated loss of our CEO and one addressing longer-term succession. Material features of this plan
include identification of Board members to lead the succession process, identification and development of
internal candidates and identification of external resources necessary to ensure a successful transition.
We maintain stock ownership and retention guidelines for directors and executive officers. See
"Compensation Discussion and Analysis. - Elements of Our Compensation Program Other
Compensation Practices Executive Stock Ownership Guidelines and Stock Retention Policy," "Director
Compensation Equity-Based Compensation" and "Director Compensation Stock Ownership
Guidelines" for further information.
-
-
-
-
Our Board of Directors and Board committees have the authority to retain independent advisors.
We have a related-person transactions approval policy regarding the review, approval and ratification by our
Nominating Committee of all related-person transactions. See "Certain Relationships and Transactions."
We have a clawback policy that entitles the Board of Directors to seek reimbursement from our senior
executives if they are involved in fraud or misconduct that causes a material restatement or, in the event of
a senior executive's violation of non-compete, non-solicit or confidentiality provisions. See "Compensation
Discussion and Analysis Elements of Our Compensation Program Other Compensation Practices
Potential Impact on Compensation from Executive Misconduct/Compensation Clawbacks."
We have a political contributions policy that is overseen by our Public Policy Strategies and Responsibility
Committee (the "Public Policy Committee”). The Company's political contributions and public advocacy efforts
and the contributions of our federal and state political action committees are disclosed on our website.
We have an environmental policy that outlines our focus on minimizing our impact on the environment and
creating a Company culture that heightens our employees' awareness of the importance of preserving the
environment and conserving energy and natural resources.
19
Audit
Board of
1
2
Directors
-
Our Board of Directors and each Board committee regularly conduct executive sessions of non-management
directors. Our Chair of the Board presides over each executive session of non-management directors.
Committee Chairs preside over executive sessions of their respective committees.
•
•
1
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Meeting
Information
Board and Board Committee Composition and Performance
•
•
All members of our Audit Committee are "audit committee financial experts" as defined by the Securities
and Exchange Commission (“SEC”).
A non-management director may not serve on more than three public company boards of directors other
than the Company.
•
Our directors are required to offer their resignations upon a change in their primary careers.
•
•
Risk Oversight
Enterprise-Wide Risk Oversight
Executive
Compensation
•
Committee Members:
Gail R. Wilensky, Ph.D. (Chair) and Kenneth I. Shine, M.D.
Meetings Held in 2016: 4
Edson Bueno, M.D. served on the Public Policy Committee until his passing in February 2017.
Primary Responsibilities:
The Public Policy Committee is responsible for assisting the Board of Directors in fulfilling its responsibilities
relating to the Company's public policy, health care reform and modernization activities, political contributions,
government relations, community and charitable activities and corporate social responsibility. The Public Policy
Committee is also responsible for overseeing the risks associated with these activities.
Independence:
Dr. Wilensky and Dr. Shine are each independent directors under the NYSE listing standards.
Public Policy Committee
26
20,075
Audit
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
46
Our Board of Directors oversees management's enterprise-wide risk management activities. Risk management
activities include assessing and taking actions necessary to manage risk incurred in connection with the long-term
strategic direction and operation of our business. Each director on our Board is required to have risk oversight
ability for each skill and attribute the director possesses that is reflected in the collective skills section of our
director skills matrix described in "Proposal 1 · Election of Directors Director Nomination Process Criteria for
Nomination to the Board" above. Collectively, our Board of Directors uses its committees to assist in its risk
oversight function as follows:
Independence:
The Nominating Committee's duties include identifying and nominating individuals to be proposed as nominees
for election as directors at each Annual Meeting or to fill Board vacancies, conducting the Board evaluation
process, evaluating the categorical standards which the Board of Directors uses to determine director
independence, and monitoring and evaluating corporate governance. The Nominating Committee also oversees
Board processes and corporate governance-related risk.
Meetings Held in 2016: 3
Audit
Board of
1
2
Directors
Corporate
Governance
3
Executive
Compensation
4 Committee
Matters
5
Annual
Meeting
Other
Information
Nominating Committee
Committee Members:
Michele J. Hooper (Chair), William C. Ballard, Jr. and Richard T. Burke
Primary Responsibilities:
Annual
4 Committee
Matters
5
Meeting
Name
William C. Ballard, Jr.
Richard T. Burke
Robert J. Darretta
Michele J. Hooper
Rodger A. Lawson
Glenn M. Renwick
Kenneth I. Shine, M.D.
Gail R. Wilensky, Ph.D.
Deferred
Stock Units
20,820
20,820
38,683
27,300
19,271
39,750
28,422
As of December 31, 2016, our non-employee directors held outstanding DSU awards as follows:
25
Includes the value of DSUs issued upon conversion of annual cash retainers as described in footnote 1 above of
$125,000 for Mr. Darretta and $150,000 for Mr. Renwick.
43,763
Other
Information
The aggregate grant date fair values of the stock awards granted in 2016, computed in accordance with FASB ASC
Topic 718 based on the closing stock price on the grant date, are as follows:
Name
William C. Ballard, Jr.
Richard T. Burke
Robert J. Darretta*
Michele J. Hooper
Rodger A. Lawson
Glenn M. Renwick*
Kenneth I. Shine, M.D.
Gail R. Wilensky, Ph.D.
January 4, April 1, July 1, October 3,
2016
($)
2016 2016
2016
($) ($)
($)
43,789 43,783 43,807
43,789 43,783 43,807
75,000 75,094 75,078 75,062
43,789 43,783 43,807 43,763
43,789 43,783 43,807 43,763
81,289 81,330 81,276 81,294
43,789 43,783 43,807 43,763
43,789 43,783 43,807 43,901
43,763
25
Each of the Nominating Committee members is an independent director under the NYSE listing standards.
Independence:
After considering the results of the risk assessment, management concluded that the level of risk associated with
the Company's enterprise-wide compensation programs is not reasonably likely to have a material adverse effect
on the Company. The results of the risk assessment were reviewed with the Compensation Committee at its
February 2017 meeting. Please see "Compensation Discussion and Analysis" for a discussion of compensation
design elements intended to mitigate excessive risk-taking by our executive officers.
Board Meetings and Annual Meeting Attendance
Directors are expected to attend Board meetings, meetings of committees on which they serve and the Annual
Meeting of Shareholders. All then-current directors attended the 2016 Annual Meeting. During the year ended
December 31, 2016, the Board of Directors held ten meetings. All then current directors attended at least 75% of
the meetings of the Board and any Board committees of which they were members in 2016.
Board Committees
The Board of Directors has established four standing committees: the Audit Committee, the Compensation
Committee, the Nominating Committee and the Public Policy Committee. These committees help the Board fulfill its
responsibilities and assist the Board in making informed decisions. Each committee operates under a written
charter, and evaluates its charter and conducts a committee performance evaluation annually.
The following table identifies the members of each committee as of March 14, 2017:
Director
William C. Ballard, Jr.
Richard T. Burke*
Other
Information
Robert J. Darretta
Stephen J. Hemsley
Michele J. Hooper
Rodger A. Lawson
Glenn M. Renwick
Kenneth I. Shine, M.D.
Gail R. Wilensky, Ph.D.
Do
Audit
Each of the Compensation Committee members is an independent director under the NYSE listing standards
and the SEC rules, a non-employee director under the SEC rules and an outside director under the Internal
Revenue Code of 1986 (the "Internal Revenue Code").
Timothy P. Flynn
Meeting
5
4 Committee
Matters
•
•
-
The Audit Committee oversees management's internal controls and compliance activities. The Audit
Committee also oversees management's processes to identify and quantify material risks facing the
Company, including risks disclosed in the Company's Annual Report on Form 10-K. The enterprise risk
management function assists the Company in identifying and assessing the Company's material risks. The
Company's General Auditor, who reports to the Audit Committee, assists the Company in evaluating risk
management controls and methodologies. The Audit Committee receives periodic reports on the enterprise
risk management function. In connection with its risk oversight role, the Audit Committee regularly meets
privately with representatives from the Company's independent registered public accounting firm and the
Company's CFO, General Auditor and Chief Legal Officer;
The Compensation Committee oversees risk associated with our compensation practices and plans;
The Nominating Committee oversees Board processes and corporate governance-related risk; and
The Public Policy Committee oversees risk associated with the public policy arena, including health care
reform and modernization activities, political contributions, government relations, community and charitable
activities and corporate social responsibility.
Our Board of Directors maintains overall responsibility for oversight of the work of its various committees by
receiving regular reports from the Committee Chairs regarding their work. In addition, discussions about the
Company's strategic plan, consolidated business results, capital structure, merger and acquisition-related activities
and other business discussed with the Board of Directors include a discussion of the risks associated with the
particular item under consideration. Our current Board of Directors' leadership structure separates the positions of
CEO and Chair of the Board. The Board believes that this separation is appropriate for the Company at this time
because it allows for a division of responsibilities and a sharing of ideas between individuals having different
perspectives.
Enterprise-Wide Incentive Compensation Risk Assessment
Our Compensation Committee requested that management conduct a risk assessment of the Company's
enterprise-wide compensation programs. The risk assessment reviewed both cash incentive compensation plans
and individual cash incentive awards paid in 2016 for the presence of potential design elements that could incent
employees to incur excessive risk, the ratio and level of incentive to fixed compensation, the amount of manager
discretion, the level of compensation expense relative to the business units' revenues, and the presence of other
design features that serve to mitigate excessive risk-taking, such as the Company's clawback policy, stock
ownership guidelines, multiple performance measures and similar features. The Compensation Committee also
receives an annual report on the Company's compliance with its equity award program controls.
23
23
*
Audit
1
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Nominating
Public Policy
Compensation
3
Primary Responsibilities:
ဝိ
Chairperson Member
Financial Expert
Mr. Burke is the Chair of the Board and an ex-officio member of the Compensation Committee and Public
Policy Committee. As an ex-officio member, Mr. Burke has a standing invitation to attend each committee
meeting, but does not count for quorum purposes or vote on committee matters.
24
Meetings Held in 2016: 9
Audit
Board of
Corporate
1
2
Glenn M. Renwick (Chair), Richard T. Burke, Robert J. Darretta and Michele J. Hooper
Directors
Governance
Executive
Compensation
4 Committee
Matters
5
Annual
Meeting
Other
Information
The Audit Committee has responsibility for the selection and retention of the independent registered public
accounting firm and assists the Board of Directors by overseeing financial reporting and internal controls and
public disclosure. The Audit Committee reviews and assesses the effectiveness of the Company's policies,
procedures and resource commitment in the areas of compliance, ethics, privacy and data security, by
interacting with personnel responsible for these functions. The Audit Committee also oversees management's
processes to identify and quantify material risks facing the Company. The Audit Committee establishes
procedures concerning the receipt, retention and treatment of complaints regarding accounting, internal
accounting controls and auditing matters. The Audit Committee operates as a direct line of communication
between the Board of Directors and our independent registered public accounting firm, as well as our internal
audit, compliance and legal personnel.
Audit Committee
Committee Members:
Each of the Audit Committee members is an independent director under the NYSE listing standards and the
SEC rules. The Board of Directors has determined that Messrs. Renwick, Burke and Darretta and Ms. Hooper
are "audit committee financial experts" as defined by the SEC rules.
Compensation Committee
Committee Members:
Rodger A. Lawson (Chair), William C. Ballard, Jr. and Gail R. Wilensky, Ph.D.
Primary Responsibilities:
Meetings Held in 2016: 5
The Compensation Committee is responsible for overseeing our policies and practices related to total
compensation for executive officers, the administration of our incentive and equity-based plans and the risk
associated with our compensation practices and plans. The Compensation Committee also establishes our
employment arrangements with our CEO and other executive officers, conducts an annual performance review
of the CEO, and reviews and monitors director compensation programs and the Company's stock ownership
guidelines.
Independence:
In determining 2016 executive compensation, the Compensation Committee considered the Company's strong
growth, operating performance and financial results, all of which were achieved in an uncertain environment, as
well as individual executive performance. Some of our key business results for 2016 were:
UnitedHealth Group's compensation program is designed to attract and retain highly qualified executives and to
maintain a strong link between pay and the achievement of enterprise-wide goals. We emphasize and reward
teamwork and collaboration among executive officers, which we believe fosters Company growth and performance,
optimizes the use of enterprise-wide capabilities, drives efficiencies and integrates products and services for the
benefit of our customers and other stakeholders.
Executive Summary
EXECUTIVE COMPENSATION
Other
Information
Meeting
5
3
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
1
Audit
4 Committee
Matters
•
•
Audit
Board succession planning process;
•
•
•
⋅
CEO succession planning process;
Executive compensation;
Use of capital;
Corporate governance; and
General Board oversight, including accounting, internal controls, auditing and other related matters.
The policy, including information on how to contact the Board of Directors, may be found in the corporate
governance section of our website, www.unitedhealthgroup.com.
The Secretary to the Board of Directors will not forward to the directors communications received which are of a
personal nature or not related to the duties and responsibilities of the Board of Directors, including, without
limitation, junk mail, mass mailings, business solicitations, routine customer service complaints, new product or
service suggestions, and opinion survey polls. The Secretary to the Board of Directors will forward such complaints
and suggestions received to the appropriate members of the Company's management.
The Board of Directors values the input and insights of our shareholders and other interested parties and believes
that effective communication strengthens the Board of Directors' role as an active, informed and engaged fiduciary.
The Board of Directors has adopted a Board of Directors Communication Policy to facilitate communication
between shareholders and other interested parties and the Board. Under this policy, the Board of Directors has
designated the Company's Secretary to the Board of Directors as its agent to receive and review communications.
Communication with the Board of Directors
Information
Meeting
5
4 Committee
Matters
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Appropriate matters to raise in communications to the Board include:
Revenues increased 17.7% to $184.8 billion from $157.1 billion in 2015;
Executive
Compensation
•
17%
9% 18%
Other NEOS Compensation Mix
CEO Compensation Mix
As reflected in the charts below, the mix of total target compensation granted in 2016 to our named executive
officers was heavily weighted towards performance-based and long-term incentive compensation, with long-term
incentive awards making up approximately 70% of total target compensation for our named executive officers.
Information
Other
Meeting
Non-qualified
5
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Audit
=4
4 Committee
Matters
34
Base salary
stock options
Annual Compensation
Long-term Incentives
72%
Performance
shares
Performance
shares
33%
29%
cash incentive
award
Non-qualified
stock options
Long-term
stock units
18%
Restricted
stock units
Restricted
17%
incentive award
Annual cash
19%
5%
Annual indirect compensation,
not variable
constitutes the smallest part of total
remuneration
To promote health, well-being and
financial security of employees,
including executive officers;
The compensation program for our named executive officers consists of the following elements:
Overview
Other
Information
Elements of our Compensation Program
Meeting
5
4 Committee
Matters
Annual
Compensation Element
Executive
Compensation
Corporate
Governance
2
Board of
Directors
1
Audit
33
33
When approving compensation decisions, the Compensation Committee reviews comprehensive tally sheet
information for each of our executive officers. These tally sheets are prepared by management and quantify the
elements of each executive officer's total compensation. The tally sheets include a summary of all equity awards
previously granted to each executive officer, the gain realized from past vesting or exercise of equity awards, the
projected value of accumulated equity awards based upon various stock price scenarios, and compensation to be
paid under various potential employment termination scenarios. This is done to effectively analyze the
compensation each executive officer has accumulated to date and to fully understand the amount the executive
officer could potentially accumulate in the future.
3
Base salary
Annual cash incentive awards
-
encourage sustained stock price
appreciation
Employee benefits
Non-qualified stock options to
Long-term performance
compensation, variable
Long-term performance
compensation, variable
Annual performance compensation,
variable
Type of Compensation
Annual compensation, not variable
ownership positions
officers and build stock
RSUS to retain executive
Performance shares to motivate
sustained performance and
growth and potentially assist
executives in building ownership
in the Company
•
To motivate and retain executive
officers and align their interests with
shareholders through the use of:
To encourage and reward executive
officers for achieving three-year
corporate performance goals
To provide a base level of cash
compensation for executive officers
To encourage and reward executive
officers for achieving annual
corporate performance goals and
individual performance results
Objective
performance shares)
Equity awards
Long-term cash incentive awards
(no new awards after 2017
replaced with long-term
Base Salary
Use of Tally Sheets and Wealth Accumulation Analysis
12%
Base salary
Annual cash
incentive award
Stewardship:
Operations*
$181.5 billion
$13.225 billion
$9.5 billion
Target
Performance
Threshold
Performance
$172.425 billion
$11.241 billion
$8.075 billion
Cash Flows from
1/3
Operating Income*
1/3
Weight
1/3
Measure
2016 Performance
The following table sets forth the performance measures and goals established, as well as actual 2016
performance results:
Annual cash incentive awards may be paid our Company meets or exceeds annual performance goals for that
year as determined by the Compensation Committee. In establishing the performance measures for the 2016
annual cash incentive awards, the Compensation Committee sought to align broadly the compensation of our
executive officers with key elements of the Company's 2016 business plan. Development of the Company's 2016
business plan was a robust process that involved input from all of the Company's business units and was reviewed
with the Company's Board of Directors in the fourth quarter of 2015 and the first quarter of 2016. These
performance measures are based on enterprise-wide measures because the Compensation Committee believes
that the named executive officers share the responsibility to support the goals and performance of the Company as
key members of the Company's leadership team.
2016 Annual Incentive Plan Performance Goals
Annual Cash Incentive Awards
Information
Meeting
Revenue*
5
Customer and
⋅
66
36
The Company's annual incentive plan allows for adjustments to the Company's reported results for the impact
of changes in accounting principles, extraordinary items and unusual or non-recurring gains or losses,
including significant differences from the assumptions contained in the financial plan upon which the incentive
targets were established. Adjustments to reported results are intended to better reflect executives' line of
sight/ability to affect payouts, align award payments with growth of the Company's business, avoid artificial
inflation or deflation of awards due to unusual or non-recurring items in the applicable period and emphasize
the Company's preference for long-term and sustainable growth. We adjusted 2016 operating income to
exclude the impact of our estimated share of guaranty association assessments resulting from the liquidation
of Penn Treaty Network America Insurance Company and its subsidiary (Penn Treaty) of $350 million. Penn
Treaty is completely unaffiliated with, is not owned by, and does not share any executive officers or directors
with, UnitedHealth Group. Under state guaranty association laws, we and other insurance companies are
required to cover a portion of Penn Treaty's obligations to its policyholders when it became insolvent. The
Committee felt it was appropriate to exclude the impact of the Penn Treaty charge since management had no
control over this matter and there was no consideration for Penn Treaty included in the 2016 performance
measure and goal setting process.
engagement and
teamwork
target for
employee
At threshold for
customer and
physician
satisfaction; at
Actual 2016
Performance
$184.828 billion
$13.280 billion
$9.795 billion
2 points above
2015 results for
teamwork and
employee
engagement
Physician Satisfaction
4 points above
2015 results for
customer and
physician
satisfaction;
1 point above
2015 results for
teamwork and
employee
engagement
2 points above
2015 results for
customer and
physician
satisfaction;
engagement;
employee
2015 results for
customer and
physician
satisfaction,
teamwork, and
*
Employee Teamwork
Employee Engagement
Maximum
Performance
$190.575 billion
$15.209 billion
$10.925 billion
4 Committee
Matters
Other
Annual
800,000
0%
1,300,000
1,300,000
(%)
($)
Increase From
2015 to 2016
2016 Base Salary 2015 Base Salary
($)
625,000
David S. Wichmann
Stephen J. Hemsley
Name
The Compensation Committee generally determines base salary levels for our named executive officers early in the
fiscal year. In June 2016, the Compensation Committee approved an increase in the base salary for Mr. Rex upon
his promotion to Chief Financial Officer, which was effective June 7, 2016. There were no other changes to the
base salaries of the other named executive officers:
Long-term Incentives
70%
cash incentive
award
Long-term
5%
John F. Rex
28%
1,100,000
1,100,000
Executive
Compensation
3
Corporate
Governance
Directors
2
1
Board of
Audit
35
55
0%
800,000
800,000
Marianne D. Short
0%
1,100,000
1,100,000
Larry C. Renfro
0%
18%
•
The Compensation Committee has the responsibility to approve and monitor all compensation for our executive
officers. Management recommends appropriate enterprise-wide financial and non-financial performance goals for
use in incentive compensation. Our CEO assists the Compensation Committee by evaluating the performance of
the executive officers that report directly to him and recommending compensation levels for these executive
officers.
Other
Information
3
Corporate
Governance
2
Board of
Directors
1
Audit
29
29
Executive
Compensation
Company matching contributions of $133,425 made under the Company's 401(k) plan and Executive
Savings Plan.
Long-term cash incentive award of $908,500 for the 2014-2016 performance period, which represents
above target performance by the Company against pre-set 2014-2016 long-term incentive plan
performance goals;
•
.
Annual cash incentive award of $4 million, which represents 154% of his target opportunity;
•
Base salary of $1.3 million, which is unchanged since 2006;
As discussed in detail below and reflected in the 2016 Summary Compensation Table, in 2016, the Compensation
Committee determined that our CEO, Mr. Hemsley, should receive the following compensation:
For 2017, we eliminated our long-term performance cash plan so that going forward all long-term incentive awards
will be delivered in equity.
A performance-based restricted stock unit opportunity ("performance shares") with a target grant date fair
value of $4.675 million, restricted stock units ("RSUS") with a grant date fair value of $2.337 million, and
non-qualified stock options with a grant date fair value of $2.337 million; and
The direct retention by the Compensation Committee of its independent compensation consultant, Pay
Governance LLC, which performs no other consulting or other services for the Company.
Annual
5
Compensation Program Principles
Foster an entrepreneurial spirit with innovative thinking and action, and effective and accountable
management, and that leverages the ingenuity of our employees.
Reward performance that supports the Company's values.
Reward performance that emphasizes teamwork and close collaboration among executive officers while
also recognizing individual performance.
•
•
•
Attract, motivate and retain highly qualified executive officers.
4 Committee
•
Align the economic interests of our executive officers with those of our shareholders.
•
We seek to attract and retain highly qualified executives and establish a strong pay-for-performance alignment by
linking senior management compensation to enterprise and individual performance goals. The primary objectives of
our executive compensation program are to:
Philosophy and Objectives of our Compensation Program
Compensation Discussion and Analysis
Matters
Other
Information
Meeting
Reward performance that advances our mission of helping people live healthier lives and helping to make
the health system work better for everyone.
Annual advisory shareholder vote to approve the Company's executive compensation.
Prohibition on repricing of stock options and stock appreciation rights without shareholder approval.
Stock ownership guidelines for our executive officers, each of whom complied with the applicable
ownership guidelines as of March 14, 2017. Mr. Hemsley, our CEO, owned shares equal to 424 times his
base salary as of March 14, 2017.
Audit
28
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for
a reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
1
UnitedHealth Group was named to both the Dow Jones Sustainability World and North America Indices for
the 18th consecutive year.
UnitedHealth Group was the top ranking company in the insurance and managed care sector on Fortune's
2017 "World's Most Admired Companies" list, based on 2016 results. This is the seventh consecutive year
UnitedHealth Group has ranked No. 1 overall in its sector; and
We repurchased $1.28 billion in stock at an average price of $128.97 per share;
Our annual cash dividend rate increased to $2.50 per share, paid quarterly, representing a 25% increase
over the annual cash dividend rate of $2.00 per share paid quarterly since the second quarter of 2015;
Board of
Directors
Total shareholder return, which is defined as the increase in stock price, together with dividends paid, was
38% in 2016 and 120% over the 2014-2016 time period;
•
•
•
•
Return on equity exceeded 19% in 2016;
•
Adjusted earnings per share¹ increased 24.8% to $8.05 per share from $6.45 per share in 2015;
Operating earnings increased 17.3% year-over-year to $12.9 billion, and net earnings attributable to
UnitedHealth Group common shareholders increased to over $7 billion and were supported by cash flows
from operations of $9.8 billion;
•
2
Corporate
Governance
3
A stock retention policy that generally requires executive officers to hold, for at least one year, one-third of
the net shares acquired upon vesting or exercise of any equity award.
A compensation clawback policy that entitles the Board of Directors to seek reimbursement from our senior
executives if they are involved in fraud or misconduct that causes a material restatement, or in the event of
a senior executive's violation of non-compete, non-solicit or confidentiality provisions.
No excise tax gross-ups or executive-only perquisites such as company cars, security systems or financial
planning.
Performance-based compensation arrangements, including performance-based equity awards, that use a
variety of performance measures, with different measures used for annual and long-term plans.
Double-trigger accelerated vesting of time-based equity awards, requiring both a change in control and a
qualifying employment termination, which is our only change in control consideration.
⋅
•
•
•
•
•
We endeavor to maintain strong governance standards in the oversight of our executive compensation programs,
including the following policies and practices that were in effect during 2016:
The Compensation Committee believes that total compensation for the executive officers listed in the 2016
Summary Compensation Table (the "named executive officers" or "NEOS") should be heavily weighted toward
long-term performance-based compensation. In 2016, long-term compensation represented approximately 70% of
the total mix of compensation granted to our named executive officers. The elements of compensation for our
named executive officers were unchanged from 2015.
Information
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27
Our Compensation Committee uses the following principles to implement our compensation philosophy and achieve
our executive compensation program objectives:
Role of Management and CEO in Determining Executive Compensation
.
•
•
Approximately at the 70th percentile on a market cap basis;
•
Approximately at the 95th percentile on a revenue basis;
•
This screening process resulted in the 52 companies set forth under "Peer Group and Managed Care Companies"
below. As compared to the peer group, the Company is:
Add major companies located near UnitedHealth Group's headquarters and primary operating locations to
reflect relevant geographic markets for talent.
Limit the list to the largest companies by revenue and market cap to avoid companies of significantly
smaller scope; and
Approximately at the 70th percentile in earnings from operations; and
•
•
Technology
•
Financial Services
•
Insurance
Pharma/Biotech/Life Sciences
•
Professional Services (e.g., consulting, accounting)
Health care
•
The Compensation Committee also considers market data from the four largest publicly traded managed care
companies with which we compete for business, three of which are in the 52-company peer group described
above. However, the Compensation Committee does not use this group of managed care companies as a primary
reference point for benchmarking compensation practices because the Company is substantially larger, more
complex and more diverse than these companies, and because we believe that the Company competes primarily
for talent and capital with other successful large companies across a broader group of industries.
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Approximately at the 75th percentile in number of employees.
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32
32
The companies that were included in the 2016 peer group and the four managed care companies are listed at the
end of this Compensation Discussion and Analysis.
At the first quarter meeting, the Compensation Committee determines pay opportunities for each officer
using the market competitiveness assessment from the previous fourth quarter as a reference point. In
addition, the Compensation Committee takes into consideration the Company's performance against
previously established performance goals, each officer's individual performance, internal equity, the CEO's
recommendations, and other relevant business performance that may not be adequately captured by the
Company and individual officer goals.
At the fourth quarter Compensation Committee meeting, Pay Governance presents an annual review of the
market competitiveness of the Company's executive compensation program for the Company's executive
officers. The review compares the compensation opportunities provided to the Company's executive officers
to peer group companies on a position-by-position basis and on an aggregate basis.
•
•
Once the process is concluded and peer group companies are selected, the Compensation Committee generally
uses the data as follows:
Audit
•
•
The Compensation Committee uses the following methodology, which formulates a peer group focused on the
industries reflected in the prior career experience of approximately 250 of the Company's senior leaders:
Meeting
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Executive
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Other
Information
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The Compensation Committee oversees the Company's policies and philosophy related to total compensation for
executive officers. The Compensation Committee approves the compensation for the named executive officers
based on its own evaluation, input from our CEO (for all executive officers except himself), internal pay equity
considerations, the tenure, role and performance of each named executive officer, input from its independent
consultant and market data.
Role of the Compensation Committee
Determination of Total Compensation
Provide standard benefits and very limited perquisites. We provide standard employee benefits and very
limited perquisites to our executive officers. We generally do not have any "executive-only" benefits or
perquisites, which we believe is appropriate in our culture and does not impact our ability to attract and
retain top executive talent.
Reward long-term growth, and focus management on sustained success and shareholder value creation.
Compensation of our executive officers is heavily weighted toward long-term equity awards. These awards
encourage sustained performance and positive shareholder returns.
Enhance the long-term value of the business. Our incentive compensation design and the performance
measures we select encourage executive officers to focus on enhancing the longer-term value of the
Company and avoid excessive risk-taking.
Pay-for-sustainable performance. A substantial portion of the total compensation of our executive officers is
earned based on achievement of enterprise-wide goals that affect shareholder value.
Audit
All U.S. publicly traded companies in the following industries as the starting point:
In addition, in making compensation decisions, the Compensation Committee considers the results of the
Company's annual shareholder advisory votes approving the Company's executive compensation. Since our
inaugural vote in 2011, more than 95% of the votes cast have been in favor of the Company's executive
compensation at each of our annual meetings. The Compensation Committee believes these shareholder votes
indicate strong support for the Company's executive compensation program.
The Compensation Committee retains a separate independent compensation consultant, Jon Weinstein of Pay
Governance LLC, to advise the Compensation Committee on executive and director compensation matters, assess
total compensation program levels and program elements for executive officers and evaluate competitive
compensation trends. Pay Governance does not provide any other services to the Company and does not perform
any work for management. The Compensation Committee has assessed the independence of Mr. Weinstein and of
Pay Governance, specifically considering, in accordance with SEC rules, whether Mr. Weinstein and Pay
Governance had any relationships with the Company, our officers or our Board members that would impair their
independence. Based on this evaluation, the Compensation Committee concluded that Mr. Weinstein's and Pay
Governance's work for the Compensation Committee does not raise any conflict of interest.
•
Information
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Other
Annual
Executive
Compensation
The Compensation Committee's Use of an Independent Compensation Consultant
3
2
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31
At the request of the Compensation Committee, Pay Governance conducts an annual review of the Company's
compensation peer group. This review ensures that the peer group companies remain appropriate from a business
and talent perspective and occurs at the second quarter Compensation Committee meeting because recent
financial and compensation data are generally available.
In general, the Compensation Committee's goal is to achieve total compensation for the named executive officers
as a group that falls within a range of the 50th to 75th percentiles of the market data for our peer group (as
discussed below) if paid at target. Target total compensation of our named executive officers as a group in 2016,
consisting of base salary, target annual cash incentive award, target long-term cash incentive award and the grant
date fair value of equity awards (including performance shares at target), resulted in a target compensation
opportunity for our named executive officers in the aggregate between the 50th and the 75th percentiles of the
market data for our peer group. The Compensation Committee believes this range is an appropriate reflection of
the Company's size, complexity and relative performance over the past several years. The following briefly
summarizes the processes followed by the Compensation Committee to select competitive compensation
benchmark data and how the Compensation Committee uses this data.
The Compensation Committee believes that total compensation for the named executive officers should be heavily
weighted toward long-term performance-based compensation, but it does not target a specific mix of annual and
long-term compensation or cash and equity compensation and does not formulaically set compensation amounts.
Competitive Positioning
Corporate
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27
Context for the 2016 Annual Cash Incentive Plan Performance Goals
The 2016 financial performance measures at target level represented year-over-year growth in revenues of
$24.4 billion, or 15.5%; year-over-year growth in operating income of $2.2 billion, or 20.0%; and year-over-year
decrease in operating cash flows of $240 million due to unusually strong operating cash flows in 2015. These
targets reflected a full-year of Catamaran results following its acquisition in mid-2015 and the view that there would
be a continued challenging business environment in 2016, including the following expectations:
1
•
Modest US economic growth with a gradual increase in interest rates, and a more rapidly growing economy
in Brazil, with a stable Brazilian Real - U.S. Dollar exchange rate;
_
40
40
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Other key assumptions and elements of the long-term business plan were:
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Information
•
•
•
•
•
•
Annual
•
The performance measures and goals for the 2014-2016 performance period were established during the first
quarter of 2014 based on the Company's long-term business plan. The first year of the long-term business plan
was based on the Company's 2014 business plan. Subsequent years were based on assumptions and growth
initiatives developed in conjunction with the Company's business units and reviewed by the Board of Directors.
Actual
2014-2016
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•
Ms. Short's individual performance considerations included her strong leadership as a UnitedHealth Group
executive in general; additional enterprise responsibilities as part of the Office of the Chief Executive;
leadership of the legal department; oversight of enterprise wide compliance and privacy matters;
participation in cost management initiatives; and distinctive leadership and judgment in ongoing litigation
and business matters.
18.3%
The Compensation Committee did not make specific assessments of, quantify or otherwise assign relative
weightings to the factors listed above as it reached its decisions with respect to any of the named executive
officers. See the 2016 Summary Compensation Table and other related compensation tables below for details
regarding 2016 total compensation for the named executive officers.
Long term incentive compensation, consisting of the long term cash incentive program and equity awards in 2016,
represents the largest portion of executive officer compensation. This combination of long term incentives provides
a compelling performance based compensation opportunity, aids in aligning and retaining the senior management
team and accelerates the optimization of business unit capabilities across the enterprise. Going forward, beginning
with the 2017-2019 performance period, all long-term incentives will be delivered in the form of equity, as the
Committee eliminated future long-term cash awards.
Long-Term Awards
2014-2016 Long-Term Cash Incentive and Performance Share Goals and Context
The long-term cash incentive award and performance share programs create a financial incentive for achieving or
exceeding three-year financial goals for the enterprise. The earned long-term cash incentive award and
performance shares for the 2014-2016 performance period were based on achieving the following performance
results versus the pre-set goals:
2014-2016
Performance Measure
Cumulative Earnings Per Share
Return on Equity
Weight
50%
50%
Threshold
Target
Performance Performance Performance Performance
$17.24
$18.30
$19.78
$19.11
15.9%
17.9%
19.9%
Maximum
Long-Term Incentive Compensation
•
•
Medicaid, Medicare Supplement, Part D and international enrollment growth in all years, including
significant growth in 2014 from Medicaid expansion;
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Other
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•
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Excluded from 2016 results was the recognition of the $350 million negative impact ($0.23 decrease per
share) for our estimated share of guaranty association assessments resulting from the liquidation of Penn
Treaty. Penn Treaty is completely unaffiliated with, is not owned by, and does not share any executive
officers or directors with, UnitedHealth Group. Under state guaranty association laws, we and other
insurance companies, are required to cover a portion of the Penn Treaty's obligations to policyholders
when it became insolvent. This charge will be funded over several years;
Excluded from 2016 results was the income tax benefit (approximately $0.15 increase per share) from
adoption of ASU 2016-09, which modifies several aspects of the accounting for share-based payment
awards, including income tax consequences; and
Excluded from 2016 results was the estimated impact of federally mandated one year moratorium in 2017
for the collection of the health insurance industry tax. This moratorium was a provision included in the 2016
federal government budget. The unfavorable impact results from commercial price reductions taken in 2016
for policies that span into 2017.
It was not possible to predict the occurrence, or impact to the Company, of any of these three adjustments when
the goals for the 2014-2016 long-term plans were set. Since all of these events were outside of the control of
management, the Committee felt it was appropriate to exclude them from final results.
2014-2016 Long-Term Cash Incentive Awards
At the beginning of each three-year performance period, the Compensation Committee approves a "long-term cash
incentive target opportunity" for each executive officer as a percentage of the executive officer's average base
salary over the performance period. At the end of a performance period, the Compensation Committee reviews the
Company's achievement of the performance goals set at the beginning of the performance period and determines
long-term cash incentive awards based on such performance. In determining these awards, the Compensation
Committee has the ability to use its discretion to increase or decrease the actual awards in view of actual
performance, individual contributions and overall business and market conditions.
For the 2014-2016 performance period, the target opportunity for each executive officer was 50% of base salary,
and the maximum cash incentive award that an executive officer could earn was set by the Compensation
Committee to be equal to two times the applicable long-term cash incentive target opportunity. In choosing this
target opportunity, the Compensation Committee believed it was important to provide the same relative target
opportunity to all of the named executive officers to increase collaboration, teamwork and accountability across the
enterprise and to recognize the skills and versatility of each executive officer.
42
Similar to the annual incentive plan, the Company's long-term incentive plan allows for adjustments to the
Company's reported results in determining long-term incentive plan awards, namely adjustments that account for
the impact of changes in accounting principles, extraordinary items and unusual or non-recurring gains or losses.
Three adjustments were made in determining 2014-2016 performance:
41
Greater than anticipated downward rate pressure in Medicare Advantage payment rates received from the
federal government.
Challenging Brazilian economy and significant devaluation of the Brazilian Real against the U.S. Dollar; and
Commercial risk-based and fee-based enrollment declines in 2014, followed by modest increases thereafter
from expansion into exchanges and growth in existing markets, leveraging enhanced products, services
and distribution;
Medicare Advantage declines in 2014 and 2015 due to funding level pressures, followed by modest
increases thereafter;
Continued funding pressure in government businesses;
An expectation that medical cost trends would be consistent with historical levels and that there would not
be net favorable development in previously reported medical cost payable estimates;
Delivery of more effective and comprehensive clinical management;
Continue to enhance the quality and operations of our government businesses to compensate for continued
expected funding pressures;
Continued growth and alignment of the Optum businesses, driving distinctive revenue, margin and earnings
performance;
Development and expansion of the Optum Local Care Delivery platform and capabilities;
Ongoing improvements to our consolidated operating cost ratio on a comparable business mix basis; and
Effective cross-enterprise collaboration among various business units for the benefit of customers and our
overall reputation and performance.
To achieve maximum performance for both the long-term cash incentive plan and the performance share plan, the
Company would have to achieve cumulative three-year earnings per share ("EPS”) performance of $19.78 and an
average return on equity ("ROE") of 19.9%. These maximum performance levels corresponded to a compound
annual growth rate in EPS of 11.9% over the three-year period. For long-term compensation purposes (see
adjustments described below), the Company generated cumulative EPS of $19.11 with accompanying ROE of
18.3%, which were both between the target and maximum performance levels. This represented a compound
annual EPS growth rate of 10.4% over the three-year performance period.
Factors that positively or negatively influenced our results subsequent to the approval of the long-term business
plan in early 2014 included:
•
Greater than anticipated enrollment of individuals who became eligible with the expansion of Medicaid in
2014;
•
Continued relatively favorable medical cost trend experience over the three-year period;
•
Significant unexpected losses in individual health insurance exchange products in 2015 and 2016;
.
Charges taken in 2015 to establish reserves for anticipated future losses for a new state Medicaid
managed care contract;
•
Acquisition of Catamaran in mid-2015;
•
•
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39
37
37
Further improve our consolidated operating cost ratio after considering the impact of changes in business
mix.
Realize planned synergies from integration and alignment of the Catamaran acquisition with OptumRx; and
Execute on Optum's growth and alignment initiatives, with major focus areas including care delivery,
technology-enabled services and pharmacy care services;
•
.
•
Increase the Company's net promoter score and enhance customer service;
•
Audit
Deliver more effective and comprehensive clinical management, and continue expanding the proportion of
our network operating with value-based contracts;
.
Continue to innovate in commercial products, service and distribution;
•
Continue to enhance the quality and operations of our government businesses to compensate for continued
expected funding pressures;
Grow medical enrollment in UnitedHealthcare by approximately 1,850,000 people;
•
•
At the beginning of 2016, the Compensation Committee believed that achievement of the annual incentive goals
required substantial performance on a broad range of initiatives contained in the 2016 business plan. These
initiatives included the following:
The 2016 non-financial performance measures were based on survey data results and, at target levels,
represented increases over 2015 performance in all categories. These measures were viewed to be important to
longer-term financial success, customer satisfaction, and employee welfare that might not be immediately reflected
in annual financial results. The Compensation Committee was of the view that the breadth of financial and
non-financial performance measures for the 2016 annual cash incentive award would motivate executive officers to
achieve results that contribute to value creation for our shareholders on a long-term basis and avoid excessive
risks.
There would not be net favorable development in previously reported medical costs payable estimates; and
There would be continued funding pressures in government programs.
Evaluate appropriate level of future participation in the public health insurance exchanges, and minimize
the disruption of any reduction in participation;
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38
The target opportunities established for the named executive officers are intended to increase collaboration,
teamwork and accountability across the enterprise, to recognize the skills and versatility of each executive officer
and to reflect relative contributions to the success of the overall enterprise. At the end of the fiscal year, the
Compensation Committee reviews the Company's achievement of the performance goals set at the beginning of
the year and determines annual cash incentive awards based on such performance. In determining these awards,
the Compensation Committee has the ability to use its discretion to increase or decrease the actual awards made
in view of actual performance, individual contributions and overall business and market conditions.
At the beginning of each year, the Compensation Committee approves an "annual cash incentive target
opportunity" for each executive officer as a percentage of the executive officer's base salary.
While the Company uses defined performance measures and weightings to determine an overall funding level for
the Company's bonus pool, individual annual cash incentive awards are not purely formulaic. In determining the
amount of the actual annual incentive award to be paid, the Compensation Committee considers the CEO's
recommendations for executive officers, the business performance underlying each of the performance measures,
macroeconomic factors disproportionately impacting business performance, individual executive performance,
market positioning, teamwork and related matters. The Compensation Committee retains discretion to pay an
annual incentive award that is higher or lower than the performance level achieved based on these considerations
if threshold performance is achieved on any performance measure. However, the overall pool cannot be exceeded.
Determination of 2016 Annual Cash Incentive Award Opportunities
Non-financial performance measures were at target levels except for customer and physician satisfaction, which
was between threshold and target performance levels. Adjusted earnings per share increased 25% in 2016, and
the Company's total shareholder return was 38%, reflecting continued successful performance in an uncertain
environment.
Revenues were significantly above target levels. Operating income for 2016 was above target after excluding the
$350 million pre-tax impact to earnings during the fourth quarter of 2016 for the Penn Treaty matter that was not
contemplated when the targets were established. This above target performance was achieved despite significantly
higher than expected losses related to the Company's individual health insurance exchange products. Cash flows
from operations for 2016 were also above target.
With respect to these initiatives, the Company significantly exceeded its enrollment targets, adding nearly
2.2 million new members, and improved net promoter scores in many, but not all, of its businesses.
UnitedHealthcare further improved its Medicare Star ratings and Optum achieved its combined revenue and
earnings growth projections, exceeding targeted synergies from the Catamaran acquisition. In addition, the amount
of medical spend covered under value-based arrangements increased to nearly $53 billion, the consolidated
operating cost ratio decreased to 15.4%. which includes the impact of Penn Treaty, and the Company achieved or
made substantial progress on all of the other initiatives listed above.
Other
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Continued marketplace disruption and financial uncertainty related to certain elements of the public health
insurance exchanges, including the level of enrollment growth and enrollee health status, risk-adjustment
payments, the transitional reinsurance program, and the availability of funds to support the risk-corridor
provision;
42
Corporate
Governance
Executive
Compensation
920,000
1,400,000
152%
185%
2,035,000
3,750,000
184%
185%
2,035,000
3,750,000
115%
184%
1,250,000
156%
In determining the 2016 annual cash incentive award amounts, the Compensation Committee took into account the
Company's performance against the 2016 annual performance goals set forth in the table above, business results
described under "Context for the 2016 Annual Cash Incentive Plan Performance Goals" and a qualitative
assessment of individual performance and accomplishments. Individual factors considered are as follows:
•
•
For Mr. Hemsley, the Compensation Committee coordinates a formal performance evaluation by all
non-management directors. The 2016 performance evaluation focused on the following areas: strategic
focus; vision and values; corporate performance; board relations; leadership and organization effectiveness;
corporate reputation and government relations. The Compensation Committee concluded that
Mr. Hemsley's performance was outstanding in each category.
Mr. Rex's individual performance considerations included assumption of the role of Chief Financial Officer
and additional enterprise responsibilities as part of the Office of the Chief Executive; oversight of all
finance, audit and financial compliance functions across the enterprise and responsibility for treasury,
mergers and acquisitions and venture and private equity investment activity.
Mr. Wichmann's individual performance considerations included his strong leadership as President of
UnitedHealth Group and oversight leadership of UnitedHealthcare's businesses; continued growth at
UnitedHealthcare; strategic leadership of the Company's significant merger and acquisition agenda;
leadership in developing new business platforms addressing multibillion dollar growth opportunities;
developing and implementing more modern and engaging approaches to serving care providers and
consumers through intuitive technologies; enterprise wide technological advancement and simplification
initiatives; and expanded development of global businesses and operations.
Mr. Renfro's individual performance considerations included strong leadership as Vice Chair of
UnitedHealth Group in addition to his responsibilities as CEO of Optum; significant progress towards the
multi-year "One Optum" strategic direction, related development of large scale business partnerships and
continued growth; related organizational and operational simplification initiatives; recruitment of high level
senior talent from nontraditional sources to strengthen and diversify the Optum leadership team; and
successful acquisition and integration activities focused on the care delivery business.
800,000
154%
4,000,000
2,600,000
Annual
4 Committee
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The Compensation Committee evaluated the Company's 2016 performance against the performance goals, overall
business results, economic conditions, and individual performance objectives, and exercised its discretion to adjust
the 2016 annual cash incentive awards such that they represented between 152% and 184% of the targets set at
the beginning of 2016 for named executive officers. The target percentages for annual cash incentive awards to our
named executive officers and the actual 2016 annual cash incentive awards paid are set forth in the table below.
An explanation of how the individual amounts were determined follows the table.
2016 Annual Cash Incentive Awards
Target
Paid
Award
Name
Stephen J. Hemsley
John F. Rex
David S. Wichmann
Larry C. Renfro
Marianne D. Short
Percentage
(% of Salary)
Target
Award Value
($)
Actual
Award Paid
($)
(% of Target)
200%
3
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100%
1
14,844
83,485
29,687
14,844
83,485
13,944
6,972
39,213
The grant date fair values and terms of these equity awards are discussed in the 2016 Grants of Plan-Based
Awards table.
29,687
44
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31,623
5,623
11,246
Equity Award Practices
Awards of equity-based compensation to our executive officers serve the purposes described above under
"Long-Term Incentive Compensation." The Compensation Committee determined that equity-based compensation
for 2016 should include grants of performance shares, RSUs and non-qualified stock options to achieve balance
and effectiveness in our equity-based compensation and to align the interests of our executive officers and our
shareholders. The mix of equity-based compensation granted in February 2016 was as follows, based on the grant
date fair value of the total award: 50% performance shares, 25% RSUs and 25% non-qualified stock options.
Performance share grants were selected to ensure a strong pay-for-performance alignment of the Company's
compensation program with drivers of shareholder value. The Compensation Committee's decision to grant
performance shares was informed, in part, by past discussions held between the Company and certain of its
shareholders regarding the merits of performance shares in a pay-for-performance executive compensation
program. RSU grants were selected because they are full value shares with time vesting and, as such, provide
added retention value. Non-qualified stock options were selected because they have value only if the Company's
stock price increases and, as such, provide incentives for sustained long-term stock appreciation.
The Compensation Committee's equity award policy requires that all grants of equity be made at set times. We do
not have a specific program, plan or practice to time equity compensation awards to named executive officers in
coordination with our release of material information.
The Company does not pay dividend equivalents on performance shares granted to employees. Unvested shares
of RSUs receive dividend equivalents, which are subject to the same terms as the RSUs and will be forfeited if the
underlying RSUs do not vest. The determination to pay dividend equivalents on RSUs was made after considering
market practices.
The aggregate number of shares subject to equity awards made in 2016 for all employees was approximately 1%
of the Company's shares outstanding at the end of 2016.
Equity Awards - 2016
In February 2016, the Compensation Committee granted the following target number of performance shares, RSUs
and stock options to our named executive officers:
Target Number
of Performance
Shares
Name
Stephen J. Hemsley
John F. Rex
David S. Wichmann
Larry C. Renfro
Marianne D. Short
Annual
RSU
Award
Annual
Stock Option
Award
(#)
(#)
(#)
42,057
21,029
118,270
Meeting
Equity Awards
Information
Supplemental Retirement Benefits
•
for other executive officers who are not direct reports of the CEO, two times base salary.
Stock options and stock appreciation rights ("SARS") do not count towards satisfying the ownership requirements
under the guidelines, regardless of their vesting status, and performance shares do not count towards satisfying the
ownership requirements until they are vested. Time-based RSUs and restricted stock awards are counted toward
the satisfaction of the ownership requirements. The Compensation Committee periodically reviews compliance with
the ownership requirements. As of March 14, 2017, all of our named executive officers were in compliance with the
ownership requirements, including Mr. Hemsley, who owned shares with a value equal to 424 times his base
salary.
The Board has established a stock retention policy for executive officers that are subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which includes our named executive officers.
Under this policy, Section 16 officers are required to retain for at least one year one-third of the net shares
acquired upon the vesting or exercise of any equity awards.
Transactions in Company Securities; Prohibition on Hedging and Short Sales
In general, SEC rules prohibit uncovered short sales of our common stock by our executive officers, including the
named executive officers. Accordingly, our insider trading policy prohibits short sales of our common stock by all
employees and directors. Our insider trading policy prohibits hedging transactions by all directors, executive officers
and employees and requires advance approval of the Compensation Committee of any pledging of common stock
by directors, executive officers and other members of management. Pledges that existed prior to the policy's
adoption in November 2012 have been grandfathered. In 2016, no executive officer or director sought or received
advance approval from the Compensation Committee regarding pledging transactions, and no executive officer had
any pledges outstanding.
Potential Impact on Compensation from Executive Misconduct/Compensation Clawbacks
If the Board of Directors determines that an executive officer has engaged in fraud or misconduct, the Board of
Directors may take a range of actions to remedy the misconduct, prevent its recurrence and impose such discipline
as would be appropriate, including, without limit: (i) terminating employment and (ii) initiating legal action against
the executive officer. In addition, with respect to our senior executives, including our named executive officers, if
the fraud or misconduct causes, in whole or in part, a material restatement of the Company's financial statements,
action may include (a) seeking reimbursement of the entire amount of cash incentive compensation awarded to the
46
46
for executive officers who are direct reports of the CEO, three times base salary; and
Information
5
4 Committee
Matters
Other
Annual
Executive
Compensation
3
Corporate
Governance
Board of
Board of
Directors
2
Meeting
•
for the CEO, eight times base salary;
•
In 2006, the accrued value of the benefit payable under Mr. Hemsley's individual supplemental executive retirement
plan agreement (the "SERP") was frozen based on his then-current age and average base salary and converted
into a lump sum cash benefit of $10,703,229. On June 7, 2016, the Company amended Mr. Hemsley's SERP to
convert the $10,703,229 cash benefit into deferred stock units ("DSUs"). The Compensation Committee decided
the SERP amendment was appropriate to further align Mr. Hemsley's interests with those of shareholders, allow
Mr. Hemsley to earn a return on the SERP balance that will be tied to the Company's stock price performance, and
provide the opportunity for Mr. Hemsley to receive deferred dividend equivalents on the SERP balance. Pursuant to
the amended SERP, the number of DSUs issued was based on the amount of the cash benefit divided by the
average closing price of the Company's common stock over the preceding five trading days from the date of
conversion of the cash balance, which resulted in 78,789 DSUs issued. Upon conversion of the cash balance into
DSUs on June 7, 2016, Mr. Hemsley was eligible to receive dividend equivalents in the form of additional DSUs,
which are paid at the same rate and at the same time that dividends are paid to the Company's shareholders.
During 2016, Mr. Hemsley received dividend equivalents in the form of an additional 1,024 DSUs that were added
to the SERP balance. Upon termination of Mr. Hemsley's employment for any reason, the DSUs held in the SERP
will be converted into shares of common stock and will be paid six months and one day after his termination.
Benefits
Perquisites
We do not believe that providing generous executive perquisites is either necessary to attract and retain executive
talent or consistent with our pay-for-performance philosophy. Therefore, other than the benefits described above,
we do not provide perquisites such as excise tax gross-ups, company automobiles, security services, private jet
services, financial planning services, club memberships or apartments to our executive officers. We prohibit
personal use of corporate aircraft by any executive officer unless the Company is reimbursed for the full
incremental cost to the Company of such use. Because there is essentially no incremental cost to the Company,
we permit an executive officer's family member to accompany the executive officer on a business flight on
Company aircraft provided a seat is available.
Employment Agreements and Post-Employment Payments and Benefits
The Company has a policy of entering into employment agreements with each of our named executive officers.
These employment agreements are described in greater detail in "Executive Employment Agreements."
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Other Compensation Practices
Executive Stock Ownership Guidelines and Stock Retention Policy
The Compensation Committee believes that executive stock ownership aligns management's interests with those of
shareholders and fosters a long-term outlook, while also mitigating compensation risk. Under our stock ownership
guidelines, each executive officer must beneficially own at least the following amounts of the Company's common
stock within five years of the executive officer's election or appointment as an executive officer:
Other Compensation
Information
In addition to generally available benefits, our executive officers are eligible to receive supplemental long-term
disability coverage equal to 60% of base salary, and all of our named executive officers, other than Mr. Hemsley,
receive supplemental group term life insurance coverage of $2 million. Executive officers are also eligible to
participate in our non-qualified Executive Savings Plan. See the 2016 Non-Qualified Deferred Compensation table
for additional information regarding contributions, earnings and distributions for each named executive officer under
the Executive Savings Plan. Our Executive Savings Plan does not provide for guaranteed or above-market interest.
5
Award
Award
Award
Average
Value
Value
Value
Paid
(% of
Base Salary)
Award
($)
($)
($)
Target)
50%
3,105
50%
2,476
50%
2,476
50%
($)
Award
Paid
Actual
Directors
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Information
The target percentages for long-term cash incentive awards to our named executive officers and the actual
long-term cash incentive awards paid for the 2014-2016 performance period are set forth in the table below:
Long-Term Cash Incentive Award
Name
Stephen J. Hemsley
David S. Wichmann
Larry C. Renfro
Marianne D. Short
Target
Percentage
Threshold
Target
Maximum
1,873
658,333 1,316,666 908,500
525,000 1,050,000
525,000 1,050,000 724,500 138%
397,116 794,232 548,100 138%
(% of 3-Year
724,500 138%
157
32,034
64,068
44,207
138%
101
21,356
42,712
29,472
Mr. Rex did not receive performance shares as part of his 2014 equity grant because he was not an executive
officer at that time.
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138%
44,207
138%
Paid
The primary factor considered by the Compensation Committee in the determination of the long-term cash incentive
award amounts was achievement of 2014-2016 long-term incentive plan EPS and ROE between target and
maximum goals. Because the Long-Term Cash Incentive Award program is being phased out, with no new
participants added after 2016, Mr. Rex was not added as a participant upon his promotion to Chief Financial Officer
in June 2016.
Stephen J. Hemsley
David S. Wichmann
Larry C. Renfro
Marianne D. Short
Long-Term Performance Shares
2014-2016 Performance Share Awards
(#)
Threshold Target Maximum
Shares
Shares
(#)
64,068
Actual
Shares Paid
Shares
(#)
(#)
Award
(% of
Target)
252
53,389
106,778
73,677
138%
157
32,034
The use of performance shares as a component of the overall equity awards granted was based upon the
Compensation Committee's desire to encourage superior performance and build executive ownership; consideration
of competitive market data; the value of utilizing a balanced system to facilitate prudent decision-making and
mitigate risk; and conversations with shareholders about the desirability of this type of equity award as a
component of a pay-for-performance program. The actual shares that were earned for the 2014-2016 performance
period were above target due to the Company's strong ROE and earnings growth performance and are set forth in
the table below as well as reflected in the 2016 Option Exercises and Stock Vested table:
Name
59,374
29,687
| | ཅེ| |
800,000
| |Š| |
2/9/2016
| | │༄།
Stock Option Award (4)
2/9/2016
| |ཡཽ།
། །༄||
Marianne D. Short
3,300,007
1,650,059
1,649,664
☐
29,687
59,374
Performance Share Award (4)(5)
=== 14,844 83.485 111
111.16
3,300,007
1,650,059
1,649,664
Annual Cash Incentive Award(2)
720,000
2016-18 Long-Term Incentive Award (3)
800,000 1,600,000
1,439 400,000
RSU Award (4)
= 14,844 83,485 111.16
107
David S. Wichmann
Performance Share Award (4)(5)
= = = 9,129 31,623 111.16
2/9/2016
5,623
| | | |
56,416
136.94
1,250,105
625,053
1,250,125
624,870
1,250,179
Annual Cash Incentive Award (2)
2016-18 Long-Term Incentive Award (3)
1,831,500
1,978
2,035,000
4,070,000
2/9/2016
550,000 1,100,000
2/9/2016
107
RSU Award (4)
2/9/2016
Stock Option Award (4)
2/9/2016
Larry C. Renfro
Annual Cash Incentive Award (2)
2016-18 Long-Term Incentive Award (3)
1,831,500
1,978
2,035,000 4,070,000
550,000
1,100,000
Performance Share Award (4)(5)
50
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(4) Amounts represent grants under the 2011 Stock Incentive Plan with the terms set forth below. In addition, the
RSUs are eligible to receive dividend equivalents, which are subject to the same terms as the RSUs and will
be forfeited if the underlying RSUs do not vest. No dividend equivalents are paid on performance shares.
*
Award Type and Vesting Terms
Board of
Directors
Performance Share Award
RSU Award
(4-year ratable vesting*)
Stock Option Award
(4-year ratable vesting)
•
•
•
Termination Provisions
Unvested performance share awards will vest if, within two years of
a change in control, an executive terminates employment for Good
Reason or is terminated without Cause (i.e., “double trigger"
vesting). The number of performance awards that vest will be
dependent upon the performance vesting criteria that have been
satisfied.
「「g||||
If the executive officer is retirement-eligible, upon retirement, the
number of performance shares that are earned at the end of the
performance period based on actual performance, if any, will vest
as if the executive officer had been continuously employed
throughout the entire performance period, provided the executive
officer had served for at least one year of the performance period.
Upon death, disability or termination of employment for Good
Reason or other than for Cause (as these terms are defined in the
award agreement), the executive officer will receive at the end of
the applicable performance period, a pro rata number of
performance shares that are earned, if any, based on the number
of full months employed plus, if applicable, the number of months
for any severance period.
(3-year performance periodwith
cliff vesting)
Audit
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53
RSU Award(4)
Stock Option Award(4)
2/9/2016
2/9/2016
27,888
1,550,015
6,972 39,213
775,008
111.16
774,849
| | |
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation
program necessary for an understanding of the information disclosed in this table.
(1) The actual value to be realized by a named executive officer depends upon the appreciation in value of the
Company's stock and the length of time the award is held. No value will be realized with respect to any stock
option award if the Company's stock price does not increase following the grant date. For a description of the
assumptions used in computing grant date fair value for stock option awards pursuant to FASB ASC
Topic 718, see Note 11 to the Consolidated Financial Statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2016. The grant date fair value of each RSU award and
targeted grant date value of each performance share award was computed in accordance with FASB ASC
Topic 718 based on the closing stock price on the grant date.
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(2) Amounts represent estimated payouts of annual cash incentive awards granted under our Executive Incentive
Plan in 2016. The Executive Incentive Plan permits a maximum annual bonus pool for executive officers equal
to 2% of the Company's net income (as defined in the plan) and no executive officer may receive more than
25% of such annual bonus pool. The Compensation Committee has generally limited annual cash incentive
payouts to not more than two times the target amount, and the maximum amounts shown for each named
executive officer equal two times each executive officer's target amount. In order for any amount to be paid,
the Company must achieve approved performance measures of (i) revenue, (ii) operating income, (iii) cash
flow, (iv) consumer, customer and physician satisfaction, (v) employee engagement and (vi) employee
teamwork. The estimated threshold award represents the amount that may be paid if threshold performance is
achieved on each of the performance measures. Once threshold performance is achieved, the Compensation
Committee has the discretion to pay an award. The actual annual cash incentive amounts earned in
connection with the 2016 awards are reported in the 2016 Summary Compensation Table.
(3) Amounts represent estimated future payouts of long-term cash incentive awards granted under our Executive
Incentive Plan in 2016 for the 2016-2018 performance period to be paid in 2019. The Executive Incentive Plan
permits a maximum long-term bonus pool for executive officers equal to 2% of the Company's average net
income (as defined in the plan) during the performance period and no executive officer may receive more than
25% of such long-term bonus pool. The Compensation Committee has limited the long-term cash incentive
payout maximum amount to not more than two times each named executive officer's target amount, which is
reflected in the maximum payout column. In 2016, upon recommendation by management, the Compensation
Committee approved a cumulative EPS measure and an average ROE measure for the 2016-2018 incentive
period, either one of which must be achieved before the threshold amount shown above becomes earned and
payable. Each measure is weighted equally. The Compensation Committee will determine whether the goals
have been achieved at the end of the performance period. The estimated threshold award represents the
amount that may be paid if threshold performance on one of the performance measures is exceeded. Once
threshold performance is achieved, the Compensation Committee has the discretion to pay an award ranging
from 0% up to a maximum of 200% of target. The estimated threshold, target and maximum awards listed in
the table were computed based on participants' estimated average salary over the 2016-2018 performance
period. This three-year average salary was determined using participants' actual 2016 salaries earned and
estimates of salaries for 2017 and 2018.
13,944
6/7/2016
5
40 11.246 22.492
Company Matching
2016
$11,925
2016
$ 8,519
Contributions
Under Executive
Savings Plan
$121,500
$ 47,158
Insurance
Premiums
2016
$11,925
2016
$11,925
$123,000
$123,000
Contributions
Under 401(k)
Savings Plan
2016
$ 57,750
$15,840
$30,480
As permitted by SEC rules, we have omitted perquisites and other personal benefits that we provided to
certain named executive officers in 2016 if the aggregate amount of such compensation to each of such
named executive officers was less than $10,000. The Company provides each of Messrs. Rex, Wichmann and
Renfro and Ms. Short a $2 million face value term life insurance policy. The 2016 annual premiums paid by
the Company on behalf of Messrs. Rex and Wichmann were each less than $10,000.
(7) As described in the Compensation Discussion and Analysis section of this proxy statement, on June 7, 2016,
the Company amended Mr. Hemsley's SERP to convert the $10,703,229 cash benefit into DSUs. The DSUS
held in the SERP are eligible to receive dividend equivalents in the form of additional DSUs, which are paid at
the same rate and at the same time that dividends are paid to the Company's shareholders. During 2016,
Mr. Hemsley received dividend equivalents equal to 1,024 DSUs, which were added to the SERP. The
amount reported in the table reflects stock price appreciation for the DSUS of $1,921,701 between the date of
conversion and December 31, 2016 as well as $148,398 in dividend equivalents.
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$11,925
Annual
Company Matching
Marianne D. Short
Unless the executive officer is retirement-eligible, award is subject
to earlier termination upon certain events related to termination of
employment.
$724,500
Marianne D. Short
2014-2016
$548,100
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(5) Named executive officers participate in our Executive Savings Plan, which is a non-qualified deferred
compensation plan. The Executive Savings Plan does not credit above-market earnings or preferential
earnings to the amounts deferred, and accordingly, no non-qualified deferred compensation earnings have
been reported. Under the Executive Savings Plan, there are no measuring investments tied to Company stock
performance. The measuring investments are a collection of unaffiliated mutual funds identified by the
Company.
(6) All other compensation includes the following:
Name
Stephen J. Hemsley
John F. Rex
David S. Wichmann
Larry C. Renfro
Executive
Compensation
Other
4 Committee
Matters
5
2/9/2016
RSU Award(4)
2/9/2016
2/9/2016
| |༞ | 」
2,340,000 2,600,000 5,200,000
650,000 1,300,000
| | |g |
21
= 151 42,057 84,114 21,029 - - 2,337,584
118,270
111.16
2,337,015
Performance Share Award(4)(5)
John F. Rex
828,000
920,000 1,840,000
2016-18 Long-Term Incentive Award (3)
Performance Share Award (4)(5)
2/9/2016
RSU Award (4)
2/9/2016
RSU Award(4)(6)
6/7/2016
Stock Option Award (4)
2/9/2016
|||||
Annual Cash Incentive Award (2)
2,338
2016-18 Long-Term Incentive Award (3)
Annual Cash Incentive Award (2)
Meeting
Information
2016 Grants of Plan-Based Awards*
The following table presents information regarding each grant of an award under our compensation plans made
during 2016 to our named executive officers for fiscal year 2016.
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
Grant
Date
Threshold
($)
Target
($)
Maximum
($)
Estimated Future Payouts
Under Equity Incentive
Plan Awards
Threshold Target Maximum
(#) (#) (#)
All Other
Stock
Awards:
Number
All Other
Option
Awards:
Number of
Securities
Underlying
Exercise
or Grant
Price of
Option
of Shares
of Stock
or Units
Options
Awards
(#)
(#)
($/Sh)
Grant Date
Fair Value
of Stock
or Option
Awards
($)(1)
Name
Stephen J. Hemsley
Stock Option Award (4)(6)
Unvested award will vest in full upon death or disability.
Unvested award will vest in full if, within two years of a change in
control, an executive terminates employment for Good Reason or is
terminated without Cause (i.e., “double trigger” vesting), as these
terms are defined in the award agreement.
2016 Option Exercises and Stock Vested
(5) Amounts represent the estimated future number of performance shares that may be earned under our 2011
Stock Incentive Plan at each of the threshold, target and maximum levels. The performance share award will
be paid out in shares of Company common stock. The number of performance shares that the executive
officer will receive will be determined at the conclusion of the 2016-2018 performance period and will be
dependent upon the Company's achievement of a cumulative EPS measure and an average ROE measure
approved by the Compensation Committee. The Compensation Committee has the discretion to reduce the
number of performance shares an executive officer is entitled to receive. The estimated threshold award
represents the number of performance shares that may be awarded if threshold performance is achieved on
one of the performance measures.
5/28/2007
25,000
54.41
5/28/2007
150,000
Larry C. Renfro
2/9/2016
2/10/2015
18,296
2/12/2014
2/6/2013
25,175
44,690
54.41
83,485(3)
111.16
54,889(3) 108.97
25,176(3)
70.24
14,897(3)
57.38
44,842(5) 7,176,514
5,229(4) 836,849
5/28/2017
5/28/2017
2/9/2016 15,096(4) 2,415,964
2/9/2016
2/10/2015
2/10/2015
2/12/2014
29,687(6) 4,751,107
11,732(4) 1,877,589
30,284(6)
4,846,651
8,409(4) 1,345,776
2/12/2014 44,842(5) 7,176,514
2/6/2013
Marianne D. Short
2/9/2016
2/10/2015
2/12/2014
2/6/2013
39,213 (3)
8,593
16,784
39,725
25,782(3)
2/9/2026
2/10/2025
2/12/2024
2/6/2023
16,784 (3)
13,242(3)
8,409(4) 1,345,776
2/10/2015 11,732(4) 1,877,589
2/10/2015
2/12/2014
2/12/2014
2/6/2013
2/9/2016
2/10/2015
2/10/2015
2/12/2014
2/12/2014
6/4/2013
11,246(6)
1,799,810
4,089(4) 654,404
10,554(6)
1,689,062
2/6/2013
David S. Wichmann
2/9/2016
2/10/2015
2/12/2014
18,296
25,175
2/6/2013
30,284(6) 4,846,651
44,690
2/9/2010
76,024
2/23/2009
113,122
29.74
2/9/2026
108.97 2/10/2025
70.24 2/12/2024
57.38 2/6/2023
33.00 2/9/2020
2/23/2019
2/9/2016
2/9/2016
7,474(4) 1,196,139
12,706(5) 2,033,468
6,828(4) 1,092,753
4,648(4) 743,866
15,096(4) 2,415,964
29,687(6) 4,751,107
6/5/2008 203,642
33.94
6/5/2018
83,485(3) 111.16
54,889(3)
25,176(3)
14,897(3)
111.16
108.97
70.24
57.38
2/9/2026
2/10/2025
2/12/2024
2/6/2023
2/9/2016
2/9/2016
2/10/2015
Larry C. Renfro
Marianne D. Short
Shares
Acquired on
Value
Realized on
Stock Awards
Number of
Shares
Acquired on
Exercise
(#)
Exercise
($)(1)
Vesting
(#)
200,000
10,776,000(2)
94,564
David S. Wichmann
Value
Realized on
Vesting
($)
21,090
2,646,940(3)
150,000
10,963,500(2)
57,328
8,545,101(3)(4)
61,197
43,175
9,163,600(3)(4)(5)
6,249,716(3)(4)
(1) Computed by determining the market value per share of the shares acquired based on the difference
between: (a) the per share market value of our common stock at exercise, defined as the closing price on the
date of exercise, or the weighted average selling price if same-day sales occurred, and (b) the exercise price
of the stock options.
56
99
14,176,695(3)(4)(5)
John F. Rex
Stephen J. Hemsley
Name
5,229(4) 836,849
7,090(4) 1,134,684
13.944(6)
2,231,598
5,511(4) 881,980
14,225(6)
2,276,569
2/10/2015
2/12/2014
5,605(4) 897,024
2/12/2014 14,947(5) 2,392,118
2/6/2013
9,296(4)
1,487,732
(1) The expiration date shown is the latest date that stock options/SARs may be exercised. Stock options/SARS
may terminate earlier in certain circumstances, such as in connection with the named executive officer's
termination of employment.
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(2) Based on the per share closing market price of our common stock on December 31, 2016 of $160.04.
(3) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date.
(4) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date, other than for
retirement eligible executive officers. A portion of a retirement eligible executive officer's award that otherwise
would have vested on the next specified vesting date is cancelled to pay applicable FICA taxes owed by the
executive officer. The cancellation occurs in the year of grant if the executive officer is retirement eligible
during that year or in the first year the executive officer becomes retirement eligible. The remainder of the
award vests proportionally over the remaining vesting period. Messrs. Hemsley and Renfro are retirement
eligible. These RSUs are eligible to and did receive dividend equivalents converted into additional shares;
accordingly, the number of shares shown has been rounded up to the nearest whole share. For more
information on RSUs cancelled in 2016, please see the 2016 Option Exercises and Stock Vested table.
(5) Vest 100% on February 12, 2017. These RSUs are eligible to and did receive dividend equivalents converted
into additional shares; accordingly, the number of shares shown has been rounded up to the nearest whole
share.
(6) Vest 100% at the end of the three-year performance period. The number of performance shares that the
executive officer will receive is dependent upon the achievement of a cumulative EPS measure and an
average ROE measure approved by the Compensation Committee. The number of performance shares
reported above for grants made in 2016 and 2015 is at the target number established by the Compensation
Committee because we currently believe that is the probable outcome of the performance conditions based on
the Company's performance through December 31, 2016.
2014-2016
The following table presents information regarding the exercise of stock options during fiscal year 2016 by our
named executive officers and vesting of restricted stock awards held by our named executive officers for fiscal year
2016.
Option Awards
Number of
2/12/2024
2/6/2023
6/5/2022
56.04
80,000
6/5/2012
Grant
Options/
SARS (#)
Exercisable
Unexercised
Options/
SARS (#)
Option/
SAR
Option/
Shares or
Units of
Stock
Unexercisable
Exercise/
Grant
Price ($)
SAR
Expiration
Date(1)
Stock
Award
Grant Date
That
Have Not
Vested (#)
Stephen J. Hemsley
Name
2/9/2016
2/10/2015
25,919
77,759(3)
111.16
108.97
2/9/2026
2/10/2025
2/9/2016
21,386(4)
($)(2)
3,422,615
Have Not
Vested (#)
Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
Equity
Incentive
Plan Awards:
118,270(3)
SAR
Option/
Unexercised
(6) Amounts represent grants made to Mr. Rex in connection with his appointment as CFO of the Company.
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Outstanding Equity Awards at 2016 Fiscal Year-End
The following table presents information regarding outstanding equity awards held at the end of fiscal year 2016 by
our named executive officers.
Option/SAR Awards
Stock Awards
Number of
Number of
Number
of
Securities
Securities
Underlying
Underlying
Date of
Number of
Unearned
Shares or
Except as provided in footnote 4 to the Outstanding Equity Awards at 2016 Fiscal Year-End table with respect to
Mr. Hemsley and Mr. Renfro.
Units That
Incentive
8,715(4)
1,394,749
John F. Rex
6/7/2016
56,416(3)
2/9/2016
31,623(3)
136.94
111.16
6/7/2026
2/9/2026
6/7/2016
9,248(4) 1,480,050
2/9/2016
2/6/2013
5,718(4) 915,109
6,376
19,128(3)
108.97
2/10/2025
2/12/2014
22,378
22,379(3)
70.24
2/6/2013
39,729
13,243(3)
57.38
2/10/2015
-
4,567,222
28,538(5)
Plan
Awards:
Market
Value of
Unearned
Shares or
Units That
Have Not
Vested ($)(2)
2/9/2016
42,057(6)
6,730,802
2/12/2014
41,959
41,959(3)
2/6/2013
74,484
24,828(3)
2/9/2010 114,036
2/23/2009
169,683
57.38
33.00
29.74
70.24 2/12/2024
2/6/2023
2/10/2015
16,620(4)
2,659,865
2/10/2015
42,902(6)
6,866,036
2/9/2020
2/23/2019
2/12/2014
14,014 (4)
2,242,801
2/12/2014
Equity
Larry C. Renfro
Stock Option Award (4)
$724,500
2
Board of
Directors
1
Audit
42
48
During fiscal 2016, Messrs. Ballard and Lawson and Dr. Wilensky served on the Compensation Committee. None
of these persons has ever been an officer or employee of the Company or any of its subsidiaries. Furthermore,
during 2016, none of these persons served as a member of the compensation committee (or other board
committee performing equivalent functions) or as a director of another entity where an executive officer of such
entity served on our Compensation Committee or Board.
Compensation Committee Interlocks and Insider Participation
Gail R. Wilensky, Ph.D.
William C. Ballard, Jr.
Rodger A. Lawson (Chair)
The Compensation Committee has reviewed and discussed the above Compensation Discussion and Analysis with
management. Based on its review and discussions, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in the proxy statement and incorporated by
reference into the Company's Annual Report on Form 10-K for the year ended December 31, 2016. This report
was provided by the following independent directors who comprise the Compensation Committee:
Humana Inc.
Corporate
Governance
CIGNA Corp.
Aetna Inc.
Managed Care Companies
Compensation Committee Report
Walgreens Boots Alliance, Inc.
Wells Fargo & Company
United Parcel Service, Inc.
Visa, Inc.
U.S. Bancorp
The Goldman Sachs Group, Inc.
The Travelers Companies, Inc.
The Allstate Corporation
Target Corp.
Prudential Financial, Inc.
Procter & Gamble Co.
Pfizer Inc.
Johnson & Johnson
JPMorgan Chase & Co.
MasterCard Incorporated
McKesson Corporation
Medtronic plc
Merck & Co. Inc.
MetLife, Inc.
Microsoft Corporation
Morgan Stanley
Oracle Corporation
Anthem Inc.
3
Executive
Compensation
Annual
14,518,164
17,765,612
137,358
145,679
2,070,099(7)
($)
Total
Compensation
($)(6)
Earnings
($)(5)
Stock Option Incentive Plan Compensation All Other
Awards Awards
Compensation
($)(2) ($)(3)
($)(4)
7,012,640 2,337,015 4,908,500
7,012,546 2,337,939 3,672,000
7,625,114 1,874,728 3,949,000
2014 1,300,000
2015 1,350,000
CEO
2016 1,300,000
Stephen J. Hemsley
($)
Year ($)(1)
Name and Principal Position
Bonus
Salary
and
Non-Qualified
Deferred
Non-Equity
Change in
Pension Value
The following table provides certain summary information for the years ended December 31, 2016, 2015 and 2014
relating to compensation paid or granted to, or accrued by us on behalf of, our named executive officers.
2016 Summary Compensation Table*
Information
Meeting
5
4 Committee
Matters
Other
International Business Machines Corp.
Humana Inc.
Hewlett-Packard Company
Gilead Sciences Inc.
Board of
Directors
47
Internal Revenue Code Section 162(m) imposes a $1 million corporate deduction limit for compensation to the
Company's CEO and its three other highest-paid executive officers (other than the CFO) employed at the end of
the year, unless the compensation is "performance-based," as defined in Section 162(m), and provided under a
plan that has been approved by shareholders. As part of the federal health care reform legislation enacted in 2010,
Section 162(m) was revised with respect to health insurers, including the Company. Starting in 2013, an annual tax
deduction limit of $500,000 per person applies to compensation that we pay to any of our employees and certain
service providers, regardless of whether such compensation is deemed performance-based under Section 162(m)
or is provided pursuant to a shareholder-approved plan. Any outstanding stock options and SARS that were granted
prior to 2010 are not subject to the tax deduction limitation.
Accounting and Tax Considerations
In addition, our Compensation Committee retains discretion to adjust compensation for quality of performance,
adherence to Company values and other factors.
We have a clawback policy that entitles the Board of Directors to seek reimbursement from any executive
involved in fraud or misconduct causing a restatement of financials, or violation of certain employment
agreement provisions, including any non-compete, non-solicit or confidentiality provisions. The executive
would be required to reimburse the Company the entire amount of a bonus paid, not just the amount that
would not have been earned had the executive received a lower award based on the restated earnings.
We generally require executive officers to hold, for at least one year, one-third of the net shares acquired
upon vesting or exercise of any equity award granted; and
We have stock ownership guidelines for our executive officers;
Our equity awards are delivered through a balanced mix of performance shares, RSUs and stock options
to encourage sustained performance over time;
Our annual cash bonus program includes a variety of financial and non-financial measures that require
substantial performance on a broad range of initiatives;
•
•
•
Our compensation programs are balanced, focused on long-term pay-for-performance, allow for discretion, and are
overseen by an independent Compensation Committee. The Compensation Committee believes that the design of
the compensation program for our executive officers does not encourage excessive or unnecessary risk-taking, as
illustrated by the following list of features:
Consideration of Risk in Named Executive Officer Compensation
executive officer, if the executive officer would have received a lower (or no) cash incentive award if calculated
based on the restated financial results; (b) canceling all outstanding vested and unvested equity awards subject to
the clawback policy and requiring the executive officer to return to the Company all gains from equity awards
realized during the 12-month period following the filing of the incorrect financial statements; and (c) seeking
reimbursement of the entire amount of any bonus paid.
Other
Information
Meeting
5
4 Committee
Matters
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
1
Audit
$43,470
Peer Group and Managed Care Companies
107,479
Audit
3
Peer Group
General Mills, Inc.
General Electric Company
FedEx Corporation
Express Scripts Holding Company
Eli Lilly and Company
Citigroup, Inc.
CVS Health Corporation
Cisco Systems, Inc.
Cargill, Incorporated
Cardinal Health, Inc.
Bristol-Myers Squibb Company
Biogen Inc.
Bank of America Corporation
Berkshire Hathaway Inc.
Best Buy Co., Inc.
Anthem Inc.
American International Group, Inc.
Ameriprise Financial, Inc.
AmerisourceBergen Corporation
Amgen Inc.
American Express Company
Aetna Inc.
Accenture, plc
AbbVie Inc.
Abbott Laboratories
3M Company
Information
Meeting
5
4 Committee
Matters
Other
Annual
Executive
Compensation
2
14,856,321
Corporate
Governance
2016 721,923
$ 775,008
$6,600,014
$3,300,007
$1,650,059
$6,600,014
$3,300,007
$1,650,059
$2,500,210
$1,250,105
$1,875,178
$9,350,112
$4,675,056
$2,337,584
$1,550,015
Maximum
Restricted
Stock Units
Marianne D. Short
Larry C. Renfro
David S. Wichmann
John F. Rex
Stephen J. Hemsley
Name
Performance Shares
Topic 718, based on the closing stock price on the grant date. The grant date fair value of RSUs granted in
2016 and the grant date fair value of performance shares granted in 2016 if target performance and maximum
performance is achieved are as follows:
(2) The amounts reported in this column reflect the aggregate grant date fair value of the RSUs and performance
shares (at target) granted in 2016, 2015 and 2014 and are computed in accordance with FASB ASC
Other
Information
Meeting
5
Target
$3,100,030
See the 2016 Grants of Plan-Based Awards table for more information on stock awards granted in 2016.
(3) The actual value to be realized by a named executive officer depends upon the performance of the
Company's stock and the length of time the award is held. No value will be realized with respect to any award
if the Company's stock price does not increase following the award's grant date or if the executive officer does
not satisfy the vesting criteria.
2014-2016
John F. Rex
David S. Wichmann
2014-2016
John F. Rex
$908,500
Period
2014-2016
Stephen J. Hemsley
Name
Amount of
Long-Term Cash
Incentive Award
Deferred
Total Amount of
Long-Term Cash
Incentive Award
The long-term cash incentive awards for the 2014-2016 incentive period under our 2008 Executive Incentive
Plan, including amounts deferred by the named executive officers, were the following:
$ 75,000
$225,000
$240,000
$ 84,000
$225,000
Amount of Annual
Cash Incentive
Award Deferred
$1,250,000
$3,750,000
$1,400,000
$4,000,000
Total Amount of
Annual Cash
Incentive Award
Marianne D. Short
Larry C. Renfro
David S. Wichmann
John F. Rex
Stephen J. Hemsley
Name
(4) Amounts reported include both annual and long-term cash incentive awards to our named executive officers
under our 2008 Executive Incentive Plan. The 2016 annual incentive awards, including amounts deferred by
the named executive officers, were the following:
The amounts reported in this column for 2016 reflect the aggregate grant date fair value of stock options
granted in 2016 computed in accordance with FASB ASC Topic 718. For a description of the assumptions
used in computing the aggregate grant date fair value, see Note 11 to the Consolidated Financial Statements
included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. These same
assumptions have been used in computing aggregate grant date fair values since fiscal year 2009.
4 Committee
Matters
Annual
$3,750,000
3
12,324,995
150,765
12,142,565
99,499
11,581,817
144,724
12,316,446
142,216
1,662,600
1,482,981
1,798,100
| | | | | |
4,950,066 1,649,664 4,474,500
4,950,071 1,650,322 3,686,700
6,375,123 1,124,841 3,643,102
2,325,023 774,849
2,325,202 775,156
3,250,075 749,909
2015 1,150,000
2014 900,000
2016 800,000
2015 832,693
2014 750,000
and Chief Legal Officer
Marianne D. Short
Executive Vice President
Vice Chairman and CEO, Optum
2016 1,100,000
Larry C. Renfro
4,950,066 1,649,664
4,950,071 1,650,322 3,686,700
6,375,123 1,124,841 3,643,102
2014 900,000
2015 1,150,000
2016 1,100,000
David S. Wichmann
President
Executive Vice President and CFO
7,185,223
62,968
3,125,283 1,875,049
Executive
Compensation
1,400,000
152,265
11,589,358
4,474,500
$48,000
Corporate
Governance
2
Directors
1
Board of
Audit
$66,000
$66,000
$43,315
$78,000
Deferred
54,540
49
49
Amounts reported for 2015 reflect one additional pay period.
Amount
100,691
86,496
5,682,147
Marianne D. Short
6,333,656
12,097,606
5,798,127
(1) Amounts reported reflect the base salary earned by named executive officers in the years ended
December 31, 2016, 2015 and 2014. Amounts reported for 2016 include the following amounts deferred by
the named executive officers under our Executive Savings Plan:
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation
program necessary for an understanding of the information disclosed in this table. Please see "Executive
Employment Agreements" below for a description of the material terms of each named executive officer's
employment agreement.
Stephen J. Hemsley
100,155
John F. Rex
David S. Wichmann
Larry C. Renfro
Name
Executive Employment Agreements
$ 868,062
$ 927,537
John F. Rex
David S. Wichmann
Larry C Renfro
Marianne D. Short
$7,716,976
Previously
Reported
Amount
$2,288,150
We have entered into an employment agreement with each of the named executive officers. The following is a
summary of the material terms of those agreements.
5,788,606
On November 7, 2006, the Board of Directors entered into an employment agreement with Mr. Hemsley to serve
as CEO. On December 14, 2010, the employment agreement was amended to extend the employment period to
December 1, 2014. The employment agreement extends automatically for additional one-year periods after
December 1, 2014 unless sooner terminated in accordance with its terms. During the period of his employment, the
Board of Directors will nominate Mr. Hemsley for election to the Board of Directors by the shareholders of the
Company.
Summary of Compensation Components
Under his employment agreement, Mr. Hemsley receives a base salary of $1,300,000, with any increases at the
sole discretion of the Compensation Committee and ultimately the independent members of the Board of Directors.
Mr. Hemsley's employment agreement does not set any minimum or target level for any bonus or other incentive
compensation. All bonus and incentive compensation awards are solely at the discretion of the Compensation
Committee. Mr. Hemsley is eligible to participate in the Company's generally available employee benefit programs.
Termination Provisions
Upon termination of Mr. Hemsley's employment for any reason, he is entitled to a supplemental retirement benefit
in the amount of $12,773,328, payable in DSUs, which will be paid six months and one day after his termination.
If Mr. Hemsley's employment is terminated by the Company without Cause, other than upon expiration of the term
of the employment agreement, or by Mr. Hemsley for Good Reason, the Company will pay Mr. Hemsley a lump
sum in an amount equal to his annual base salary for 12 months.
If Mr. Hemsley's employment is terminated because of his death or permanent disability, the Company will pay him
or his beneficiaries a lump sum in an amount equal to two years total compensation of base salary plus the
average bonus for the last two calendar years, excluding any special or one-time bonus or incentive compensation
payments.
60
Stephen J. Hemsley
Audit
Board of
Directors
Stephen J. Hemsley
Name
Audit
Information
1,213,930
2
1,008,504
(1) All amounts in these columns have been reported as compensation in the 2016 Summary Compensation
Table.
(2) Named executive officers are eligible to participate in our Executive Savings Plan, which is a non-qualified
deferred compensation plan. Under the plan, employees may generally defer up to 80% of their eligible annual
base salary (100% prior to January 1, 2007) and up to 100% of their annual and long-term cash incentive
awards. Amounts deferred, including Company credits, are credited to a bookkeeping account maintained for
each participant, and are distributable pursuant to an election made by the participant as to time and form of
payment that is made prior to the time of deferral. The Company maintains a Rabbi Trust for the plan. The
Company's practice is to set aside amounts in the Rabbi Trust to be used to pay for all benefits under the
plan, but the Company is under no obligation to do so except in the event of a change in control.
(3) For the first 6% of the employee's base salary and annual incentive award deferrals under our Executive
Savings Plan, the Company provides a matching credit of up to 50% of amounts deferred at the time of each
deferral. This matching credit does not apply to deferrals of long-term cash incentive awards or other special
incentive awards.
(4) Amounts deferred are credited with earnings from measuring investments selected by the employee from a
collection of unaffiliated mutual funds identified by the Company. The Executive Savings Plan does not credit
above-market earnings or preferential earnings to amounts deferred. The returns on the mutual funds
available to employees during 2016 ranged from 0.28% to 23.53%, with a median return of 7.75% for the year
ended December 31, 2016. Employees may change their selection of measuring investments on a daily basis.
(5) Under our Executive Savings Plan, unless an employee in the plan elects to receive distributions during the
term of his or her employment with the Company, benefits will be paid no earlier than at the beginning of the
year following the employee's termination. However, upon a showing of severe financial hardship, an
employee may be allowed to access funds in his or her deferred compensation account earlier. Benefits can
be received either as a lump sum payment, in five or ten annual installments, in pre-selected amounts and on
pre-selected dates, or a combination thereof. An employee may change his or her election with respect to the
timing and form of distribution for such deferrals under certain conditions. However, for deferrals relating to
services performed on or after January 1, 2004, employees may not accelerate the timing of the distributions.
59
59
(6) This column includes the amounts shown in columns (b) and (c) as well as the following amounts reported in
the summary compensation table for prior years:
1
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Meeting
Board of
Directors
Corporate
Governance
Summary of Compensation Components
Executive
Compensation
5
Meeting
Information
Compensation Component
John F.
Rex
David S.
Wichmann
Larry C.
Renfro
Marianne D.
Short
Base salary(1)
✓
Participation in incentive compensation plans (1)
✓
✓
Stock-based awards (1)
✓
$2 million term life insurance policy (2)
Long-term disability policy (2)(3)
✓
472,388
One-time sign-on / promotion equity award and / or bonus
4 Committee
Matters
3
Other
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Meeting
Information
If Mr. Hemsley's employment is terminated by the Company for Cause, by Mr. Hemsley without Good Reason or
because of his retirement or upon expiration of the term of the employment agreement, he will not be entitled to
any further compensation from the Company other than earned but unpaid salary and benefits.
Material Definitions
As defined in the employment agreement, "Cause" generally means (a) willful and continued failure to perform his
duties after written notice and a failure to remedy the deficiency, (b) a violation of the Company's Code of Conduct
that is materially detrimental to the Company and is not remedied after written notice, (c) engaging in fraud,
material dishonesty or gross misconduct in connection with the Company's business, (d) conviction of a felony, or
(e) willful and material breach of the employment agreement that is not remedied after written notice.
As defined in the employment agreement, “Good Reason" generally means (a) an assignment of duties
inconsistent with his position or duties or other diminution of duties, (b) a relocation of primary work location by
more than 25 miles, (c) failure by the Board of Directors to elect Mr. Hemsley as CEO, (d) failure by the Board of
Directors to nominate Mr. Hemsley to serve on the Board of Directors, (e) the Company's failure to pay or provide
Mr. Hemsley's base salary, incentive compensation or other benefits, or (f) any other material breach of
Mr. Hemsley's employment agreement that is not remedied.
Non-Solicitation, Non-Competition and Confidentiality Provisions
Pursuant to the employment agreement, Mr. Hemsley is subject to provisions prohibiting his solicitation of the
Company's employees and customers or competing with the Company during the term of the employment
agreement and the longer of two years following termination or the period that severance payments are made to
him under the employment agreement. In addition, he is prohibited at all times from disclosing confidential
information related to the Company.
John F. Rex, David S. Wichmann, Larry C. Renfro and Marianne D. Short
Messrs. Rex, Wichmann and Renfro and Ms. Short have entered into employment agreements with the Company.
Under those agreements, they each report to the CEO of the Company. The table below and the narrative that
follows summarize the material terms of their respective employment agreements.
61
Audit
1
Board of
Directors
2
Corporate
Governance
3
Annual
($)(6)
(f)
11,553,210
Present
Value of
Accumulated
Benefit ($)
40,242
Number of
Years
Credited
Name
Stephen J. Hemsley
John F. Rex
David S. Wichmann
Larry C. Renfro
Service
Plan Name
Individual Agreement for
(#)
The following table presents information regarding the present value of accumulated benefits payable under our
non-qualified defined-benefit pension plans covering our named executive officers for fiscal year 2016.
Payments
During Last
Fiscal Year
_ (1)
12,773,328(1)
Supplemental Executive
Retirement Pay
N/A
N/A
N/A
N/A
Marianne D. Short
($)
2016 Pension Benefits
Information
Meeting
✓
159.86
325,155
532
159.86
85,046
685
159.86
109,504
57
40
Audit
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
(1) In 2006, the amount of Mr. Hemsley's supplemental retirement benefit was frozen based on his age and
average base salary at the time and converted into a lump sum of $10,703,229. As described in the
Compensation Discussion and Analysis section of this proxy statement, on June 7, 2016, the Company
amended Mr. Hemsley's SERP to convert the $10,703,229 cash benefit into a number of DSUs based on the
average closing price of the Company's common stock over the preceding five trading days from the date of
conversion ($135.846), which resulted in 78,789 DSUs issued on June 7, 2016. The DSUS held in the SERP
are eligible to receive dividend equivalents in the form of additional DSUs, which are paid at the same rate
and at the same time that dividends are paid to the Company's shareholders. During 2016, Mr. Hemsley
received dividend equivalents equal to 1,024 DSUs, which were added to the SERP. As of
December 31, 2016, upon termination of Mr. Hemsley's employment for any reason, the amount of the benefit
to which Mr. Hemsley is entitled is 79,813 DSUs, which had a value of $12,773,328 as of
December 31, 2016. The SERP balance will be paid six months and one day after his termination.
58
59
Registrant
Contributions
in Last FY
Aggregate
Earnings
in Last FY
Aggregate
Withdrawals/
Distributions
($)(4)
(d)
($)(5)
(e)
243,000
121,500
1,240,744
94,315
47,158
61,929
287,202
123,000
627,460
246,000
123,000
53,749
115,500
57,750
($)(1)(3)
(c)
Aggregate
Balance at
Last FYE
($)(1)(2)
(b)
Marianne D. Short
Audit
Board of
1
2
Directors
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Meeting
Information
2016 Non-Qualified Deferred Compensation
The following table presents information as of the end of 2016 regarding the non-qualified deferred compensation
arrangements for our named executive officers for fiscal year 2016.
Name (a)
Stephen J. Hemsley
John F. Rex
David S. Wichmann
Larry C. Renfro
Executive
Contributions
in Last FY
Additional service credit (4)
Total(4)
✓
Acceleration of Equity(3)
33,924,434
2,034
42,136,434
2,000,000 660,000
29,141,638 29,141,638 33,924,434 33,924,434
36,322,749 34,982,749 39,105,545 35,035,545
Marianne D. Short
Cash Payments
Annual Cash Incentive (1)
Long-Term Cash Incentive (2)
Insurance Benefits
3,862,000
1,600,000 1,600,000
Insurance Benefits
Acceleration of Equity (3)
Total(4)
807,265
2,000,000
807,265
480,000
807,265
807,265
15,143,288
19,005,288
1,600,000
1,111,111 1,111,111
4,070,000 4,070,000 4,070,000
1,111,111 1,111,111
Long-Term Cash Incentive (2)
Cash Payments
8,212,000
Annual Cash Incentive (1)
Long-Term Cash Incentive (2)
4,070,000 4,070,000 4,070,000
1,111,111 1,111,111
1,111,111 1,111,111
Insurance Benefits
2,000,000
Acceleration of Equity(3)
29,115,893
29,141,638
660,000
29,141,638
33,924,434
Total(4)
37,327,893
36,322,749
34,982,749 5,181,111 35,035,545
Larry C. Renfro
Cash Payments
8,212,000
Annual Cash Incentive (1)
15,155,402 15,155,402
17,401,884
19,562,667 18,042,667 2,407,265
18,209,149
2
Directors
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Meeting
Information
Proposal 2 - Advisory Approval of the Company's Executive
Compensation
The Board of Directors recognizes the significant interest of shareholders in executive compensation matters. As
required by the Exchange Act, we are seeking shareholders' views on our executive compensation philosophy and
practices through an advisory vote on the following resolution at the Annual Meeting:
"Resolved, that the shareholders approve, on an advisory basis, the compensation of the named executive
officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC,
including the Compensation Discussion and Analysis, the compensation tables and the related narrative
disclosures."
The Compensation Discussion and Analysis, the compensation tables and the related narrative disclosures appear
on pages 30-65 of this proxy statement.
As discussed in the Compensation Discussion and Analysis, the Board of Directors believes that our executive
compensation program attracts and retains highly qualified executives while linking executive compensation directly
to Company-wide performance and long-term shareholder interests. In deciding how to vote on this proposal, the
Board of Directors asks you to consider the key points with regard to our executive compensation program included
in the Compensation Discussion and Analysis and in the "Executive Summary" section on pages 28-65 of this
proxy statement.
This advisory proposal, commonly referred to as a "Say-on-Pay" proposal, is not binding on the Board of Directors.
Although the voting results are not binding, the Board and the Compensation Committee will review and consider
them when evaluating our executive compensation program. More than 95% of the votes cast were in favor of our
executive compensation program at each of our annual meetings since our inaugural vote in 2011. An advisory
vote regarding the frequency of future Say-on-Pay votes is included as Proposal 3 for this Annual Meeting.
In addition to our annual advisory vote to approve the Company's executive compensation, we are committed to
ongoing engagement with our shareholders on executive compensation and corporate governance issues. These
engagement efforts take place throughout the year where appropriate through meetings, telephone calls and
correspondence involving our senior management, directors and representatives of our shareholders.
For these reasons, the Board of Directors recommends that you vote FOR approval of the compensation of
the named executive officers, as disclosed in this proxy statement. Executed proxies will be voted FOR
approval of the compensation of the named executive officers unless you specify otherwise.
66
99
1
David S. Wichmann
Board of
65
(1) Represents the maximum amount the Compensation Committee may in its discretion determine, but is not required,
to pay the executive officer (or the executive officer's estate, if applicable) based upon a prorated portion of the
award that the executive officer would have received but for his or her death, disability or retirement, calculated at
the achievement of the maximum performance target, as more fully described in footnote 2 to the 2016 Grants of
Plan-Based Awards table. For the purposes of this table, the potential amounts have not been prorated because the
table assumes a death, disability or retirement as of December 31, 2016.
64
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Information
(2) With respect to "Death,” “Disability” and “Retirement,” represents the maximum amount the Compensation
Committee may in its discretion determine, but is not required, to pay the executive officer (or the executive officer's
estate, if applicable) based upon the portion of the incentive periods the executive officer served prior to death,
disability or retirement and measurement of Company and executive performance based on performance through
the end of the fiscal year of the Company which ends closest to the executive officer's date of death, disability or
retirement, calculated at the achievement of the maximum performance target, as more fully described in footnote 3
to the 2016 Grants of Plan-Based Awards table. With respect to "Change in Control," represents the amount
payable by the Company or its successor to each executive officer (or to be credited to the named executive
officer's account in the Company's Executive Savings Plan if a timely deferral election is in effect), which is a
prorated portion of the maximum long-term cash incentive award for which the executive officer is eligible for the
2015-2017 and 2016-2018 performance periods.
(3) Represents the (i) unvested RSUs multiplied by the closing stock price on December 31, 2016 ($160.04),
(ii) intrinsic value of the unvested stock options, which is calculated based on the difference between the closing
price of our stock on December 31, 2016 ($160.04) and the exercise or grant price of the unvested stock options as
of that date, and (iii) the number of performance shares earned if target performance is achieved multiplied by the
closing stock price on December 31, 2016 ($160.04). If maximum performance is achieved for the performance
shares, the amounts for Acceleration of Equity would be (a) for "For Good Reason or Not for Cause," $57,549,953
for Mr. Hemsley; $16,976,057 for Mr. Rex, $38,713,652 for Mr. Wichmann; $43,522,192 for Mr. Renfro; and
$19,651,455 for Ms. Short; (b) for "Death” and “Disability," $43,998,406 for Mr. Hemsley; $18,762,738 for Mr. Rex,
$33,956,602 each for Messrs. Wichmann and Renfro; and $17,417,087 for Ms. Short; (c) for "Retirement,"
$57,549,953 for Mr. Hemsley; and $43,522,192 for Mr. Renfro; and (d) for "Change in Control," $57,549,953 for
Mr. Hemsley; $22,288,419 for Mr. Rex; $43,522,192 each for Messrs. Wichmann and Renfro; and $21,910,050 for
Ms. Short.
For "For Good Reason or Not for Cause," the amount includes the value of unvested equity awards held by the
named executive officer that will not immediately vest upon termination but will continue to vest through any
applicable severance. For "Retirement," the amount includes the value of certain unvested equity awards granted in
2013, 2014, 2015 and 2016 that will continue to vest and be exercisable for a period of five years (but not after the
award's expiration date). The value of the awards that will not immediately vest is based on their intrinsic values on
December 31, 2016. However, because these awards would continue to vest after termination of employment or
retirement, the actual value the named executive officer would receive is not determinable. At December 31, 2016,
Messrs. Hemsley and Renfro had met the retirement eligibility provisions.
(4) Does not include value of benefits, plans or arrangements that would be paid or available following termination of
employment that do not discriminate in scope, terms or operation in favor of our executive officers and that are
generally available to all salaried employees or accrued balances under any non-qualified deferred compensation
plan that is described above.
99
Audit
Reasonable non-business use of corporate aircraft (5)
20,876,707 19,356,707 1,840,000 18,799,547
Total(4)
Means:
Definition
Good Reason
•
Material failure to follow the Company's reasonable direction or to perform any duties
reasonably required on material matters;
A material violation of, or failure to act upon known or suspected violations of, the
Company's Code of Conduct;
Conviction of any felony, commission of any criminal, fraudulent or dishonest act, or any
conduct that is materially detrimental to the Company's interests; or
Material breach of the employment agreement.
The Company must provide the executive officer with written notice of Cause within 120 days
of discovery, and the executive officer will have 60 days to remedy the conduct, if the conduct
is reasonably capable of being remedied.
Term
Cause
Exists if the Company:
Moves the executive officer's primary work location more than 50 miles;
Makes changes that substantially diminish the executive officer's duties or responsibilities*;
or
Changes the executive officer's reporting relationship.
The executive officer must give the Company written notice of the circumstances constituting
Good Reason within 120 days of becoming aware of the circumstances, and the Company will
I have 60 days to remedy the circumstances.
For Mr. Rex, "Good Reason" also exists if the Company makes a change so that he no longer serves as both CFO of the
Company and a member of the Office of the CEO of the Company. For Mr. Renfro, "Good Reason" also exists if the
Company makes a change so that he no longer holds the positions of Vice Chairman of the Company and CEO of
Optum, Inc. or other equivalent positions.
Non-Solicitation, Non-Competition and Confidentiality Provisions
Pursuant to their respective employment agreements, each executive officer is subject to provisions prohibiting his
or her solicitation of the Company's employees or competing with the Company during the term of the employment
agreement and for two years following termination for any reason. In addition, each executive officer is prohibited at
all times from disclosing confidential information related to the Company.
63
Reduces the executive officer's base salary or long- or short-term target bonus percentage
other than in connection with a general reduction affecting a group of similarly situated
employees;
Applicable definitions for the employment agreements follow.
Information
Meeting
Generally available employee benefit programs
(1) Any adjustments to base salary, actual bonuses payable and stock-based awards are at the discretion of the
Compensation Committee.
(2) Benefit provided at the Company's expense.
(3) Annual benefit covers 60% of eligible base salary in the event of a qualifying long-term disability, subject to
the terms of the policy.
(4) Mr. Renfro's employment agreement (a) states that for purposes of determining his eligibility for retirement, he
will receive two years of service credit for each year he remains employed with the Company after age 59 and
(b) clarifies that he will be deemed eligible for retirement if, prior to otherwise becoming eligible for retirement,
his employment is terminated by the Company without Cause or he resigns for Good Reason.
(5) Required to reimburse the Company for full incremental costs associated with such use.
Termination Provisions and Material Definitions
Each employment agreement and each executive officer's employment may be terminated (a) by mutual agreement
(b) by the Company with or without Cause, (c) by the executive officer and (d) upon the executive officer's death or
disability that renders him or her incapable of performing the essential functions of his or her job, with or without
reasonable accommodation. Each executive officer may also terminate his or her employment agreement and
employment at any time for Good Reason. If the executive officer's employment is terminated by the Company
without Cause or by the executive officer for Good Reason, the Company will provide the executive officer with
outplacement services consistent with those provided to similarly situated executives and pay the executive officer
severance compensation equal to the sum of (a) 200% of his or her annualized base salary as of his or her
termination date, (b) 200% of the average of his or her last two calendar year bonuses, excluding any equity
awards and any special or one-time bonus or incentive compensation payments, and (c) $12,000 to offset the costs
of benefit continuation coverage. The severance compensation will be payable over a 24-month period for
Messrs. Rex and Wichmann and Ms. Short and will be payable over a 12-month period for Mr. Renfro. In addition,
if the Company terminates Mr. Rex's employment without Cause or if Mr. Rex terminates employment for Good
Reason, Mr. Rex has the option to remain employed in an advisory capacity for one year (at his then-current
annual base salary and target bonus) following notification of termination.
62
62
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Other
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Board of
1
2
John F. Rex
1,300,000
12,773,328
43,953,115
58,026,443
8,350,000 8,350,000
5,200,000 5,200,000
1,311,111 1,311,111
12,773,328 12,773,328
420,000
37,177,341 37,177,341 43,953,115 43,953,115
64,811,780 65,231,780 63,237,554 58,037,554
5,200,000
1,311,111
1,311,111
12,773,328
12,773,328
Cash Payments
3,212,000
Annual Cash Incentive (1)
1,840,000 1,840,000 1,840,000
Long-Term Cash Incentive (2)
Insurance Benefits
Acceleration of Equity (3)
13,487,185
2,000,000 480,000
17,036,707 17,036,707
18,799,547
Total(4)
16,699,185
Acceleration of Equity(3)
DSUS in the SERP
Directors
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Governance
3
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Compensation
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Other
Information
Potential Payments Upon Termination or Change in Control
The following table describes the potential payments to named executive officers upon termination of employment
or a change in control of the Company as of December 31, 2016. Amounts are calculated based on the benefits
available to the named executive officers under existing plans and arrangements, including each of their
employment agreements described under "Executive Employment Agreements."
Name
For Good Reason
or Not For Cause
($)
Change
Death
($)
Disability Retirement
($)
($)
In Control
($)
Cash Payments
Stephen J. Hemsley
Annual Cash Incentive (1)
Long-Term Cash Incentive (2)
Insurance Benefits
60,907
2/12/2016
381
6/4/2013
510,560
111.72
4,570
2/6/2016
2/6/2013
652,179
136.84
4,766
6/5/2016
6/5/2012
John F. Rex
502,595
112.74
4,458
2/10/2015 2/10/2016
770,440
6/4/2016
6,740
136.84
922,302
4,134
2/12/2016
2/12/2014
574,464
111.72
5,142
2/6/2016
2/6/2013
111.82
David S. Wichmann
112.74
1,340
2/10/2016
2/10/2015
410,827
111.82
3,674
2/12/2014
151,072
111.82
6,890
111.72
David S. Wichmann
Stephen J. Hemsley
Name
Other
Information
(2) The value was computed as described in footnote 1 above and was based on the following:
Meeting
5
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Matters
Annual
Executive
Compensation
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Governance
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Audit
159.86
Exercise
Date
Number of
Options
Exercised
Market Price
at Exercise
Exercise
Price
8,569
2/6/2016
2/12/2016
2/12/2014
2/6/2013
Stephen J. Hemsley
Value Realized
on Vesting
Market Price
at Vesting
on Vesting
957,329
Number of
Shares Acquired
Date of
Award
Name
(3) Reflects the vesting of a portion of the RSUs granted. The value realized on vesting was computed based on
the following:
1/29/2016
3/2/2016
1/31/2006
5/2/2006
59.42
48.58
113.30
121.67
200,000
150,000
Vesting
Date
462,264
Date of
Award
2/10/2016
Marianne D. Short
7,074,888
160.04
44,207
12/31/2016
2/12/2014
Larry S. Renfro
7,074,888
160.04
44,207
12/31/2016
2/12/2014
David S. Wichmann
11,791,267
160.04
73,677
12/31/2016
2/12/2014
12/31/2016
29,472
160.04
37,887
2/10/2015
159.86
237
2/6/2013 12/14/2016
2/12/2014 12/14/2016
2/12/2014 12/14/2016
2/10/2015 12/14/2016
2/9/2016 12/14/2016
155,064
159.86
970
2/12/2014
2/9/2016 12/14/2016
Market Price
at Vesting
Shares
Acquired
on Vesting
Vesting
Date
Date of
Award
Name
Number of
(5) Reflects the cancellation on December 14, 2016 of RSUs for the payment of FICA tax liability. The value
realized was computed based on a closing stock price of $159.86 on December 14, 2016.
4,716,699
Stephen J. Hemsley
Larry C. Renfro
Stephen J. Hemsley
Value
Realized
on Vesting
Period
112.74
3,845
2/10/2015 2/10/2016
462,264
111.82
4,134
2/12/2016
2/12/2014
574,464
111.72
2/6/2016
2/6/2013
Larry C. Renfro
433,485
3,845
Value Realized
on Vesting
112.74
433,485
Marianne D. Short
5,142
2/6/2016
Number of
Shares Acquired
2/6/2013
2/12/2014 2/12/2016
2/10/2015 2/10/2016
on Vesting
Performance
Period
Completion Date
Date of
Award
Market Price
at End of
Performance
December 31, 2016 is based on the number of shares earned for the 2014-2016 performance period using the
per share closing market price of our common stock on December 31, 2016, although shares were not issued
until the Compensation Committee certified the performance results on February 8, 2017:
December 31, 2016 because performance targets were met. The value shown as realized on
(4) Also reflects the performance shares earned for the 2014-2016 performance period that ended on
203,608
Name
112.74
1,806
308,176
111.82
2,756
1,021,233
111.72
9,141
Board of
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75
15
For these reasons, the Board of Directors recommends that you vote AGAINST this proposal. Executed
proxies will be voted AGAINST this proposal unless you specify otherwise.
Our expenses related to political and lobbying activities are not financially significant. In 2016, our total
expenditures for all such activities, even using an overly broad definition, were significantly less than one tenth of
one percent of our total operating costs. Therefore, we do not believe that an additional line-item disclosure of such
amounts would be beneficial to our investors, and the cost of doing so would far exceed any perceived advantage.
Accordingly, the Board does not believe that implementing this proposal is in the best interests of the Company or
our shareholders.
Our shareholders were presented with substantially similar proposals at our 2014, 2013 and 2012 annual meetings.
Over these three years, the highest proportion of favorable votes was 23.49%, and, accordingly, none of the
proposals passed. In the shareholder supporting statement for this Annual Meeting, the proponent provides no new
compelling arguments in support of a substantially similar proposal.
Shareholders did not Approve Similar Proposals in Prior Years
6
Our Lobbying-Related Expenditures are not Financially Material
Other
Information
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5
6
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Information
Questions and Answers About the Annual Meeting and Voting
4 Committee
Matters
What is the purpose of the Annual Meeting?
At the Annual Meeting, shareholders will act upon the matters outlined in the Notice of Annual Meeting of
Shareholders. These include:
2
Annual
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already well disclosed, and our disclosures regarding our expenditures which are far below material financial
levels exceed applicable state and federal requirements.
-
Corporate
Governance
Directors
2
1
Board of
Audit
Executive
Compensation
74
Trade Association Activity
Our advocacy and legislative priorities at the federal and state levels are publicly available in our "Modern,
High-Performing, Simpler Health Care System," including detailed information about our positions on health care
reform and other public policy issues. It is all available on our website. In 2009, the Company formed the Center
for Health Reform & Modernization to facilitate communication of new ideas to contain health care costs and
improve quality and care. Drawing on the Company's expertise, data and extensive external experience and
partnerships, the Center for Health Reform & Modernization analyzes key health care issues, develops and offers
innovative policies and practical solutions for the health care challenges facing our nation. We share this
information freely and openly in the U.S. and internationally with the public, policymakers, academics, researchers,
care providers, health plans, employers and other key health care stakeholders. All such information is also publicly
available on our website at www.unitedhealthgroup.com/About/Modernization.aspx.
Legislative and Regulatory Priorities
We comply fully with all state and federal laws concerning the disclosure of our lobbying activities and expenses
including disclosures that are publicly available and which provide extensive detail regarding expenses and the
nature of our lobbying activities. All proposed political contributions go through a legal and business approval
process designed to ensure compliance with applicable federal and state campaign finance requirements, internal
policies and, in the case of contributions from our PACs, applicable PAC's bylaws. All contributions must reflect the
Company's interests and not those of its individual officers or directors. No campaign contributions are given in
anticipation of, in recognition of, or in return for, an official act.
Lobbying activities are led by our Government Affairs group and subject to oversight by senior management. In
addition, the Public Policy Committee of our Board of Directors oversees this function, including our health care
reform and modernization activities, political contributions, government relations, community and charitable
activities, third-party activities such as trade associations and industry group involvement, corporate social
responsibility, as well as overseeing the risks associated with these activities. The Public Policy Committee of the
Board of Directors receives, at each meeting, regular reports from management on these matters and reviews the
purpose and results of the activities. The Committee then provides detailed reports to the full Board of Directors at
each in-person meeting.
Advocacy Activities
We believe that it is in the best interests of our Company and our shareholders to belong to certain selected trade
associations, industry coalitions, and other such groups when it will benefit the business. We have stated publicly
that, in the normal course of business, we do not always agree with all positions taken by these groups. We offer a
Political Contributions report on our website and, for those trade associations to which we paid dues in excess of
$50,000, our 2016 report includes the amounts that are not deductible under Section 162(e) of the Internal
Revenue Code.
election of directors;
Executive
an advisory vote to approve our executive compensation (a "Say-on-Pay" vote);
Compensation
3
Annual
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Governance
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20
The Board of Directors recommends that you vote to hold future Say-on-Pay votes EVERY YEAR. Proxies
will be voted to hold future Say-on-Pay votes EVERY YEAR unless you specify otherwise.
The Board of Directors believes holding an annual advisory vote on executive compensation is a best practice and
is consistent with its policy of seeking regular input from shareholders on corporate governance matters and the
Company's executive compensation philosophy and practices. This vote is not binding but rather will provide the
Compensation Committee with shareholders' views on how frequently they desire to consider executive
compensation. Although the vote is advisory, the Compensation Committee will take into account the outcome of
the vote when considering how frequently the Company will submit executive compensation to a shareholder vote.
Notwithstanding the outcome of the shareholder vote, the Board may in the future decide to conduct advisory votes
on a more or less frequent basis and may vary its practice based on factors such as discussions with shareholders
or the adoption of material changes to compensation programs.
As part of its commitment to understanding shareholder sentiment on the Company's executive compensation
philosophy and practices, the Board of Directors is seeking shareholders' views on how frequently the Company
should submit executive compensation for consideration by shareholders. Currently our shareholders vote on the
Company's executive compensation every year. Shareholders may cast an advisory vote on whether to hold future
advisory votes on executive compensation every one, two or three years or abstain. After careful consideration, the
Board of Directors is recommending that shareholders approve continuing to hold a Say-on-Pay vote EVERY
YEAR.
Proposal 3 Advisory Approval Regarding the Frequency of
Holding Future Say-on-Pay Votes
4 Committee
Matters
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Meeting
5
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Other
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Information
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Information
•
an advisory vote regarding the frequency of holding future Say-on-Pay votes;
•
ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting
firm; and
•
if properly presented, one shareholder proposal.
Also, once the business of the Annual Meeting is concluded, management of the Company will give a business
update. Management, Chairs of each standing Board committee and representatives of Deloitte & Touche LLP will
be available to respond to questions from shareholders.
2.
What is a proxy?
It is your legal designation of another person to vote the stock you own in the manner you direct. That other
person is called a proxy. If you designate someone as your proxy in a written document, that document also is
called a proxy or a proxy card. We have designated Dannette L. Smith and Amy L. Schneider to serve as proxies
for the Annual Meeting. The Board of Directors will use the proxies at the 2017 Annual Meeting of Shareholders.
The proxies also may be voted at any adjournments or postponements of the meeting.
3.
What is a proxy statement?
The Company's Board of Directors is soliciting proxies for use at the 2017 Annual Meeting of Shareholders. A
proxy statement is a document we give you when we are soliciting your vote pursuant to SEC regulations.
4. What is the difference between a shareholder of record and a shareholder who holds
stock in street name?
Shareholders of Record. If your shares are registered in your name with our transfer agent, Wells Fargo
Shareowner Services, you are a shareholder of record with respect to those shares and the Notice of Internet
Availability of Proxy Materials ("Notice") or the proxy materials were sent directly to you by Broadridge Financial
Solutions.
Street Name Holders. If you hold your shares in an account at a bank or broker, then you are the beneficial owner
of shares held in “street name.” The Notice or proxy materials were forwarded to you by your bank or broker, who
is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you
have the right to direct your bank or broker on how to vote the shares held in your account.
76
AUDIT COMMITTEE MATTERS
Audit Committee Report
The Audit Committee of our Board of Directors is comprised of three non-employee directors, all of whom are audit
committee financial experts, as defined by the SEC. The Board of Directors has determined that all of the members
of the Audit Committee are independent within the meaning of the listing standards of the NYSE, the rules of the
SEC and the Company's Standards for Director Independence. The Audit Committee operates under a written
charter adopted by the Board of Directors which you may access in the corporate governance section of our
website at www.unitedhealthgroup.com/About/Corporate Governance.aspx.
The Audit Committee has responsibility for selecting and evaluating the independent registered public accounting
firm, which reports directly to the Audit Committee, overseeing the performance of the Company's internal audit
function, and assisting the Board of Directors in its oversight of enterprise risk management including privacy and
data security. Management has primary responsibility for the Company's consolidated financial statements and the
overall reporting process, for maintaining adequate internal control over financial reporting and, with the assistance
of the Company's internal auditors, for assessing the effectiveness of the Company's internal control over financial
reporting. Deloitte & Touche LLP ("Deloitte") has served as the Company's independent registered public
accounting firm since 2002.
While it is not the duty of the Audit Committee to plan or conduct audits, the Audit Committee engages with the
Company's independent registered public accounting firm and the internal auditors regarding the overall scope and
plans for their respective audits. The Company's independent registered public accounting firm is responsible for
performing an independent audit of the Company's consolidated financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States), expressing an opinion as to the
conformity of the consolidated financial statements with generally accepted accounting principles in the United
States of America, and auditing management's assessment of the effectiveness of internal control over financial
reporting. The Audit Committee's responsibility is to monitor and oversee these processes. The Audit Committee
also oversees management's processes to identify and quantify material risks facing the Company, including risks
disclosed in the Company's Annual Report on Form 10-K. The Audit Committee meets regularly with the internal
auditors and independent registered public accounting firm, with and without management present, to discuss the
results of their examinations, the evaluation of the Company's internal control over financial reporting and the
overall quality of the Company's accounting.
The Audit Committee has adopted a Policy for Approval of Independent Auditor Services (the "Policy") outlining the
scope of services that the independent registered public accounting firm may provide to the Company. The Policy
sets forth guidelines and procedures the Company must follow when retaining the independent registered public
accounting firm to perform audit, audit-related, tax and other services. The Policy also specifies certain non-audit
services that may not be performed by the independent registered public accounting firm under any circumstances.
Pursuant to these guidelines, the Audit Committee approves fee thresholds annually for each of these categories,
and services within these thresholds are deemed pre-approved.
•
68
Board of
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2
Corporate
Governance
3
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Compensation
Annual
Audit
This shareholder proposal relates to three components of the Company's activities: transparency of the Company's
positions on public policy, and related policies and procedures; advocacy efforts including membership in different
groups; and lobbying costs, both direct and indirect. As detailed below, our positions and advocacy efforts are
(2) Tax Fees include tax compliance, planning and support services. In 2016 and 2015 approximately $285,000
and $439,000, respectively, of Tax Fees were related to international tax services, and in 2016 approximately
$4,447,000 of Tax Fees were for business model operating design services. In 2016 and 2015 approximately
$109,000 and $148,000, respectively, of Tax Fees were related to tax compliance (review and preparation of
corporate and expatriate tax returns, review of the tax treatment for certain expenses and claims for refunds).
(3) All Other Fees include consulting fees and fees relating to communications training.
Background
Year
2016
$19,691,000
2015
$17,576,000
4,037,000
4,501,000
$23,728,000
$22,077,000
5,441,000
842,000
204,000
623,000
Tax Fees (2)
All Other Fees (3)
Total Audit and Audit-Related Fees
Total
(1) Audit-Related Fees for 2016 and 2015 include benefit plan and other required audits, an audit of one of our
subsidiaries, certain AICPA agreed-upon procedures and due diligence services.
Audit Committee's Consideration of Independence of Independent
Registered Public Accounting Firm
The Audit Committee has reviewed the nature of non-audit services provided by Deloitte & Touche and has
concluded that these services are compatible with maintaining the firm's ability to serve as our independent
registered public accounting firm.
Audit and Non-Audit Services Approval Policy
The Audit Committee has adopted a Policy for Approval of Independent Auditor Services (the "Policy") outlining the
scope of services that Deloitte & Touche may provide to the Company. The Policy sets forth guidelines and
procedures the Company must follow when retaining Deloitte & Touche to perform audit, audit-related, tax and
other services. The Policy also specifies certain non-audit services that may not be performed by Deloitte & Touche
under any circumstances. Pursuant to these guidelines, the Audit Committee approves fee thresholds annually for
each of these categories, and services within these thresholds are deemed pre-approved. The Audit Committee
10
70
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3
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Compensation
Annual
$29,373,000 $23,542,000
4 Committee
Matters
Audit-Related Fees (1)
Aggregate fees billed to the Company for the fiscal years ended December 31, 2016 and 2015 represent fees
billed by the Company's principal independent registered public accounting firm, Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates, which includes Deloitte Consulting
(collectively, "Deloitte & Touche"). The Audit Committee pre-approved the audit and non-audit services provided in
the years ended December 31, 2016 and 2015 by Deloitte & Touche, as reflected in the table below.
Other
4 Committee
Matters
5
Meeting
Information
Management represented to the Audit Committee that the Company's consolidated financial statements were
prepared in accordance with generally accepted accounting principles. The Audit Committee has reviewed and
discussed with management and Deloitte in separate sessions the Company's consolidated financial statements for
the years ended December 31, 2016, December 31, 2015 and December 31, 2014, management's annual report
on the Company's internal control over financial reporting and Deloitte's attestation. The Audit Committee also
discussed with management and Deloitte the process used to support certifications by the Company's CEO and
CFO that are required by the SEC and the Sarbanes-Oxley Act of 2002 to accompany the Company's periodic
filings with the SEC and the process used to support management's annual report on the Company's internal
controls over financial reporting.
The Audit Committee discussed with Deloitte matters required to be discussed by the applicable Public Company
Accounting Oversight Board standards and Rule 2-07 of Regulation S-X. Deloitte also provided to the Audit
Committee the written disclosures and the letter required by applicable requirements of the Public Company
Accounting Oversight Board regarding Deloitte's communications with the Audit Committee concerning
independence, and the Audit Committee discussed with Deloitte the accounting firm's independence. In considering
the independence of Deloitte, the Audit Committee took into consideration whether the provision of non-audit
services is compatible with maintaining the independence of Deloitte. In connection with its selection of Deloitte as
the Company's independent registered public accounting firm for the year ending December 31, 2017, the Audit
Committee conducted a performance evaluation of Deloitte's services.
Based upon the Audit Committee's review of the financial statements, independent discussions with management
and Deloitte, and the Audit Committee's review of the representation of management and the report of the
independent registered public accounting firm to the Audit Committee, and subject to the limitations of the Audit
Committee's role, the Audit Committee recommended to the Board of Directors that the audited consolidated
financial statements for the years ended December 31, 2016, December 31, 2015 and December 31, 2014 be
included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the
SEC.
Members of the Audit Committee*
Glenn M. Renwick, Chair
Robert J. Darretta
Michele J. Hooper
This report was approved by the Audit Committee prior to Mr. Burke becoming a member of the Audit
Committee.
69
Fee Category
Audit Fees
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Annual
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Other
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Disclosure of Fees Paid to Independent Registered Public
Accounting Firm
Audit
5
Meeting
Other
Information
2. Payments by UnitedHealth used for (a) direct or indirect lobbying or (b) grassroots lobbying
communications, in each case including the amount of the payment and the recipient.
3.
4.
UnitedHealth's membership in and payments to any tax-exempt organization that writes and endorses
model legislation.
Description of the decision making process and oversight by management and the Board for making
payments described in section 2 and 3 above.
For purposes of this proposal, a "grassroots lobbying communication" is a communication directed to the general
public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and
(c) encourages the recipient of the communication to take action with respect to the legislation or regulation.
"Indirect lobbying" is lobbying engaged in by a trade association or other organization of which UnitedHealth is a
member.
Both "direct and indirect lobbying" and "grassroots lobbying communications" include efforts at the local, state and
federal levels.
72
Audit
1
Board of
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2
Corporate
Governance
3
1. Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying
communications.
Executive
Compensation
4 Committee
Matters
5
Meeting
Other
Information
The report shall be presented to the Audit Committee or other relevant oversight committees and posted on
UnitedHealth's website.
Supporting Statement
We encourage transparency in the use of corporate funds to influence legislation and regulation. UnitedHealth
spent $5.25 million in 2014 and 2015 on federal lobbying. This figure does not include lobbying expenditures to
influence legislation in states, where UnitedHealth also lobbies in 43 states ("Amid Federal Gridlock, Lobbying
Rises in the States," Center for Public Integrity, February 11, 2016), but disclosure is uneven or absent.
UnitedHealth also lobbies abroad, and its lobbying in England has attracted media scrutiny ("Calls for Greater
Disclosure on NHS Chiefs' Meetings with Private US Health Insurer," The Guardian, August 30, 2014).
Unlike its peers Aetna, Anthem, CIGNA and Humana, UnitedHealth does not disclose its memberships in, or
payments to, trade associations, or the amounts used for lobbying. United Health will disclose its nondeductible
trade association payments used for political contributions, but this does not include payments used for lobbying.
This leaves a serious disclosure gap, as trade associations generally spend far more on lobbying than on political
contributions. Absent a system of accountability and disclosure, corporate assets may be used for objectives that
pose risks to the company. For example, UnitedHealth has previously made undisclosed trade association
payments that were used for lobbying ("Insurers Gave U.S. Chamber $86 Million Used to Oppose Obama's Health
Law," Bloomberg, November 17, 2010).
Transparent reporting would reveal whether company assets are being used for objectives contrary to
UnitedHealth's long-term interests.
Board of Directors' Recommendation
The Board of Directors unanimously recommends a vote AGAINST the foregoing proposal for the following
reasons:
We have carefully considered this proposal and have concluded that it is not in the best interests of the Company
and our shareholders and is redundant with existing comprehensive state and federal public disclosure
requirements.
Annual
Resolved, the shareholders of UnitedHealth Group Incorporated ("UnitedHealth") request the preparation of a
report, updated annually, disclosing:
Whereas, we believe full disclosure of UnitedHealth's direct and indirect lobbying activities and expenditures is
required to assess whether UnitedHealth's lobbying is consistent with its expressed goals and in the best interests
of shareholders.
Lobbying Disclosure
has delegated authority to the Chair of the Audit Committee to pre-approve permitted audit and non-audit services
between regularly scheduled quarterly Audit Committee meetings, provided that such pre-approvals are presented
to the Audit Committee at its next scheduled meeting. All fees reported above were approved pursuant to the
Policy. The services provided by our independent registered public accounting firm and related fees are discussed
with the Audit Committee, and the Policy is evaluated and updated periodically by the Audit Committee.
-
Ratification of Independent Registered Public
Proposal 4
Accounting Firm
The Audit Committee is directly responsible for the appointment, evaluation, compensation, retention and oversight
of the independent registered public accounting firm retained to audit the Company's financial statements. The
Audit Committee has appointed Deloitte & Touche LLP ("Deloitte”) as our independent registered public accounting
firm for the year ending December 31, 2017. Deloitte has been retained as our independent registered public
accounting firm since 2002. The Audit Committee is responsible for approving audit fees associated with the
retention of Deloitte. In order to assure continuing auditor independence, the Audit Committee periodically
considers whether there should be a regular rotation of our independent registered public accounting firm. Further,
as part of the Audit Committee's assessment of Deloitte and in conjunction with the mandated rotation of the audit
firm's lead engagement partner, in November 2015, the Audit Committee interviewed candidates to become
Deloitte's new lead engagement partner and following those interviews, selected the individual who will become the
new lead engagement partner in 2017.
The Board of Directors has proposed that shareholders ratify the appointment of Deloitte at the Annual Meeting. If
shareholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment but is
not obligated to appoint another independent registered public accounting firm. The Audit Committee evaluates, at
least every three years, whether to rotate our independent registered public accounting firm.
Representatives of Deloitte are expected to be present at the meeting, will have an opportunity to make a
statement and will be available to respond to questions from shareholders.
The Board of Directors recommends that you vote FOR ratification of the appointment of Deloitte as our
independent registered public accounting firm for the year ending December 31, 2017. Executed proxies
will be voted FOR ratification of this appointment unless you specify otherwise.
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Executive
Annual
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Shareholder Proposal
We have been informed that the Comptroller of the State of New York intends to introduce the proposal set forth
below at the Annual Meeting. In accordance with SEC rules, the text of the proposal is printed verbatim from the
submission. The Company will provide to shareholders the address and reported holdings of the Company's
common stock for the proposal sponsor promptly upon receiving an oral or written request. The Board of Directors
has recommended a vote against this proposal for the reasons set forth following the proposal.
Shareholder Proposal Regarding Lobbying
-
Proposal 5
Disclosure
We have, as a company, an obligation to our customers, the care providers with whom we partner and our
shareholders to engage with policymakers. In this regard, we undertake efforts to inform public policymakers at the
international, federal and state levels in an effort to improve the quality, sustainability, and delivery of health care,
the outcomes of which affect our customers, care providers, employees, and the communities in which we operate.
We engage people across the political spectrum through our activities, including advocacy efforts and thought
leadership activities, educational outreach and campaign contributions.
ANNUAL MEETING
Meeting
5
4 Committee
Matters
Compensation
3
Other
Information
1.
9.
98
In the vote on the election of director nominees, shareholders may:
•
vote in favor of a nominee;
•
vote against a nominee; or
•
abstain from voting with respect to a nominee.
A director nominee will be elected if the number of votes cast "for" the nominee exceeds the number of votes cast
"against" the nominee. To address a provision in Delaware law that allows a director who has not been re-elected
to remain in office until a successor is elected and qualified, we have a policy requiring any director who does not
receive a greater number of votes “for” than “against” his or her election in an uncontested election to tender his
or her resignation from the Board of Directors following certification of the shareholder vote. Under this policy, the
Board of Directors will determine whether to accept or reject the offer to resign within 90 days of certification of the
shareholder vote. The text of this policy appears in our Principles of Governance, which is available on our website
at www.unitedhealthgroup.com.
80
60
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3
Executive
Compensation
Annual
Other
4 Committee
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5
6
16. What are my choices when voting for director nominees and what vote is needed to
elect directors?
Meeting
We are offering our shareholders the opportunity to confirm their votes were cast in accordance with their
instructions. Vote confirmation is consistent with our commitment to sound corporate governance standards and an
important means to increase transparency. Beginning May 22, 2017 and for up to two months after the Annual
Meeting, you may confirm your vote beginning 24 hours after your vote is received, whether it was cast by proxy
card, electronically or telephonically. To obtain vote confirmation, log onto www.proxyvote.com using your control
number (located on your Notice or proxy card) and receive confirmation on how your vote was cast. If you hold
your shares through a bank or brokerage account, the ability to confirm your vote may be affected by the rules of
your bank or broker and the confirmation will not confirm whether your bank or broker allocated the correct number
of shares to you.
We have retained Broadridge Financial Solutions to tabulate the votes. We have retained Carl T. Hagberg & Associates
to act as independent inspector of the election.
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6
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14. Are votes confidential? Who counts the votes?
We hold the votes of all shareholders in confidence from directors, officers and employees except:
•
⋅
in the case of a contested proxy solicitation;
if a shareholder makes a written comment on the proxy card or otherwise communicates his or her vote to
management; or
•
to allow the independent inspectors of the election to certify the results of the vote.
15. How may I confirm my vote was counted?
Information
17. What are my choices when voting on each of the other proposals considered at the
Annual Meeting?
For each of the other proposals, other than the proposal regarding the frequency of holding future Say-on-Pay
votes, shareholders may:
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6
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20. What if I do not specify a choice for a matter when returning a proxy?
Shareholders should specify their choice for each matter in the manner described in the Notice or on their proxy
card. If no specific instructions are given, proxies that are signed and returned will be voted:
•
FOR the election of all director nominees;
•
FOR the advisory approval of our executive compensation;
The Board of Directors recommends a vote AGAINST the shareholder proposal regarding lobbying
disclosure.
•
The Board of Directors recommends a vote FOR ratification of the appointment of Deloitte & Touche LLP
as our independent registered public accounting firm.
The Board of Directors recommends a vote to hold the Say-on-Pay vote EVERY YEAR (vote for "One
Year").
•
vote for the proposal;
•
vote against the proposal; or
•
abstain from voting on the proposal.
For the proposal regarding the frequency of holding future Say-on-Pay votes, shareholders may:
•
vote for every year;
vote for every two years;
79
•
•
abstain from voting on the proposal.
18. What vote is needed to approve each of the other proposals?
The proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting
firm and the shareholder proposal must be approved by the holders of a majority of the shares of common stock
present and entitled to vote in person or by proxy at the Annual Meeting in order to pass. For the advisory vote to
approve our executive compensation and the advisory vote regarding the frequency of future Say-on-Pay votes,
there is no minimum approval necessary for either proposal since these are advisory votes; however, the Board of
Directors will consider the results of the advisory votes when considering future decisions related to such
proposals.
19. What is the Board's recommendation with regard to each proposal?
The Board of Directors makes the following recommendation with regard to each proposal:
•
•
The Board of Directors recommends a vote FOR each of the director nominees.
The Board of Directors recommends a vote FOR advisory approval of the Company's executive
compensation.
vote for every three years; or
12
contacting your bank or broker to request a legal proxy in order to vote your shares in person at the
Annual Meeting.
submitting new voting instructions in the manner provided by your bank or broker; or
Shareholders of Record. If you are a shareholder of record and received a Notice, the Notice is your admission
ticket. If you are a shareholder of record and received proxy materials by mail, your admission ticket is attached to
your proxy card. You will need to bring the Notice or the admission ticket and valid photo identification with you to
the Annual Meeting in order to be admitted to the meeting.
Street Name Holders. If you hold your shares in street name, bring with you to the Annual Meeting valid photo
identification and your most recent brokerage statement or a letter from your broker or other nominee indicating
that you hold our shares. We will use that statement or letter to verify your ownership of common stock and admit
you to the Annual Meeting; however, you will not be able to vote your shares at the Annual Meeting without a legal
proxy, as described in Question 8.
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Other
Information
Please note that use of cameras, phones or other similar electronic devices and the bringing of large bags,
packages or sound or video recording equipment will not be permitted in the meeting room. Attendees will also be
required to comply with meeting guidelines and procedures that will be available at the meeting. A copy of the
meeting guidelines and procedures is also available on our website at
www.unitedhealthgroup.com/Investors/Annual Meeting.aspx.
8.
How can I vote at the Annual Meeting if I own shares in street name?
If you are a street name holder, you may not vote your shares at the Annual Meeting unless you obtain a legal
proxy from your bank or broker. A legal proxy is a bank's or broker's authorization for you to vote the shares it
holds in its name on your behalf. To obtain a legal proxy, please contact your bank or broker for further
information.
Only our shareholders are entitled to attend the meeting. The procedure you must follow in order to attend the
meeting depends on whether you are a shareholder of record or a street name holder of our common stock.
To attend the Annual Meeting, you will need to bring an admission ticket and valid photo identification.
How do I attend the Annual Meeting? What do I need to bring?
7.
86
Audit
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2
Corporate
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3
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Compensation
Annual
Other
4 Committee
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What shares are included on the Notice, proxy card or voting instruction form?
5
Meeting
Information
5.
How many shares must be present to hold the Annual Meeting?
In order to conduct the Annual Meeting, holders of a majority of the shares entitled to vote as of the close of
business on the record date must be present in person or by proxy. This constitutes a quorum. Your shares are
counted as present if you attend the Annual Meeting and vote in person, if you vote your proxy over the Internet or
by telephone, or by mail. Abstentions and broker non-votes will be counted as present for purposes of establishing
a quorum. If a quorum is not present, we will adjourn the Annual Meeting until a quorum is obtained.
6. How can I access the proxy materials for the Annual Meeting?
Shareholders may access the proxy materials, which include the Notice of Annual Meeting of Shareholders, Proxy
Statement (including a form of proxy card) and Annual Report for the year ended December 31, 2016 on the
Internet at www.unitedhealthgroup.com/proxymaterials. We will also provide a hard copy of any of these documents
free of charge upon request to: UnitedHealth Group Incorporated, 9900 Bren Road East, Minnetonka, Minnesota
55343, Attention: Secretary to the Board of Directors.
Instead of receiving future copies of our proxy materials by mail, you can elect to receive an e-mail that will provide
electronic links to these documents. Opting to receive your proxy materials online will save the cost of producing
and mailing documents to your home or business, will give you an electronic link to the proxy voting site and will
also help preserve environmental resources.
Shareholders of Record. If you vote on the Internet at www.proxyvote.com, simply follow the prompts for enrolling
in the electronic proxy delivery service. You also may enroll in the electronic proxy delivery service at any time by
going directly to www.unitedhealthgroup.com and following the enrollment instructions.
Street Name Holders. If you hold your shares in a bank or brokerage account, you also may have the opportunity
to receive the proxy materials electronically. Please check the information provided in the proxy materials you
receive from your bank or broker regarding the availability of this service.
6
•
If you are a shareholder of record, you will receive only one Notice or proxy card for all the shares of common
stock you hold:
in certificate form;
In Person. All shareholders of record may vote in person at the Annual Meeting. Street name holders may vote in
person at the Annual Meeting if they have a legal proxy, as described in Question 8.
The Notice is not a proxy card and it cannot be used to vote your shares.
12. What is the record date and what does it mean?
The record date for the Annual Meeting is April 11, 2017. Only owners of record of shares of common stock of the
Company at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting, or
at any adjournments or postponements of the Annual Meeting. On April 11, 2017, there were 964,110,164 shares
of common stock issued, outstanding and entitled to vote. Each owner of record on the record date is entitled to
one vote for each share of common stock held.
The record date was established by our Board of Directors as required by the Delaware General Corporation Law.
Owners of record of common stock at the close of business on the record date are entitled to:
•
receive notice of the Annual Meeting; and
•
vote at the Annual Meeting and any adjournments or postponements of the Annual Meeting.
13. If I submit a proxy, may I later revoke it and/or change my vote?
Shareholders of record may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
•
⋅
signing another proxy card with a later date and delivering it to an officer of the Company before the
Annual Meeting;
voting again over the Internet or by telephone prior to 11:59 p.m., Eastern Time, on June 4, 2017;
•
voting at the Annual Meeting; or
notifying the Secretary to the Board of Directors in writing before the Annual Meeting.
Street name holders may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
•
•
By Telephone or Internet. All shareholders of record can vote by telephone from the United States and Canada,
using the toll-free telephone number on the proxy card, or through the Internet using the procedures and
instructions described on the Notice or proxy card. Street name holders may vote by Internet or telephone if their
bank or broker makes those methods available, in which case the bank or broker will enclose the instructions with
the proxy materials. The Internet and telephone voting procedures are designed to authenticate shareholders'
identities, allow shareholders to vote their shares and to confirm that their instructions have been properly
recorded.
Other
Information
Meeting
5
•
in book-entry form; and
•
in any Company benefit plan.
If you hold your shares in street name, you will receive one Notice or voting instruction form for each account you
have with a bank or broker. If you hold shares in multiple accounts, you may need to provide voting instructions for
each account.
If you hold shares in our 401(k) savings plan and do not vote your shares or specify your voting instructions on
your proxy card, the administrators of the 401(k) savings plan will vote your 401(k) plan shares in the same
proportion as the shares for which they have received voting instructions. To allow sufficient time for voting by
the 401(k) administrators, your voting instructions must be received by 11:59 p.m. Eastern Time on
May 31, 2017.
10. How can I listen to the live webcast of the Annual Meeting?
You can listen to the live webcast of the Annual Meeting by logging on to our website at
www.unitedhealthgroup.com and clicking on "Investors" and then on the link to the webcast. An archived copy of
the webcast will also be available on our website for 14 days following the Annual Meeting.
11. What different methods can I use to vote?
•
By Written Proxy. All shareholders of record who received proxy materials by mail can vote by written proxy card. If
you received a Notice or the proxy materials electronically, you may request a proxy card at any time by following
the instructions on the Notice or on the voting website. If you are a street name holder, you will receive instructions
on how you may vote from your bank or broker, unless you previously enrolled in electronic delivery.
Audit
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78
•
as necessary to meet applicable legal requirements and to assert or defend claims for or against the
Company;
to hold the Say-on-Pay vote EVERY YEAR (for "One Year");
Kenneth I. Shine, M.D.
28,995(2)
0
28,995
*
Gail R. Wilensky, Ph.D.
55,175(2)
50,930
106,105
Stephen J. Hemsley
3,209,326(5)(6)
527,375
3,736,701
*
John F. Rex
David S. Wichmann
Larry C. Renfro
32,378
187,196
*
219,574
*
76,223
33,929
42,294(2)
Robert J. Darretta
Timothy P. Flynn
42,488(2)(4)
56,621
2,107,051
99,109
*
0
0
0
615,431(5)
*
30,941(2)
35,000
65,941
*
Rodger A. Lawson
26,542(2)
0
*
26,542
Glenn M. Renwick
Michele J. Hooper
59,860
722,601
*
Corporate
Governance
•
Executive
Compensation
Annual
4 Committee
Matters
5
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Other
Information
and other members of management. Pledges that existed prior to the policy's adoption in November 2012
have been grandfathered. Mr. Darretta continues to satisfy our stock ownership guidelines when pledged
shares are excluded from his individual holdings. The three-month average trading volume for the Company's
common stock was 3,510,000 as of March 14, 2017. Mr. Darretta will cease serving on the Company's Board
as of the date of the 2017 Annual Meeting.
(5) Includes the following number of shares held in trust for the individuals pursuant to our 401(k) plan:
Mr. Hemsley
- 308.3995 shares; and Mr. Wichmann - 231.1102 shares. Pursuant to the terms of the
401(k) plan, a participant has sole voting power over his or her shares; however, the plan trustee votes all
unvoted shares in the same proportions as the actual proxy votes submitted by plan participants.
(6) Includes 79,813 DSUS, 24,000 shares held in a charitable foundation and 2,079,952 shares held in grantor
retained annuity trusts, all of which are beneficially owned by Mr. Hemsley.
(7) Includes the indirect holdings included in footnotes 3, 5 and 6.
Householding Notice
We have adopted "householding" procedures that allow us to deliver one Notice or single copies of proxy
statements and annual reports to any household at which two or more shareholders reside who share the same
last name or whom we believe to be members of the same family. Each registered shareholder living in that
household will receive a separate proxy card if the householded proxy materials are received by mail.
If you participate in householding but wish to receive a separate copy of the Notice, this proxy statement or our
2016 Annual Report to Shareholders, please notify us at: Secretary to the Board of Directors, UnitedHealth Group
Center, 9900 Bren Road East, Minnetonka, Minnesota 55343, telephone (877) 536-3550. You may opt-in or opt-out
of householding at any time by contacting our transfer agent, Wells Fargo Shareowner Services, at
P.O. Box 64854, St. Paul, Minnesota 55164-0854, telephone (800) 468-9716. Your householding election will apply
to all materials mailed more than 30 days after your request is received.
Your participation in the householding program is encouraged. As an alternative to householding, you may choose
to receive documents electronically. Instructions for electing electronic delivery are described in Question 6 of the
"Questions and Answers About the Annual Meeting and Voting" section of this proxy statement.
We have been notified that some banks and brokers will household proxy materials. If your shares are held in
"street name" by a bank or broker, you may request information about householding from your bank or broker.
Other Matters at Meeting
In accordance with the requirements of advance notice described in our Bylaws, no shareholder nominations or
shareholder proposals other than those included in this proxy statement will be presented at the 2017 Annual
Meeting. We know of no other matters that may come before the Annual Meeting. However, if any matters calling
for a vote of the shareholders, other than those referred to in this proxy statement, should properly come before
the meeting, the persons named as proxies will vote on such matters according to their individual judgment.
Directors
2
1
Board of
209,886
154,813
*
364,699
Marianne D. Short
64,017
105,133
169,150
All current directors, executive officers and
director nominees as a group (16 individuals)
6,417,813 (7)
1,338,032
2,082,245
0.89%
*
Less than 1%.
(1) Unless otherwise noted, each person and group identified possesses sole voting and dispositive power with
respect to the shares shown opposite such person's or group's name. Shares not outstanding but deemed
beneficially owned by virtue of the right of an individual to acquire them within 60 days of March 14, 2017 are
treated as outstanding only when determining the amount and percent owned by such individual or group.
(2) Includes the following number of vested DSUs which are considered owned under the Company's stock
ownership guidelines for directors: Mr. Ballard 21,091 DSUS; Mr. Burke 21,091 DSUS; Mr. Darretta
39,148 DSUS; Ms. Hooper - 27,571 DSUS; Mr. Lawson 19,542 DSUS; Mr. Renwick - 40,254 DSUs;
Dr. Shine -28,422 DSUs; and Dr. Wilensky - 20,346 DSUs.
―
(3) Includes 86,000 shares held in trust for the benefit of Mr. Burke's children. Mr. Burke does not have voting or
dispositive power over these shares and disclaims beneficial ownership of these shares.
(4) Includes 3,340 shares held by Mr. Darretta in a margin account for which no loans are outstanding. To
discourage pledging shares of the Company's common stock, our insider trading policy requires advance
approval of the Compensation Committee of any pledging of common stock by directors, executive officers
85
95
Audit
8,500,058
1,957,191(2)(3)
3
115,391
Other Shareholder Proposals to Be Considered for Inclusion in the Company's Proxy Materials (SEC Rule 14a-8).
To be considered for inclusion our proxy statement for our 2018 Annual Meeting, shareholder proposals
submitted pursuant to SEC Rule 14a-8 must be received no later than December 22, 2017 and be submitted in
accordance with Rule 14a-8. These shareholder proposals must be in writing and received by the deadline
described above at our principal executive offices at UnitedHealth Group Center, 9900 Bren Road East,
Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors. If we do not receive a shareholder
proposal by the deadline described above, the proposal may be excluded from our proxy statement for our
2018 Annual Meeting.
Other Shareholder Proposals for Presentation at the 2018 Annual Meeting (Advance Notice Provision). A
shareholder proposal that is not submitted for inclusion in our proxy statement for our 2018 Annual Meeting
pursuant to Section 3.04 of our Bylaws or SEC Rule 14a-8 and is sought to be presented at the 2018 Annual
Meeting must comply with the "advance notice" deadlines in our Bylaws. As such, these shareholder proposals
must be received no earlier than February 5, 2018, and no later than the close of business on March 7, 2018.
These shareholder proposals must be in writing and received within the "advance notice" deadlines described
above at our principal executive offices at UnitedHealth Group Center, 9900 Bren Road East, Minnetonka,
Minnesota 55343, Attention: Secretary to the Board of Directors. These shareholder proposals must be in the form
provided in our Bylaws and must include the information set forth in the Bylaws. If we do not receive a shareholder
proposal and the required information by the "advance notice" deadlines described above, the proposal may be
excluded from consideration at the 2018 Annual Meeting. The "advance notice" requirement described above
supersedes the notice period in SEC Rule 14a-4(c)(1) of the federal proxy rules regarding the discretionary proxy
voting authority with respect to such shareholder business.
25. How are proxies solicited and what is the cost?
We bear all expenses incurred in connection with the solicitation of proxies. We have engaged
D.F. King & Co., Inc., to assist with the solicitation of proxies for a base fee of $23,000 plus expenses. We will
reimburse brokers, fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of
common stock.
Our directors, officers and employees may also solicit proxies by mail, telephone and personal contact. They will
not receive any additional compensation for these activities.
26. Where can I find more information about my voting rights as a shareholder?
The SEC has an informational website that provides shareholders with general information about how to cast their
vote and why voting should be an important consideration for shareholders. You may access that information at
www.sec.gov/spotlight/proxymatters.shtml or at www.investor.gov.
83
Audit
Board of
1
2
Directors
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Committee
Matters
5
Shareholder Director Nominations for Inclusion in the Company's Proxy Materials (Proxy Access). To be considered
for inclusion in our proxy statement for our 2018 Annual Meeting, director nominations submitted pursuant to
Section 3.04 of our Bylaws must be received at our principal executive offices at UnitedHealth Group Center, 9900
Bren Road East, Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors, no earlier than
November 22, 2017 and no later than December 22, 2017, and must be submitted in accordance with Section 3.04
of our Bylaws. If we do not receive the information required by our Bylaws by the deadline described above, the
director nominee will be excluded from our proxy statement for our 2018 Annual Meeting.
24. What are the deadlines for submitting director nominees and other shareholder
proposals for the 2018 Annual Meeting?
Other
Information
Meeting
Richard T. Burke
FOR the ratification of the appointment of Deloitte & Touche LLP as the Company's independent registered
public accounting firm; and
AGAINST the shareholder proposal regarding lobbying disclosure.
21. Are my shares voted if I do not provide a proxy?
If you are a shareholder of record and do not provide a proxy, you must attend the Annual Meeting in order to
vote. If you hold shares through an account with a bank or broker, your shares may be voted by the bank or broker
on some matters if you do not provide voting instructions. Banks and brokers have the authority under NYSE rules
to vote shares for which their customers do not provide voting instructions on routine matters. The ratification of
Deloitte & Touche LLP as our independent registered public accounting firm is considered a routine matter. The
other matters being voted on at the Annual Meeting are not considered routine and banks and brokers cannot vote
shares without instruction on those matters. Shares that banks and brokers are not authorized to vote are counted
as "broker non-votes."
22. How are abstentions and broker non-votes counted?
Abstentions have no effect on the election of directors or the advisory vote regarding the frequency of holding
future Say-on-Pay votes. Abstentions have the effect of an "AGAINST" vote on the advisory vote to approve our
executive compensation, the ratification of the appointment of the Company's independent registered public
accounting firm and the shareholder proposal. Broker non-votes have no effect on the vote for any matter at the
meeting.
23. Does the Company have a policy about directors' attendance at the Annual Meeting
of Shareholders?
The Company expects directors to attend the Annual Meeting, absent a compelling reason. All of our directors
attended the 2016 Annual Meeting.
88
6
82
1
2
Directors
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
5
6
Board of
Meeting
Audit
Security Ownership of Certain Beneficial Owners and Management
2
Directors
Corporate
Governance
3
Executive
Compensation
Annual
4 Committee
Matters
5
Meeting
Other
Information
1
The following table provides information about the beneficial ownership of our common stock as of March 14, 2017
by each director and nominee for director, each named executive officer, and by all of our current directors,
executive officers and director nominees as a group. As of March 14, 2017, there were 953,931,448 shares of our
common stock issued, outstanding and entitled to vote.
Ownership of
Identity of Group
Number of Shares
Deemed Beneficially
Owned as a Result of
Equity Awards Exercisable
or Vesting Within 60 Days
of March 14, 2017
William C. Ballard, Jr.
70,391(2)
45,000
Percent of
Common
Total(1)
Information
Stock
Outstanding
Name of Beneficial Owner or
Board of
Common Stock
84
Audit
The following table provides information about shareholders known to us to beneficially own more than 5% of the
outstanding shares of our common stock, based solely on the information filed by such shareholders in 2017 for
the year ended December 31, 2016 on Schedule 13G under the Exchange Act.
Amount and Nature of Percent of
Beneficial Ownership
69,264,228
Class
Name and Address of Beneficial Owner
BlackRock, Inc. (1)
55 East 52nd Street
New York, New York 10055
The Vanguard Group (2)
100 Vanguard Boulevard Malvern,
Pennsylvania 19355
7.30%
56,567,442
FMR LLC (3)
(2) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by The
Vanguard Group on February 10, 2017. The Vanguard Group reported having sole voting power over
1,488,160 shares, shared voting power over 181,207 shares, sole dispositive power over 58,583,686 shares
and shared dispositive power over 1,628,080 shares.
(1) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by
BlackRock, Inc. on January 27, 2017. BlackRock, Inc. reported having sole voting power over 59,468,643
shares and sole dispositive power over 69,264,228 shares.
5.94%
(3) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by FMR LLC
on February 14, 2017. FMR LLC reported having sole voting power over 6,186,045 shares and sole
dispositive power over 56,567,442 shares.
60,211,766
Boston, Massachusetts 02210
245 Summer Street
6.32%
2017 Summary Compensation Table .....
52
58
3
2017 Grants of Plan-Based Awards...
55
Outstanding Equity Awards at 2017 Fiscal Year-End...
Executive Employment Agreements.....
62
59
Executive
Compensation
2017 Pension Benefits
2017 Non-Qualified Deferred Compensation
51
64
63
2017 Option Exercises and Stock Vested.
Compensation Committee Interlocks and Insider Participation..
Board Committees..
Compensation Committee Report..
21
21
Potential Payments Upon Termination or Change in Control
CEO Pay Ratio
22
Board Leadership Structure...
23
24
Board Meetings and Annual Meeting Attendance....
25
25
Communication with the Board of Directors
28
Executive Summary .
29
Compensation Discussion and Analysis
31
Compliance and Ethics...
51
69
Other Matters at Meeting..
Proposal 2
Compensation
86
5
Annual Meeting
6
Other Information
Certain Relationships and Transactions
Section 16(a) Beneficial Ownership Reporting Compliance....
Appendix A - Reconciliation of Non-GAAP Financial Measures...
==
888
89
87
90
90
Code of Conduct: Our Principles of Ethics & Integrity.
This summary highlights information contained elsewhere in this proxy statement. We encourage you to review the
entire proxy statement. This proxy statement and our Annual Report for the year ended December 31, 2017 are
first being mailed to the Company's shareholders and made available on the Internet at
www.unitedhealthgroup.com/proxymaterials on or about April 20, 2018. Website addresses included throughout this
proxy statement are for reference only. The information contained on our website is not incorporated by reference
into this proxy statement.
Proxy Summary
86
70
84
Questions and Answers About the Annual Meeting and Voting..
Security Ownership of Certain Beneficial Owners and Management
Householding Notice.
-
- Advisory Approval of the Company's Executive
72
¡
Page
Audit and Non-Audit Services Approval Policy...
Proposal 3
Firm...
4
Audit
Audit Committee Report
Disclosure of Fees Paid to Independent Registered Public Accounting Firm ..
Audit Committee's Consideration of Independence of Independent
Registered Public Accounting Firm ........
73
75
75
75
11
Ratification of Independent Registered Public Accounting
76
77
Corporate
Governance
Items of Business
Risk Oversight......
To transact other business that properly may come before the Annual Meeting or any
adjournments or postponements of the meeting.
To ratify the appointment of Deloitte & Touche LLP as the independent registered
public accounting firm for the Company for the year ending December 31, 2018.
An advisory vote to approve the compensation paid to the Company's named executive
officers as disclosed in the attached proxy statement (a "Say-on-Pay" vote).
To elect the eleven nominees set forth in the attached proxy statement to the
Company's Board of Directors.
•
•
•
April 10, 2018. Only shareholders of record of the Company's common stock at the close
of business on the record date are entitled to receive notice of, and to vote at, the Annual
Meeting and any adjournments or postponements of the meeting.
Chicago, Illinois 60611
11 East Walton Street
Webcast
Proxy Voting
Admission to the
Annual Meeting
Record Date
Thoreau Room
Third Floor
10:00 a.m. Central Time
To attend the Annual Meeting, you will need to bring an admission ticket and valid photo
identification. You may attend the Annual Meeting by following the procedures described
under Question 7 of the "Questions and Answers About the Annual Meeting and Voting"
section in the attached proxy statement.
June 4, 2018
Important. Even if you plan to attend the Annual Meeting, we still encourage you to submit
your proxy by Internet, telephone or mail prior to the meeting. If you later choose to revoke
your proxy or change your vote, you may do so by following the procedures described
under Question 13 of the “Questions and Answers About the Annual Meeting and Voting"
section in the attached proxy statement.
By Order of the Board of Directors,
Chief Executive Officer Succession
2018 Director Nominees
Director Nomination Process
Election Of Directors..
Board of
Directors
1
―
Proposal 1
Proxy Summary...
Page
Table of Contents
The Notice of Internet Availability of Proxy Materials, Notice of Annual Meeting of Shareholders, Proxy
Statement and Annual Report are available at www.unitedhealthgroup.com/proxymaterials.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 4, 2018:
April 20, 2018
Secretary to the Board of Directors
Dannette L. Smith
Dannett L. Smitt
You can listen to the live webcast of the Annual Meeting by logging on to our website at
www.unitedhealthgroup.com and clicking on “Investors” and then on the link to the
webcast. See Question 10 of the "Questions and Answers About the Annual Meeting and
Voting" section in the attached proxy statement.
Location
Time
Date
6
6
14
14
14
Stock Ownership and Retention Guidelines
15
15
Other Compensation
16
2017 Director Compensation Table
Overview.....
17
19
Principles of Governance...
21
Director Independence
1
Director Deferral Plan......
Equity-Based Compensation
April 20, 2018
Notice of 2018 Annual Meeting of Shareholders
UNITEDHEALTH GROUP
Executive Chairman of the Board
Stephen J. Hemsley
eu
A
David S. Wichmann
Chief Executive Officer
Sincerely,
2
Every shareholder vote is important, and we encourage you to vote as promptly as possible. If you cannot attend
the meeting in person, you may listen to the meeting via webcast. Instructions on how to access the live webcast
are included in the proxy statement.
•
How to obtain admission to the meeting if you plan to attend; and
•
Attached you will find a notice of meeting and proxy statement containing further information about the items upon
which you will be asked to vote and the meeting itself, including:
As a shareholder of UnitedHealth Group, you play an important role in our company by considering and taking
action on the matters set forth in the attached proxy statement. We appreciate the time and attention you invest in
making thoughtful decisions.
We cordially invite you to attend our 2018 Annual Meeting of Shareholders. We will hold our meeting on Monday,
June 4, 2018, at 10:00 a.m. Central Time at 11 East Walton Street, Third Floor - Thoreau Room, Chicago,
Illinois 60611.
Dear Shareholder:
UNITEDHEALTH GROUP
9900 Bren Road East, Minnetonka, Minnesota 55343
Different methods you can use to vote your proxy, including by Internet, telephone and mail.
On August 15, 2017, the Board of Directors elected David S. Wichmann to succeed Stephen J. Hemsley as Chief
Executive Officer ("CEO") and become a director of the Company, effective September 1, 2017. On September 1, 2017,
Mr. Hemsley took the newly-created role of Executive Chairman of the Board of Directors, after serving more than ten
years as CEO, and Richard T. Burke, formerly Chairman of the Board, became Lead Independent Director.
4 Audit
The Board determined that Mr. Wichmann had the right business and leadership skills, enterprise knowledge and
support, broad health care experience and expertise in growth, innovation, technology, operations and global
markets to be CEO and lead the Company into the future.
Company's Executive
Compensation (a
"Say-on-Pay" vote)
2
Advisory Approval of
Executive Compensation
3
Ratification of Independent
Registered Public
Accounting Firm
Reasons for Recommendation
The Board and Nominating Committee believe the
eleven Board candidates possess the experience,
skills, attributes and diversity to effectively monitor
performance, provide oversight and advise
management on the Company's strategy.
Board Recommendation
For Each Candidate
FOR
Our executive compensation program is designed to
attract and retain highly qualified executives and to
maintain a strong link between pay and the
achievement of enterprise-wide goals. We emphasize
and reward teamwork and collaboration among
executive officers, which we believe fosters Company
growth and performance, optimizes the use of
enterprise-wide capabilities, drives efficiencies and
integrates products and services for the benefit of our
customers and other stakeholders.
Board Recommendation
FOR
FOR
FOR
Based on the Audit Committee's assessment of
Deloitte & Touche's qualifications and performance, it
believes their retention for fiscal year 2018 is in the
best interests of the Company.
Advisory Approval of the
These changes were designed to ensure continuity as the Company continues to grow and evolve. They were the
result of a four-year succession-planning process, during which the Board had the opportunity to observe and
evaluate Mr. Wichmann in many different settings, including formal Board presentations, Board/management
meetings, investor presentations and individual discussions with directors.
Double trigger change in control arrangements for equity grants.
•
•
•
Our 2011 Stock Incentive Plan prohibits the repricing of stock options and stock appreciation rights without
shareholder approval.
Annual advisory shareholder votes to approve the Company's executive compensation.
Stock ownership guidelines requiring executive officers to beneficially own specified amounts of the
Company's common stock within five years of their appointment as an executive officer.
A stock retention policy generally requiring executive officers to hold, for at least one year, one third of the
net shares acquired upon vesting or exercise of any equity award.
A clawback policy entitling the Board of Directors to seek reimbursement from senior executives if they are
involved in fraud or misconduct that causes a material restatement or in the event of a senior executive's
violation of non-compete, non-solicit or confidentiality provisions.
Voting Matters and Vote Recommendations
Board
Recommendation
Proposal
1
Election of eleven directors
FOR
1
Election of Directors
2
•
3
Board Recommendation
The Nominating Committee analyzes, on an annual basis, director skills and attributes, and recommends to the
Board of Directors appropriate individuals for nomination as Board members.
The Nominating Committee developed and maintains a skills matrix to assist it in considering the appropriate
balance of experience, skills and attributes required of a director and to be represented on the Board as a whole.
We believe that an effective board consists of a diverse group of individuals who bring a variety of complementary
skills and a range of tenures. The skills matrix is consistent with the Company's long-term strategic plan and is
regularly reviewed and updated by the Nominating Committee. The key features of the skills matrix are also
discussed with members of our Nominating Advisory Committee and their feedback is considered by the
Nominating Committee when it updates the skills matrix. The Nominating Committee uses the skills matrix in the
broader context of the Board's overall composition, with a view toward constituting a board that has the best skill
set and experience to oversee the Company's business and to ensure that the Board has the appropriate mix of
skills needed for the broad set of challenges that it confronts. The Nominating Committee evaluates Board
candidates against the skills matrix when determining whether to recommend candidates for initial election to the
Board and when determining whether to recommend currently serving directors for reelection to the Board.
The skills matrix has two sections a list of core criteria every member of the Board should meet and a list of
skills and attributes to be represented collectively on the Board. The following are core director criteria that should
be satisfied by each director or nominee:
.
Independence under the Company's Standards for Director Independence and New York Stock Exchange
("NYSE") listing requirements, subject to waiver by the Nominating Committee;
Service on no more than three other public company boards; except our CEO may serve on no more than
one other public company board;
•
High integrity and ethical standards;
•
Standing and reputation in the individual's field;
Risk oversight ability with respect to the particular skills of the individual director;
•
Understanding of and experience with complex public companies or like organizations; and
•
Ability to work collegially and collaboratively with other directors and management.
CO
6
Criteria for Nomination to the Board
Ratification of Independent
Registered Public Accounting Firm
Director Nomination Process
Proposal 1 Election of Directors
5
FOR
More
Information
Page 6
Page 72
Page 76
Board of
Directors
Corporate
2
Governance
Executive
Compensation
Annual
Director Compensation.
5
Meeting
Other
Information
BOARD OF DIRECTORS
-
Performance based compensation arrangements, including performance based equity awards, that use a
variety of performance measures, with different measures used for annual and long term plans.
Cash Compensation
•
Clawback Policy - We have adopted a clawback policy that entitles the Board of Directors to seek reimbursement
from our senior executives if they are involved in fraud or misconduct that causes a material restatement or in the
event of a senior executive's violation of non-compete, non-solicit or confidentiality provisions.
Stock Retention Policy We generally require executive officers to hold, for at least one year, one-third of
the net shares acquired upon vesting or exercise of any equity award. Our directors are generally required
to hold all equity awards granted until completion of service on the Board, or until they have met our stock
ownership requirements.
Reward long-term growth and focus management on sustained success and shareholder value creation
Compensation of our executive officers is weighted toward equity awards that encourage sustained
performance and drive shareholder returns.
-
Stock Ownership Guidelines · Each of our executive officers and directors were in compliance with our
stock ownership guidelines as of April 10, 2018. Mr. Wichmann, our CEO, owned shares equal to 140
times his base salary as of April 10, 2018.
-
Nominating Advisory Committee - Our Nominating Advisory Committee, comprised of long-term
shareholders of the Company and a member of the medical community, provides our Nominating and
Corporate Governance Committee (the “Nominating Committee”) with additional input regarding desirable
characteristics of director candidates and the composition of our Board.
Our succession plan, which is reviewed annually
by our Board of Directors, addresses both an unexpected loss of our CEO and longer-term succession.
Board Refreshment and Tenure Since January 2017, we have appointed four new directors to the Board
who are standing for election this year, three of whom are independent, advancing both the skill and
experience profile of the Board as well as its diversity.
-
Chief Executive Officer ("CEO") Succession Planning
Our directors are elected annually by a majority vote of our
shareholders. We have an Executive Chairman of our Board of Directors and an Independent Lead
Director, and ten of our twelve directors are independent.
•
•
•
•
Board Structure and Composition
•
2
UnitedHealth Group is committed to meeting high standards of ethical behavior, corporate governance and
business conduct in everything we do, every day. This commitment has led us to implement many governance best
practices, including the following:
•
Our Compensation and Human Resources Committee (the
"Compensation Committee”) uses an independent compensation consultant that performs no other
consulting or services for the Company.
No excise tax gross ups.
A substantial portion of the total compensation of our executive officers is earned
based on achievement of enterprise-wide goals that drive long-term performance, including growth and
shareholder value.
Pay-for-performance
Our Overall Compensation Program Principles
Our executive compensation program uses a mix of base salary, annual and long-term cash incentives, equity
awards and broad-based benefits to attract and retain highly qualified executives and maintain a strong relationship
between executive pay and Company performance. Shareholders expressed strong support for our executive
compensation program at our 2017 Annual Meeting of Shareholders, with more than 96% of the votes cast in favor
of our Say-on-Pay proposal.
Enhance the value of the business · Incentive compensation is designed to grow and sustain the
longer-term value of the Company and avoid excessive risk-taking.
Executive Compensation
Our Board of Directors, assisted by its committees, oversees management's enterprise-wide risk management
activities. Risk management activities include assessing and taking actions necessary to mitigate and manage risk
incurred in connection with the long-term strategic direction and operation of our business.
Enterprise-Wide Risk Oversight
See the "Corporate Governance" portion of this proxy statement for further information on our governance
practices.
Absence of Rights Plan - We do not have a shareholder rights plan, commonly referred to as a "poison
pill."
Short Selling and Hedging Transactions in Company Securities Our insider trading policy prohibits all
directors, executive officers and employees from engaging in short sales and hedging transactions relating
to our common stock, and requires advance approval of the Compensation Committee of any pledging of
common stock by directors, executive officers and other members of management.
Environmental Policy — We seek to minimize our environmental impact and to heighten our employees'
awareness of the importance of the environment.
-
We publicly disclose our political contributions and public advocacy
efforts and the contributions of our federal and state political action committees.
-
Political Contributions Disclosure
Independent Compensation Consultant
Corporate Governance
Proxy Access A shareholder or group of shareholders who have owned at least 3% of our common
stock for at least three years, and who comply with specified procedural and disclosure requirements, may
include in our proxy materials shareholder-nominated director candidates representing up to 20% of the
Board.
UnitedHealth Group was included among the 2017 Best Employers for Diversity by Forbes; and
Standard benefits and very limited perquisites - We provide standard employee benefits and very limited
perquisites to our executive officers.
3
Summary of Compensation Paid to David S. Wichmann, our CEO, in 2017
•
Base salary $1.16 million.
Cash incentive awards
_
Annual cash incentive award of $4.25 million and long-term cash incentive award
of $649,800, which reflect the Company's performance against pre-set goals and continued strong
leadership by Mr. Wichmann.
Business Results
•
-
Michele J. Hooper, a UnitedHealth Group director, was named 2017 Director of the Year by the National
Association of Corporate Directors, and, in 2016, was included in Savoy magazine's Most Influential Black
Corporate Directors, and Board of Directors member Dr. Gail R. Wilensky was included in the 2016 NACD
Director 100 list of the most influential people in the boardroom.
•
Company matching contributions - $159,519 under our 401(k) and executive savings plan.
Information regarding compensation paid to each of our named executive officers in 2017 is described in the
"Compensation Discussion and Analysis" section.
Strong Governance Standards in Oversight of Executive Compensation Policies
We maintain strong governance standards in the oversight of our executive compensation policies and practices,
including:
•
Equity awards
We are a diversified health care company whose mission is to help people live healthier lives and to help make the
health system work better for everyone. We again achieved strong business results in 2017, including:
Performance shares with a target grant date fair value of $5.55 million, restricted stock
units with a grant date fair value of $2.775 million and stock options with a grant date fair value of
$2.775 million.
•
UnitedHealth Group was named to both the Dow Jones Sustainability World and North America Indices for
the 19th consecutive year;
1
UnitedHealth Group was the top ranking company in the insurance and managed care sector on Fortune's
2018 "World's Most Admired Companies" list, based on 2017 results. This is the eighth consecutive year
UnitedHealth Group has ranked No. 1 overall in the insurance and managed care sector;
•
•
1
a reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix in this proxy statement for
Our annual cash dividend rate increased to $3.00 per share, paid quarterly, representing a 20% increase
over the annual cash dividend rate of $2.50 per share paid quarterly since the second quarter of 2016;
•
Driven by net earnings growth, including the deferred tax revaluation, return on equity increased to 24.4%
in 2017;
Adjusted earnings per share¹ increased 25% to $10.07 per share from $8.05 per share in 2016;
Operating earnings increased 18% year-over-year to $15.2 billion, net earnings to UnitedHealth Group
common shareholders increased to over $10.5 billion and cash flows from operations grew to $13.6 billion;
•
•
Revenues increased 9% to $201.2 billion from $184.8 billion in 2016;
Total shareholder return, which is defined as the increase in stock price, together with dividends paid, was
40% in 2017, 125% over the 2015-2017 time period and 324% over the 2013-2017 time period;
•
$
EA
7,795
$
$
9,923
SA
(454)
10.72
(334)
SA
SA
10.07
7.25
(1.22)
0.91
0.91
0.36
(0.34)
(0.47)
$
$
8.05
1 GAAP and adjusted net earnings are attributable to UnitedHealth Group common shareholders.
00
90
350
$
882
Intangible amortization per share
7,017
Any transaction that involves the providing of compensation to a director or executive officer in connection
with his or her duties to the Company or any of its subsidiaries, including the reimbursement of business
expenses incurred in the ordinary course.
Under the policy, the Company determines whether a transaction falls under the definition of a related-person
transaction requiring review by the Nominating Committee. In determining whether to approve or ratify a related-
person transaction, the Nominating Committee will consider, among other things, whether the terms of the related-
person transaction are fair to the Company and on terms at least as favorable as would apply if the other party
was not an affiliate; the business reasons for the transaction; whether the transaction could impair the
independence of a director under the Company's Standards for Director Independence; and whether the transaction
would present an improper conflict of interest for any director or executive officer of the Company.
Any member of the Nominating Committee who has an interest in the transaction under discussion will abstain from
voting on the approval of the related-person transaction, but may, if so requested by the Chair of the Nominating
Committee, participate in some or all of the Nominating Committee's discussions of the related-person transaction.
Any related-person transaction that is not approved or ratified, as the case may be, will be voided, terminated or
amended, or other actions will be taken in each case as determined by the Nominating Committee so as to avoid
or otherwise address any resulting conflict of interest.
87
2
Board of
1
2
Directors
Corporate
Governance
Executive
Compensation
Annual
4 Audit
5
Meeting
Other
Information
As required under SEC rules, transactions in which the Company was or is to be a participant and the amount
involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest,
are disclosed below.
Employment of Family Members of Executive Officer
Matthew Renfro and Stephen Renfro, Larry Renfro's sons, Laura Renfro, Larry Renfro's daughter, and Paul Leary,
Larry Renfro's brother-in-law, are employed at Optum. The compensation paid to each of these employees is
consistent with the Company's overall compensation principles based on the employees' years of experience,
performance and positions within the Company.
Interests arising solely from the ownership of a class of the Company's equity securities if all holders of
that class of equity securities receive the same benefit on a pro rata basis.
Transactions with our Executive Officer, Larry Renfro
Indemnification and advancement of expenses made pursuant to the Company's Certificate of Incorporation
or Bylaws or pursuant to any agreement or instrument.
•
Board of
Directors
Corporate
2
Governance
Executive
Compensation
4 Audit
LO
5
Annual
Meeting
6
Other
Information
OTHER INFORMATION
Certain Relationships and Transactions
Approval or Ratification of Related-Person Transactions
The Board of Directors has adopted a written Related-Person Transactions Approval Policy, which is administered
by the Nominating Committee. A copy of the policy is available on our website at www.unitedhealthgroup.com.
Under the policy, "related-person" transactions are prohibited unless approved or ratified by the Nominating
Committee. In general, a related-person transaction is any transaction or series of transactions (or amendments
thereto) directly or indirectly involving:
•
A director or an immediate family member of a director in which an executive officer of the Company is
directly or indirectly a participant and the amount involved exceeds $1.00; or
A director, executive officer or shareholder beneficially owning more than 5% of our common stock, or any
of their respective immediate family members, in which the Company or its subsidiaries is directly or
indirectly a participant and the amount involved exceeds $120,000; provided that if a director is an
executive officer of an entity that is a party to a transaction with the Company or its subsidiaries, and the
director was actively involved in the transaction, then the amount shall be $1.00.
Related-person transactions under the policy do not include:
•
896
Set forth below is information regarding certain business relationships between the Company and Larry Renfro
associated with the Company's Optum Ventures unit. The Nominating and Corporate Governance Committee of the
Board of Directors has ratified the relationships set forth below.
•
-
Use of Non-GAAP Financial Measures
Adjusted net earnings per share is a non-GAAP financial measure. Non-GAAP financial measures should be
considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with
GAAP. Management believes that the use of adjusted net earnings per share provides investors and management
useful information about the earnings impact of acquisition-related intangible asset amortization. In addition,
adjusted net earnings per share excludes the earnings impact of the deferred tax revaluation recognized after The
Tax Cuts and Jobs Act of 2017 was enacted in December 2017 and the recognition of the Company's estimated
share of guaranty association assessments resulting from the liquidation of Penn Treaty Network America
Insurance Company and its subsidiary (Penn Treaty).
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED NET EARNINGS AND EARNINGS PER SHARE¹
(in millions, except per share data)
(unaudited)
GAAP net earnings
Tax reform impact
Intangible amortization
Penn Treaty impact
Tax effect
Adjusted net earnings
GAAP diluted earnings per share
Tax reform impact per share
Penn Treaty impact per share
Tax effect per share
Adjusted diluted earnings per share
Year Ended
December 31, 2017
Year Ended
December 31, 2016
$
10,558
(1,197)
$
-
•
Appendix A Reconciliation of Non-GAAP Financial Measures
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own
more than 10% of our common stock, to file initial reports of ownership and reports of changes in ownership with
the SEC and the NYSE. Executive officers, directors and greater-than-10% beneficial owners are required by SEC
rules to furnish us with copies of all Section 16(a) reports they file. Based solely on our review of these reports and
written representations from our executive officers and directors, we believe that all of our executive officers and
directors complied with all Section 16(a) filing requirements during 2017.
Mr. Renfro is an owner and managing director of Optum Venture Partners GP (General Partner), the
general partner of Optum Venture Partners LP (Optum Ventures) in which we hold a 99% limited partner
interest. As of December 31, 2017, we had contributed a total of $24 million to Optum Ventures. We have
no ownership interest in the General Partner.
Mr. Renfro, as managing director of the General Partner, is entitled to receive distributions with respect to
the General Partner's 20% carried interest in the net gains of Optum Ventures after Optum Ventures'
investors have been repaid their capital commitments. Mr. Renfro, as General Partner, did not receive any
distributions from Optum Ventures in 2017.
As part of the Optum Ventures operations, Optum Venture Management, LLC, a management company
owned by Mr. Renfro (Management Company), leased office space from Optum Services, Inc. and
reimbursed Optum for direct support services related to Optum Ventures activities in the amount of
$400,000. The fees were computed based on the costs incurred by Optum affiliates.
Transactions with 5% Shareholders
BlackRock Inc. beneficially owned approximately 7.1% of our common stock as of December 31, 2017. The
Company paid BlackRock $6.4 million for investment management fees in 2017. BlackRock maintains a self-funded
health insurance plan through the Company and paid the Company $2.2 million for administrative services in 2017.
FMR LLC beneficially owned approximately 5.94% of our common stock as of December 31, 2017. The Company
and its employees paid Fidelity Management & Research Company ("Fidelity"), a wholly owned subsidiary of
FMR LLC, $11.8 million in investment and benefits management fees in 2017. Fidelity maintains a self-funded
health insurance plan through the Company and paid the Company $19.4 million for administrative services,
approximately $17.6 million for premium payments on behalf of affiliated entities, approximately $1.6 million for
in-house fitness service management fees and approximately $363,100 for the employee assistance program and
wellness services in 2017.
88
Board of
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Executive
Compensation
Annual
Other
4 Audit
5
Meeting
Information
Section 16(a) Beneficial Ownership Reporting Compliance
89
Related-Person Transactions
5
Our corporate aircraft use policy prohibits personal use of corporate aircraft by any independent director. However,
because there is essentially no incremental cost to the Company, the policy permits a director's family member to
accompany the director on a business flight on Company aircraft provided a seat is available.
2017
61
Stephen J. Hemsley
Timothy P. Flynn
1977
74
1993
77
Director Since
Age
Richard T. Burke
William C. Ballard, Jr.
Name
The Board of Directors recommends that you vote FOR the election of each of the nominees. Executed
proxies will be voted FOR the election of each nominee unless you specify otherwise.
65
Information
6
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
9
Our Certificate of Incorporation and Bylaws provide that each member of our Board of Directors is elected annually
by a majority of votes cast if the election is uncontested. The Board of Directors has nominated the eleven
directors set forth below for election by the shareholders at the 2018 Annual Meeting. All of the director nominees
were elected by our shareholders at the 2017 Annual Meeting except for Dr. Montgomery Rice and
Messrs. McNabb and Wichmann. Dr. Montgomery Rice and Mr. Wichmann were appointed unanimously by the
Board in August 2017, and Mr. McNabb in February 2018. All of the nominees have informed the Board that they
are willing to serve as directors if elected. If any nominee should decline or become unable to serve as a director
for any reason, the persons named as proxies will elect a replacement. After seven years of exceptional service,
Mr. Lawson is not standing for election at the 2018 Annual Meeting. Andrew P. Witty, who was appointed
unanimously by the Board in August 2017, has stepped down from the Board in anticipation of his transition to the
role of Chief Executive Officer of Optum in July 2018.
2018 Director Nominees
www.unitedhealthgroup.com/About/Corporate Governance.aspx. For the 2019 Annual Meeting, this notice must be
received at our principal executive offices, directed to the Secretary to the Board of Directors, no earlier than
February 4, 2019 and no later than March 6, 2019.
Our shareholders may also nominate candidates for election to the Board of Directors from the floor of our Annual
Meeting of Shareholders, instead of including the director candidate in our proxy statement, only by submitting
timely written notice to the Secretary to the Board in accordance with our Bylaws. The notice must include the
information required by our Bylaws, which are available at
Meeting
Shareholder Nominations of Director Candidates at a Meeting
2000
66
2
Board of
Directors
10
10
Mr. Burke is Lead Independent Director of the Board of Directors of UnitedHealth Group and has served in that
capacity since September 2017. Mr. Burke served as Chairman of the Board from 2006 to August 2017, has been
a member of our Board since 1977, and was Chief Executive Officer of UnitedHealthcare, Inc., our predecessor
corporation, until 1988. From 1995 until 2001, Mr. Burke was the owner, Chief Executive Officer and Governor of
the Phoenix Coyotes, a National Hockey League team. Mr. Burke currently serves as a director of Meritage Homes
Corporation.
Director since 1977
Richard T. Burke
Mr. Ballard served as Of Counsel to Bingham Greenebaum Doll LLP (formerly Greenebaum Doll & McDonald
PLLC), a law firm in Louisville, Kentucky, from 1992 until 2008. In 1992, Mr. Ballard retired from Humana, Inc., a
health and well being company, after serving with Humana in various roles for 22 years, including as the Chief
Financial Officer ("CFO") and a director. In the past five years, he also served as a director of Welltower, Inc.
(formerly Health Care REIT, Inc.).
Director since 1993
William C. Ballard, Jr.
The director nominees, if elected, will serve until the 2019 Annual Meeting or until their successors are elected and
qualified. Following is a brief biographical description of each director nominee. A table listing the areas of
expertise in the skills matrix that are held by each director and that, in part, led the Board to conclude that each
respective director should continue to serve as a member of the Board is included on page 7.
1993
74
Gail R. Wilensky, Ph.D.
Michele J. Hooper
2017
David S. Wichmann
2009
83
Kenneth I. Shine, M.D.
2008
62
Glenn M. Renwick
2017
56
Valerie C. Montgomery Rice, M.D.
2018
60
F. William McNabb III
2007
55
Corporate
Governance
Our Bylaws provide a shareholder or group of shareholders (of up to 20) who have owned at least 3% of our
common stock for at least three years the ability to include in our proxy statement shareholder-nominated director
candidates for up to 20% of the Board. To be eligible to use this right, the shareholder(s) and the candidate(s)
must satisfy the requirements specified in our Bylaws. Our Bylaws are available at
www.unitedhealthgroup.com/About/Corporate Governance.aspx. For the 2019 Annual Meeting, director nominations
submitted under these Bylaw provisions must be received at our principal executive offices, directed to the
Secretary to the Board of Directors, no earlier than November 21, 2018 and no later than December 21, 2018.
In considering potential candidates for election to the Board, the Nominating Committee considers views expressed
by members of the Nominating Advisory Committee and other shareholders regarding skill sets that would be
valuable for a new director to possess. The Nominating Committee has an outside firm on retainer to assist in
identifying and evaluating director candidates. The Nominating Committee will also consider recommendations
submitted by shareholders for director candidates. Recommendations should be directed to the Secretary to the
Board of Directors. None of the Company's shareholders recommended candidates for the Board of Directors in
connection with the 2018 Annual Meeting.
7
3
Number of Director Nominees
Our Nominating Committee strives to maintain a balance of tenure on the Board. Long-serving directors bring
valuable experience with our Company and familiarity with the successes achieved and challenges it has faced
over the years, while newer directors bring fresh perspectives and ideas. Tenure of the eleven director nominees is
as follows:
Capital Markets
Regulatory
Political/Health Care Policy/
Clinical Practice
Processes
Technology/Business
Complex Organizations
Experience with Large
Ballard Burke Flynn Hemsley Hooper McNabb Montgomery Renwick Shine Wichmann Wilensky
Rice
Diversity
10-5 Years
Social Media/Marketing
Health Care Industry
Finance
Corporate Governance
The skills matrix provides further that the Board as a whole should represent a diverse group and have expertise in
the substantive areas included in the following table, which also indicates the director nominees with expertise in
each area.
Each of our director nominees has satisfied all the core director criteria set forth in the skills matrix, except
Messrs. Hemsley and Wichmann who are not independent directors because Mr. Hemsley is our Executive
Chairman of the Board and Mr. Wichmann is our CEO.
Other
Information
Meeting
5
4 Audit
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
Direct Consumer Markets
Shareholder Director Candidates for Inclusion in our Proxy Statement (Proxy Access)
6-10 Years
Board of
Directors
In assessing current directors for potential re-nomination, the Nominating Committee reviews the directors' overall
performance on the Board of Directors and other relevant factors, including the criteria for nomination to the Board
discussed above.
Information
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Board of
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8
The Board and the Nominating Committee believe having a diverse profile in life, cultural and business experience
is essential to a balanced, well-functioning board. We have long considered diversity as an important component in
identifying, evaluating and nominating director candidates and it has been a core element of our director skills
matrix. We have for several years maintained an active "Evergreen" director candidate pipeline which reflects this
continuing commitment to diversity in all dimensions. This approach reflects a long-standing, naturally inclusive
approach and process. Prior to the appointment of each of the new independent directors in 2017 and 2018, the
Nominating Committee considered a wide slate of potential candidates, including qualified women and minority
candidates. Each eventual nominee was selected due to his or her overall skills and experience and was discussed
with the members of our shareholder Nominating Advisory Committee, who uniformly supported the director profiles
prior to appointment to the Board.
More Than 10 Years
The Board's ongoing director development efforts are closely attuned to the evolving needs of the Company,
factoring in the proactive management of the Board's skill profile and tenure to the environment the Company will
operate in going forward. Since January 2017, we have added four new directors to the Board standing for election
this year, three of whom are independent directors, advancing the skill and experience profile of the Board as well
as its diversity.
A description of the Nominating Advisory Committee, including a description of how the members of the committee
are nominated and selected, can be found on our website at www.unitedhealthgroup.com.
The Board of Directors formed the Nominating Advisory Committee in 2006 to provide the Nominating Committee
with additional input from shareholders and others regarding desirable characteristics of director candidates and the
composition of the Board of Directors. The Nominating Committee considers, but is not bound by, input provided by
the Nominating Advisory Committee. The Nominating Advisory Committee currently includes four individuals
affiliated with long-term shareholders of the Company and one individual who is a member of the medical
community. Members of the Nominating Advisory Committee do not receive any compensation from the Company
for serving on the Nominating Advisory Committee. The Nominating Advisory Committee met once in 2017.
Our Board assesses its overall effectiveness through an annual evaluation process. This evaluation includes,
among other things, an assessment of the overall composition of the Board, including the diversity of its members.
Although the Board does not establish specific goals with respect to diversity, the Board's overall diversity is a
consideration in the director nomination process. For this year's election, the Board has nominated eleven
individuals; all are incumbent nominees who collectively bring tremendous diversity to the Board. Each nominee is
a strategic thinker and has varying, specialized experience in the areas that are relevant to the Company and its
businesses. Moreover, their collective experience covers a wide range of geographies and industries, including
health care, insurance, consumer products, technology and financial services and roles in academia and
government. The eleven director nominees range in age from 60 to 83 and three of the eleven director nominees
are women; two are African American; and one is a citizen of another country, specifically New Zealand.
Nominating Advisory Committee
UnitedHealth Group embraces and encourages a culture of diversity and inclusion. Valuing diversity makes good
business sense and helps to ensure our future success. Our Board has not adopted a formal definition of diversity.
Board Diversity
Information
Meeting
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4 Audit
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Executive
Compensation
Corporate
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2
Process for Identifying and Evaluating Nominees; Shareholder Recommendations for
Director Candidates
16
Executive
Compensation
4 Audit
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5
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Compensation
Corporate
Governance
Directors
2
1
Board of
14
Non-employee directors receive annual grants of DSUs under the 2011 Stock Incentive Plan having an aggregate
fair value of $175,000, subject to rounding adjustments described below. The grants are in consideration of general
Equity-Based Compensation
Meeting
Cash retainers are payable on a quarterly basis in arrears on the first business day following the end of each fiscal
quarter, and are subject to pro rata adjustment if the director did not serve the entire quarter. Directors may elect to
receive deferred stock units ("DSUs") or common stock (if the director has met the stock ownership guidelines) in
lieu of their cash compensation or may defer receipt of their cash compensation to a later date pursuant to the
Directors' Compensation Deferral Plan ("Director Deferral Plan").
Prior to the establishment of the Lead Independent Director position on September 1, 2017, the independent Board Chair
received an annual cash retainer of $300,000.
$175,000 aggregate fair value of deferred stock units
At the director's election, cash compensation may be
converted into DSUs, or if the director has met the stock
ownership guidelines, into common stock
$ 75,000*
$ 20,000
$ 20,000
$ 20,000
$ 25,000
$125,000
Compensation Value
Equity Conversion Program
Annual Public Policy Committee Chair Cash Retainer
Annual Lead Independent Director Cash Retainer
Annual Equity Award
Annual Compensation Committee Chair Cash Retainer
Annual Nominating Committee Chair Cash Retainer
Annual Audit Committee Chair Cash Retainer
Annual Cash Retainer
Cash Compensation
Compensation Element
Information
The DSUS immediately vest upon grant and must be retained until completion of the director's service on the Board
of Directors. Upon completion of service, the DSUs convert into an equal number of shares of the Company's
common stock. A director may defer receipt of the shares for up to ten years after completion of service pursuant
to the Director Deferral Plan. Non-employee directors who have met their stock ownership requirement may elect to
receive common stock in lieu of DSUs and/or in-service distributions on pre-selected dates.
The Company maintains a program through which it will match up to $15,000 of charitable donations made by
each director for each calendar year. The directors do not receive any financial benefit from this program because
the charitable income tax deductions accrue solely to the Company. Donations under the program may not be
made to family trusts, partnerships or similar organizations.
We reimburse directors for any out-of-pocket expenses incurred in connection with service as a director. We also
provide health care coverage to directors but only if the director is not eligible for subsidized coverage under
another group health care benefit program. Health care coverage © provided generally on the same terms and
conditions as current employees. Upon retirement from the Board of Directors, directors may continue to obtain
health care coverage under benefit continuation coverage, and after the lapse of such coverage, under the
Company's post-employment medical plan for up to a total of 96 months if they are otherwise eligible.
Other Compensation
The Director Deferral Plan does not provide for matching contributions by the Company.
pre-selected amounts to be distributed on pre-selected dates while the director remains a member of the
Board of Directors.
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
service and responsibilities and required meeting preparation. The grants are issued quarterly in arrears on the first
business day following the end of each fiscal quarter and prorated if the director did not serve the entire quarter.
The number of DSUs granted is determined by dividing $43,750 (the quarterly value of the annual equity award) by
the closing price of our common stock on the grant date, rounded up to the nearest share.
2
1
15
for cash deferrals, an immediate lump sum upon the completion of his or her service on the Board of
Directors; or
a delayed lump sum following either the fifth or tenth anniversary of the completion of his or her service on
the Board of Directors;
a series of five or ten annual installments following the completion of his or her service on the Board of
Directors;
⋅
•
•
Under the Director Deferral Plan, subject to compliance with applicable laws, non-employee directors may elect
annually to defer receipt of all or a percentage of their compensation. Amounts deferred are credited to a
bookkeeping account maintained for each director participant that uses a collection of unaffiliated mutual funds as
measuring investments. Subject to certain additional rules set forth in the Director Deferral Plan, a participating
director may elect to receive the distribution in one of the following ways:
Director Deferral Plan
Under our stock ownership guidelines, we require non-employee directors to achieve ownership of shares of the
Company's common stock (excluding stock options, but including vested DSUs and vested restricted stock units)
having a fair market value equal to five times the directors' annual base cash retainer. Non-employee directors
must comply with the stock ownership guidelines within five years of their appointment to the Board of Directors. All
of our non-employee directors have met the stock ownership requirement or have served as a director for less than
five years. Our directors are required to hold all equity awards granted until completion of service on the Board or
until they have met our stock ownership requirements.
Stock Ownership and Retention Guidelines
The Company pays dividend equivalents in the form of additional DSUs on all outstanding DSUs. Dividend
equivalents are paid at the same rate and at the same time that dividends are paid to Company shareholders and
are subject to the same vesting conditions as the underlying grant.
If a director elects to convert his or her cash compensation into common stock or DSUs, such conversion grants
are made on the day the eligible cash compensation becomes payable to the director. The director receives the
number of shares of common stock or DSUs, as applicable, equal to the cash compensation foregone, divided by
the closing price of our common stock on the date of grant, rounded up to the nearest share. The DSUS
immediately vest upon grant. A director may only elect to receive common stock if he or she has met the stock
ownership guidelines.
Board of
Directors
Annual
The following table highlights the material elements of our director compensation program:
Director Compensation
Glenn M. Renwick
Dr. Montgomery Rice is the President and Dean of the Morehouse School of Medicine, a medical school in Atlanta,
Georgia, and has served in that capacity since 2014, and as the Executive Vice President and Dean from 2011 to
2014. Morehouse School of Medicine is among the nation's leading educators of primary care physicians and was
recently recognized as the top institution among U.S. medical schools for their social mission. Prior to joining
Morehouse School of Medicine, she served as dean of the School of Medicine and Senior Vice President of health
affairs at Meharry Medical College from March 2006 to June 2009, and the director of the Center for Women's
Health Research, one of the nation's first research centers devoted to studying diseases that disproportionately
impact women of color, from 2005 to 2011. Dr. Montgomery Rice also serves as a Council Member of the National
Institute of Health, National Center for Advancing Translational Science, and previously on the National Institute of
Health's Minority Health and Health Disparities and Office of Research on Women's Health advisory councils, and
the Association of American Medical Colleges Council of Deans administrative board. Dr. Montgomery Rice is a
member of the National Academy of Medicine and a renowned infertility specialist and women's health researcher.
Director since 2017
Other
Information
Meeting
6
4 Audit
Annual
Executive
Compensation
Valerie C. Montgomery Rice, M.D.
Corporate
Governance
2
Board of
Directors
11
Director since 2008
Mr. McNabb is Chairman of The Vanguard Group, Inc. and served as CEO from 2008 to 2017. He joined Vanguard
in 1986. In 2010 he became Chairman of the Board of Directors and the Board of Trustees of the Vanguard group
of investment companies. Earlier in his career, Mr. McNabb led each of Vanguard's client facing business divisions.
Mr. McNabb serves as the Vice-Chairman of the Investment Company Institute's Board of Governors, and served
as Chairman from 2013 to 2016. Mr. McNabb is Chairman of the Board of the Zoological Society of Philadelphia
and serves on the Wharton Leadership Advisory Board and the Dartmouth Athletic Advisory Board. He is also a
board member of CECP: The CEO Force for Good.
F. William McNabb III
Ms. Hooper is President and CEO of The Directors' Council, a private company she co-founded in 2003 that works
with corporate boards to increase their independence, effectiveness and diversity. She was President and CEO of
Voyager Expanded Learning, a developer and provider of learning programs and teacher training for public
schools, from 1999 until 2000. Prior to that, she was President and CEO of Stadtlander Drug Company, Inc., a
provider of disease-specific pharmaceutical care, from 1998 until Stadtlander was acquired in 1999. Ms. Hooper is
a nationally recognized corporate governance expert. Ms. Hooper currently serves as a director of PPG
Industries, Inc. and United Airlines, Inc.
Director since 2007
Michele J. Hooper
Mr. Hemsley is Executive Chairman of the Board of UnitedHealth Group and has served in that capacity since
September 2017. Mr. Hemsley previously served as Chief Executive Officer from 2006 to August 2017. He has
been a member of the Board of Directors since 2000. Mr. Hemsley joined the Company in 1997 as Senior
Executive Vice President and became Chief Operating Officer in 1998. Mr. Hemsley served as President and Chief
Operating Officer from 1999 to 2006 and as President and Chief Executive Officer from 2006 to November 2014.
Mr. Hemsley currently serves as a director of Cargill, Inc.
Director since 2000
Stephen J. Hemsley
Mr. Flynn was Chairman of KPMG International (“KPMG”), a global professional services organization that provides
audit, tax and advisory services, from 2007 until his retirement in October 2011. From 2005 until 2010, he served
as Chairman and from 2005 to 2008 as CEO of KPMG LLP in the U.S., the largest individual member firm of
KPMG. Prior to serving as Chairman and CEO of KPMG LLP, Mr. Flynn was Vice Chairman, Audit and Risk
Advisory Services, with operating responsibility for Audit, Risk Advisory and Financial Advisory Services practices.
He previously served as a trustee of the Financial Accounting Standards Board, a member of the World Economic
Forum's International Business Council, and a director of the International Integrated Reporting Council. Mr. Flynn
currently serves as a director of Alcoa Corporation, JPMorgan Chase & Co. and Wal-Mart Stores, Inc.
Director since 2017
Timothy P. Flynn
Other
Information
Meeting
6
5
Director since 2018
We seek to compensate our non-employee directors fairly for work required for a company of our size and scope
and to align their interests with the long-term interests of our shareholders. Director compensation reflects our
desire to attract, retain and benefit from the expertise of highly qualified people serving on the Company's Board of
Directors. The Compensation Committee annually reviews the compensation of our non-employee directors and
makes recommendations to the Board of Directors. In August 2017, the Compensation Committee, with the advice
of its independent compensation consultant, undertook a review of the structure, philosophy and overall mix of the
director compensation program as compared to the Company's compensation peer group and also the four large
publicly traded managed health care companies. Following this review, and in connection with the establishment of
the Lead Independent Director position, the Compensation Committee recommended, and the Board approved, an
annual $75,000 cash retainer for the Lead Independent Director, effective as of September 1, 2017. No other
changes were made to the compensation of non-employee directors. The Compensation Committee's
recommendations, and the Board's subsequent approval, were made after considering the results of the market
practices review and the complexity of the Company's structure and operations.
Mr. Renwick has been Chairman of the Board of Fiserv, Inc. since May 2017, and has been a director of Fiserv
since 2001. Mr. Renwick also serves as Chairman of the Board of Directors of The Progressive Corporation, an
auto insurance holding company, but announced his decision to retire from Progressive's Board at their 2018
annual meeting of shareholders. Mr. Renwick has served as Chairman of the Board of Progressive since
November 2013. Mr. Renwick served as Executive Chairman of Progressive from July 2016 to June 2017, and as
President and CEO from 2001 to 2016. Before being named President and CEO in 2001, Mr. Renwick served as
CEO-Insurance Operations and Business Technology Process Leader at Progressive from 1998 to 2000. Prior to
that, he led Progressive's Consumer Marketing group and served as President of various divisions within
Progressive. Mr. Renwick joined Progressive in 1986 as Auto Product Manager for Florida.
Director since 2009
Information
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4 Audit
Other
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Executive
Compensation
Corporate
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2
Board of
Directors
13
Dr. Wilensky has been a senior fellow at Project HOPE, an international health foundation, since 1993. From 2008
to 2009, Dr. Wilensky was President of the Department of Defense Health Board and chaired its sub-committee on
health care delivery. From 2006 to 2008, Dr. Wilensky co-chaired the Department of Defense Task Force on the
Future of Military Health Care. During 2007 she also served as a commissioner on the President's Commission on
Care for America's Returning Wounded Warriors. From 2001 to 2003, she was the Co-Chair of the President's
Task Force to Improve Health Care for our Nation's Veterans. From 1997 to 2001, she was also Chair of the
Medicare Payment Advisory Commission. From 1992 to 1993, Dr. Wilensky served as the Deputy Assistant to
President George H. W. Bush for policy development, and from 1990 to 1992, she was the Administrator of the
Health Care Financing Administration (now known as the Centers for Medicare and Medicaid Services) directing
the Medicaid and Medicare programs for the United States. Dr. Wilensky is a nationally recognized health care
economist. Dr. Wilensky currently serves as a director of Quest Diagnostics Incorporated.
Director since 1993
Gail R. Wilensky, Ph.D.
Kenneth I. Shine, M.D.
Mr. Wichmann is Chief Executive Officer of UnitedHealth Group and a member of the Board of Directors, having
served in both capacities since September 2017. Mr. Wichmann served as President of UnitedHealth Group from
November 2014 to August 2017. Mr. Wichmann also served as Chief Financial Officer of UnitedHealth Group from
January 2011 to June 2016. From April 2008 to November 2014, Mr. Wichmann served as Executive Vice
President of UnitedHealth Group and President of UnitedHealth Group Operations. Mr. Wichmann currently serves
as a director of Tennant Company.
David S. Wichmann
Other
Information
Meeting
6
5
4 Audit
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
12
12
Dr. Shine has been Professor of Medicine at the Dell Medical School within the University of Texas System (the
"UT System"), which consists of nine academic campuses and six health institutions, since June 2015. He served
as the Special Advisor to the Chancellor for Health Affairs of the UT System from September 2013 to June 2015,
as Executive Vice Chancellor for Health Affairs of the UT System from 2003 to September 2013, and as interim
Chancellor of the UT System from 2008 to February 2009. Dr. Shine served as President of the Institute of
Medicine at the National Academy of Sciences from 1992 until 2002. From 1993 until 2003, Dr. Shine served as a
Clinical Professor of Medicine at the Georgetown University School of Medicine. From 1971 until 1992, Dr. Shine
served in several positions at the University of California at Los Angeles School of Medicine, with his final position
being Dean and Provost, Medical Sciences, and he continues to hold the position of Professor of Medicine
Emeritus. Dr. Shine also served as Chair of the Council of Deans of the Association of American Medical Colleges
from 1991 until 1992 and as President of the American Heart Association from 1985 until 1986. He is a nationally
recognized cardiologist.
Director since 2017
26
46
Corporate
Governance
43,753
43,881 43,863
44,029
Andrew P. Witty
27,642
* Includes the value of DSUS issued upon conversion of annual cash retainers as described in footnote 1 above of
$85,165 for Mr. Darretta, $89,584 for Mr. Flynn and $150,000 for Mr. Renwick.
As of December 31, 2017, our non-employee directors held outstanding DSU awards as follows:
Name
William C. Ballard, Jr.
Richard T. Burke
Timothy P. Flynn
Michele J. Hooper
Rodger A. Lawson
Valerie C. Montgomery Rice, M.D.
Glenn M. Renwick
Kenneth I. Shine, M.D.
Gail R. Wilensky, Ph.D.
Andrew P. Witty
Deferred
Stock Units
22,139
22,139
1,185
28,716
20,566
Gail R. Wilensky, Ph.D.
141
43,832
43,753
($)
($)
($)
43,753 43,881 43,863 43,832
43,753 43,881 43,863 43,832
75,074
75,012 54,502
65,077 75,033
75,027
Michele J. Hooper
43,753
43,881 43,863
43,832
Rodger A. Lawson
43,753
43,881 43,863
43,832
Valerie C. Montgomery Rice, M.D.
27,641
Glenn M. Renwick*
81,371
81,305 81,379
81,345
Kenneth I. Shine, M.D.
43,881 43,863
($)
42,213
20,814
Board of Directors Committee Charters
✓
Standards for Director Independence
✓
Code of Conduct: Our Principles of Ethics & Integrity
Related-Person Transactions Approval Policy
Board of Directors Communication Policy
Political Contributions Policy
✓
Corporate Environmental Policy
You can access these documents at www.unitedhealthgroup.com to learn more about our corporate governance
practices. We will also provide copies of any of these documents without charge upon written request to the
Company's Secretary to the Board of Directors. Our key corporate governance practices are highlighted below.
Board Structure and Shareholder Rights
•
•
•
.
All members of our Board of Directors are elected annually by our shareholders.
Our Certificate of Incorporation provides, in an uncontested election, each director must be elected by a
majority vote. To address a provision in Delaware law that allows a director who has not been re-elected to
remain in office until a successor is elected and qualified, we have a policy requiring any director who does
not receive a greater number of votes “for” than “against” his or her election in an uncontested election to
tender his or her resignation from the Board of Directors following certification of the shareholder vote.
Our Bylaws provide eligible shareholders the right to include shareholder director nominees representing up
to 20% of the Board in our proxy statement.
Each share of stock is entitled to one vote and our Certificate of Incorporation and Bylaws do not have any
supermajority shareholder approval provisions.
As of September 1, 2017, the Board of Directors unanimously appointed an Executive Chairman of the
Board and a Lead Independent Director. If a future Chairman of the Board is independent, a Lead
Independent Director would not be required under our bylaws.
19
Board of
Directors
2
Corporate
Governance
3
Principles of Governance
28,852
✓
Certificate of Incorporation
141
_
(3) The Company did not grant stock option awards to directors in 2017. As of December 31, 2017, our non-employee
directors held outstanding (and unexercised) stock option awards as follows: Mr. Ballard - 30,000; Mr. Burke - - 41,730;
Mr. Darretta 30,000; Ms. Hooper - 15,000; Mr. Renwick - 33,929; and Dr. Wilensky - 34,190.
(4) The Director Deferral Plan does not credit above-market earnings or preferential earnings to the amounts deferred. There
are no measuring investments tied to Company stock performance. The measuring investments are a collection of
unaffiliated mutual funds identified by the Company.
(5) In 2017, the Company matched $15,000 in charitable contributions made by the following directors to charitable
organizations selected by the directors pursuant to the Company's Board Matching Program: Messrs. Ballard, Burke,
Flynn, Lawson, Renwick and Witty; Dr. Shine; and Dr. Wilensky. The Company additionally matched $14,797 and $14,955
in charitable contributions made by Ms. Hooper and Dr. Montgomery Rice. In 2017, the Company also made $3,000
contributions to charitable organizations selected by the following directors: Messrs. Ballard, Burke, Lawson and Renwick
and Ms. Hooper, Dr. Shine and Dr. Wilensky. In 2017, the Company also paid $7,764, $5,678, $4,251 and $490 in health
care premiums on behalf of Messrs. Burke, Lawson and Renwick, and Ms. Hooper, respectively.
18
Board of
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Corporate
2
3
Governance
Executive
Compensation
Annual
Other
4 Audit
5
Meeting
Information
CORPORATE GOVERNANCE
Overview
UnitedHealth Group is committed to high standards of corporate governance and ethical business conduct.
Important documents reflecting this commitment are listed below.
Corporate Governance Documents
✓
Bylaws
Executive
Compensation
Timothy P. Flynn*
William C. Ballard, Jr.
Richard T. Burke
Total
($)(5)
($)
125,000 175,329
18,000
318,329
406,659
175,329
25,640
607,628
Robert J. Darretta
204,588
204,588
Timothy P. Flynn
—
215,137
15,000
230,137
Michele J. Hooper
145,000
175,329
18,287
338,616
All Other
Compensation
Rodger A. Lawson
($)(4)
($)(2)
Board of
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Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
The following table provides summary information for the year ended December 31, 2017 relating to compensation
paid to or accrued by us on behalf of our non-employee directors who served in this capacity during 2017.
Messrs. Hemsley and Wichmann are employee directors and do not receive additional compensation for serving as
directors. Mr. Flynn joined the Board on January 13, 2017, Dr. Montgomery Rice joined the Board on August 4, 2017,
and Mr. McNabb joined the Board on February 13, 2018. Mr. Witty served on the Board from August 4, 2017 until
March 13, 2018. Mr. Darretta ceased serving on the Company's Board on June 5, 2017.
2017 Director Compensation Table
Name
William C. Ballard, Jr.
Richard T. Burke
Fees Earned
or Paid in
Stock Option
Awards Awards
($)(1)
Change in Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings
($)(3)
Robert J. Darretta*
145,000
23,678
(2) The amounts reported reflect the aggregate grant date fair value of the stock awards granted in 2017 computed in
accordance with FASB ASC Topic 718, based on the closing price of our common stock on the grant date. For a
description of the assumptions used in computing the aggregate grant date fair value, see Note 11 to the Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. For
each director, the amounts reported include the aggregate grant date fair value of the annual equity award of DSUS
granted in quarterly installments. The amounts reflect the value of fractional shares issued with the quarterly installments
as we round equity grants up to the nearest whole share. For Messrs. Darretta, Flynn and Renwick, we combined the
cash compensation they elected to convert into DSUs on a quarterly basis and the value of the quarterly DSU grant prior
to determining the number of DSUs to be granted each quarter. For 2017, Dr. Shine elected that all of his, and
Dr. Wilensky elected that a portion of her, annual DSU awards be granted in shares of common stock. Mr. Darretta did not
stand for re-election at the 2017 Annual Meeting of Shareholders and his DSU awards were paid in common shares in
accordance with the terms of the DSUS.
17
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Information
The aggregate grant date fair values of the stock awards granted in 2017, computed in accordance with FASB ASC
Topic 718 based on the closing price of our common stock on the grant date, are as follows:
January 3, April 3, July 3, October 2,
2017
2017
2017
2017
Name
(1) Mr. Darretta converted his $85,165 cash compensation into 504 DSUs, Mr. Flynn converted his $89,584 cash
compensation into 490 DSUs and Mr. Renwick converted his $150,000 cash compensation into 850 DSUs.
175,329
62,344
27,642
344,007
Valerie C. Montgomery Rice, M.D.
19,702
27,642
14,955
62,299
Glenn M. Renwick
-
325,400
22,192
347,592
Kenneth I. Shine, M.D.
125,000
175,329
18,000
318,329
Gail R. Wilensky, Ph.D.
145,000
175,526
18,000
338,526
Andrew P. Witty
19,702
15,000
Annual
Cash
4 Audit
Our Board of Directors maintains overall responsibility for oversight of the work of its various committees by
receiving regular reports from the Committee Chairs regarding their work. In addition, discussions about the
Company's strategic plan, consolidated business results, capital structure, merger and acquisition-related activities
and other business discussed with the Board of Directors include a discussion of the risks associated with the
particular item under consideration. Our current Board of Directors' leadership structure separates the positions of
CEO and Chairman of the Board. Since we have an Executive Chairman, the Board has also appointed a Lead
Independent Director. The Board believes that this separation is appropriate for the Company at this time because
it allows for a division of responsibilities and a sharing of ideas between individuals having different perspectives.
Enterprise-Wide Incentive Compensation Risk Assessment
Our Compensation Committee requested that management conduct a risk assessment of the Company's
enterprise-wide compensation programs. The risk assessment reviewed both cash incentive compensation plans
and individual cash incentive awards paid in 2017 for the presence of potential design elements that could incent
employees to incur excessive risk. The review included the ratio and level of incentive to fixed compensation, the
amount of manager discretion, the level of compensation expense relative to the business units' revenues, and the
presence of other design features that serve to mitigate excessive risk-taking, such as the Company's clawback
policy, stock ownership and retention guidelines, multiple performance measures and similar features. The
Compensation Committee also receives an annual report on the Company's compliance with its equity award
program controls.
24
*
**
Board of
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Governance
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Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
After considering the results of the risk assessment, management concluded that the level of risk associated with
the Company's enterprise-wide compensation programs is not reasonably likely to have a material adverse effect
on the Company. The results of the risk assessment were reviewed with the Compensation Committee at its
February 2018 meeting. Please see "Compensation Discussion and Analysis" for a discussion of compensation
design elements intended to mitigate excessive risk-taking by our executive officers.
Board Meetings and Annual Meeting Attendance
Directors are expected to attend Board meetings, meetings of committees on which they serve and the Annual
Meeting of Shareholders. All then-current directors attended the 2017 Annual Meeting. During the year ended
December 31, 2017, the Board of Directors held eleven meetings. All then-current directors attended at least 75%
of the meetings of the Board and any Board committees of which they were members in 2017.
The Public Policy Committee oversees risk associated with the public policy arena, including health care
reform and modernization activities, political contributions, government relations, community and charitable
activities and corporate social responsibility.
Board Committees
The Nominating Committee oversees Board processes and corporate governance-related risk; and
The Audit Committee oversees management's internal controls and compliance activities. The Audit
Committee also oversees management's processes to identify and quantify material risks facing the
Company, including risks disclosed in the Company's Annual Report on Form 10-K. The enterprise risk
management function assists the Company in identifying and assessing the Company's material risks. The
Company's General Auditor, who reports to the Audit Committee, assists the Company in evaluating risk
management controls and methodologies. The Audit Committee receives periodic reports on the enterprise
risk management function. The Audit Committee also receives periodic reports on the Company's cyber
security efforts. In connection with its risk oversight role, the Audit Committee regularly meets privately with
representatives from the Company's independent registered public accounting firm and the Company's
CFO, General Auditor and Chief Legal Officer;
Being available for communications with shareholders, as needed.
23
23
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Information
Risk Oversight
Enterprise-Wide Risk Oversight
Our Board of Directors oversees management's enterprise-wide risk management activities. Risk management
activities include assessing and taking actions necessary to manage risk incurred in connection with the long-term
strategic direction and operation of our business. Each director on our Board is required to have risk oversight
ability for each skill and attribute the director possesses that is reflected in the collective skills section of our
director skills matrix described in "Proposal 1 Election of Directors Director Nomination Process Criteria for
Nomination to the Board" above. Collectively, our Board of Directors uses its committees to assist in its risk
oversight function as follows:
•
•
•
•
—
—
The Compensation Committee oversees risk associated with our compensation practices and plans;
Interviewing, along with the Chair of the Nominating Committee, all Board candidates and making director
candidate recommendations to the Nominating Committee; and
The Board of Directors has established four standing committees: Audit, Compensation, Nominating and Public
Policy. These committees help the Board fulfill its responsibilities and assist the Board in making informed
decisions. Each committee operates under a written charter, and evaluates its charter and conducts a committee
performance evaluation annually.
Director
Corporate
2
3
Governance
Executive
Compensation
4 Audit
5
6
Other
Information
Audit Committee
Meetings Held in 2017: 10
Committee Members:
Glenn M. Renwick (Chair), Richard T. Burke, Timothy P. Flynn and Michele J. Hooper
Primary Responsibilities:
The Audit Committee has responsibility for the selection and retention of the independent registered public
accounting firm and oversees financial reporting, internal controls and public disclosure. The Audit Committee
reviews and assesses the effectiveness of the Company's policies, procedures and resource commitments in the
areas of compliance, ethics, privacy and cyber security, by interacting with personnel responsible for these
functions. The Audit Committee also oversees management's processes to identify and quantify material risks
facing the Company. The Audit Committee establishes procedures concerning the receipt, retention and
treatment of complaints regarding accounting, internal accounting controls and auditing matters. The Audit
Committee operates as a direct line of communication between the Board of Directors and our independent
registered public accounting firm, as well as our internal audit, compliance and legal personnel.
Independence:
Each of the Audit Committee members is an independent director under the NYSE listing standards and the
SEC rules. The Board of Directors has determined that Messrs. Renwick, Burke and Flynn and Ms. Hooper are
"audit committee financial experts" as defined by the SEC rules.
Compensation Committee
Committee Members:
Meetings Held in 2017: 5
Rodger A. Lawson (Chair), William C. Ballard, Jr. and Gail R. Wilensky, Ph.D.
Andrew P. Witty also served on the Compensation Committee from November 6, 2017 until March 13, 2018.
Primary Responsibilities:
The Compensation Committee is responsible for overseeing our policies and practices related to total
compensation for executive officers, the administration of our incentive and equity-based plans and the risk
associated with our compensation practices and plans. The Compensation Committee also establishes
employment arrangements with our CEO and other executive officers, conducts an annual performance review
of the CEO, and reviews and monitors director compensation programs and the Company's stock ownership
guidelines.
Independence:
Each of the Compensation Committee members is an independent director under the NYSE listing standards
and the SEC rules, a non-employee director under the SEC rules and an outside director under the Internal
Revenue Code of 1986 (the "Internal Revenue Code").
Other
Board of
Directors
The following table identifies the members of each committee as of April 10, 2018:
25
Mr. Burke is the Lead Independent Director and an ex-officio member of the Compensation Committee and
Public Policy Committee. As an ex-officio member, Mr. Burke has a standing invitation to attend each
committee meeting, but does not count for quorum purposes or vote on committee matters.
William C. Ballard, Jr.
Richard T. Burke*
Timothy P. Flynn
Stephen J. Hemsley
Michele J. Hooper
Rodger A. Lawson**
F. William McNabb III
Valerie C. Montgomery Rice, M.D.
Glenn M. Renwick
Kenneth I. Shine, M.D.
David S. Wichmann
Gail R. Wilensky, Ph.D.
Audit
Do
Do Do
B
Compensation
Nominating
Public Policy
Do
8
Chairperson Member
Financial Expert
Mr. Lawson is not standing for re-election in June 2018.
Serving as an ex-officio member of each committee and working with the Board Committee Chairs on the
performance of their designated roles and responsibilities;
Annual
Meeting
Calling meetings of the independent directors as appropriate and, in coordination with the Executive
Chairman, all directors;
We have a related-person transactions approval policy regarding the review, vote and ratification by our
Nominating Committee on all proposed related-person transactions. See "Certain Relationships and
Transactions."
We have a clawback policy that entitles the Board of Directors to seek reimbursement from our senior
executives if they are involved in fraud or misconduct that causes a material restatement or, in the event of
a senior executive's violation of non-compete, non-solicit or confidentiality provisions. See "Compensation
Discussion and Analysis Elements of Our Compensation Program Other Compensation Practices
-
Potential Impact on Compensation from Executive Misconduct/Compensation Clawbacks."
We have a political contributions policy that is overseen by our Public Policy Strategies and Responsibility
Committee (the "Public Policy Committee”). The Company's political contributions and public advocacy efforts
and the contributions of our federal and state political action committees are disclosed on our website.
We have an environmental policy that outlines our focus on minimizing our impact on the environment and
creating a Company culture that heightens our employees' awareness of the importance of preserving the
environment and conserving energy and natural resources.
20
20
Board of
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3
Executive
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Annual
4 Audit
5
Meeting
Other
Information
•
Our insider trading policy prohibits all directors, executive officers and employees from engaging in short
sales and hedging transactions relating to our common stock, and requires advance approval of the
Compensation Committee of any pledging of common stock by directors, executive officers and other
members of management.
-
Our Board of Directors believes that effective Board-shareholder communication strengthens the Board of
Directors' role as an active, informed and engaged fiduciary, so we have a communication policy that
outlines how shareholders and other interested parties may communicate with the Board of Directors. See
"Corporate Governance Communication with the Board of Directors."
-
Our Board of Directors has developed a CEO succession plan with input from our CEO and reviews the
plan annually. The CEO succession plan has two components: one addressing an emergency or
unanticipated loss of our CEO and one addressing longer-term succession. Material features of this plan
include identification of Board members to lead the succession process, identification and development of
internal candidates and identification of external resources necessary to ensure a successful transition.
We maintain stock ownership and retention guidelines for directors and executive officers. See
"Compensation Discussion and Analysis
- Other
- Elements of Our Compensation Program
Compensation Practices Executive Stock Ownership Guidelines and Stock Retention Policy," "Director
Compensation · Equity-Based Compensation" and "Director Compensation - Stock Ownership and
Retention Guidelines" for further information.
Leading the Board's annual goal setting for and evaluation of the Executive Chairman and, in consultation
with the Executive Chairman, the CEO;
Meeting
Information
Board and Board Committee Composition and Performance
•
•
All members of our Audit Committee are "audit committee financial experts" as defined by the Securities
and Exchange Commission ("SEC").
A non-management director may not serve on more than three other public company boards of directors,
5
•
Our directors are required to offer their resignations upon a change in their primary careers.
⋅
•
•
•
Our Board of Directors and each Board committee regularly conduct executive sessions of non-management
directors. Our Lead Independent Director presides over each executive session of non-management
directors. Committee Chairs preside over executive sessions of their respective committees.
Our Board of Directors and Board committees have the authority to retain independent advisors.
Our Board of Directors and Board committees conduct performance reviews annually.
All directors are required to complete a specified level of director training.
Guidelines and Board Policies
•
•
•
—
-
and our CEO may not serve on more than one other public company board of directors.
Principles of Governance
22
1
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
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Information
Board Leadership Structure
Our Board of Directors believes that having independent Board leadership is an important component of our
governance structure. As such, our Bylaws require the Company to have either an independent Chairman of the
Board or a Lead Independent Director.
In connection with the CEO succession that took place this year, our Board created the position of Executive
Chairman. The Board unanimously selected Mr. Hemsley to serve as our Executive Chairman, due to his vision for
the Company's future and his understanding of the Company and its evolving competitive environment. The Board
also believed that Mr. Hemsley's service as Executive Chairman would enhance management continuity and
provide a valuable resource for Mr. Wichmann as he transitioned to CEO.
Given that Mr. Hemsley is not an independent director under applicable NYSE rules, the Board determined to
continue the strong voice of independent directors and created the role of Lead Independent Director. Mr. Burke
was appointed to serve as Lead Independent Director.
•
•
.
Serving as the principal liason between the independent directors and the Executive Chairman;
A Nominating Advisory Committee comprised of representatives from the shareholder and medical
communities provides input into the composition of our Board of Directors.
Coordinating the preparation of agendas and materials for executive sessions of the Board's
non-management directors;
The Board of Directors also considered relationships between the Company and organizations on which our
non-employee directors or their immediate family members serve only as directors and determined that such
relationships did not impair the directors' exercise of independent judgment.
Dr. Montgomery Rice is President and Dean of Morehouse School of Medicine. In 2017, Morehouse School
of Medicine paid the Company approximately $1.0 million for premiums for health insurance. Morehouse
School of Medicine also paid the Company approximately $680,700 for fees associated with the
administration of Morehouse School of Medicine's self-insurance program. These premiums and fees were
determined on the same terms and conditions as premiums and fees for other comparable customers. This
relationship terminated at the end of 2017. Morehouse School of Medicine paid the Company
approximately $165,500 for software license fees and maintenance in 2017. The Company paid Morehouse
School of Medicine approximately $875,400 for network provider services and approximately $341,800 in
charitable donations in 2017. Total fees paid by the Company and the United Health Foundation to
Morehouse School of Medicine during 2017 were substantally less than 1% of Morehouse School of
Medicine's total revenues for 2017. Dr. Montgomery Rice was not directly involved in these relationships.
Our Principles of Governance outline the specific duties of the Lead Independent Director, including:
•
Mr. Burke is an owner of Rainy Partners, LLC. Rainy Partners is a customer of the Company and paid the
Company premiums for health insurance of approximately $232,800 in 2017. These premiums were
determined on the same terms and conditions as premiums for other comparable customers.
The Code of Conduct: Our Principles of Ethics & Integrity document is posted on our website and covers our
principles and policies related to business conduct, conflicts of interest, public disclosure, legal compliance, reporting
and accountability, corporate opportunities, confidentiality, fair dealing and protection and proper use of Company
assets. Any waiver of the Code of Conduct for the Company's executive officers, senior financial officers or directors
may be made only by the Board of Directors or a committee of the Board. We will publish any amendments to the
Code of Conduct and waivers of the Code of Conduct for an executive officer or director on our website.
Compliance and Ethics
We strongly and broadly encourage employees to raise ethics and compliance concerns, including concerns about
accounting, internal controls or auditing matters. We offer several channels for employees and third parties to
report ethics and compliance concerns or incidents, including by telephone or online, and individuals may choose
to remain anonymous in jurisdictions where anonymous reporting is permissible. We prohibit retaliatory action
against any individual who in good faith raises concerns or questions regarding ethics and compliance matters or
reports suspected violations. We train all employees annually and periodically advise them regarding the means by
which they may report possible ethics or compliance issues and their affirmative responsibility to report any
possible issues. In our 2017 employee survey, 97% of employees said they knew what to do if they believed
unethical behavior or misconduct occurred in their work area.
Our Certificate of Incorporation and Bylaws, together with Delaware law and NYSE and SEC rules, govern the
Company. Our Board has also adopted "Principles of Governance," which set forth many of our practices, policies
and procedures in corporate governance. The policies and practices covered in our Principles of Governance
include shareholder rights and proxy voting; structure, composition and performance of the Board of Directors;
stock ownership and retention requirements; Board of Directors operation; individual director responsibilities; and
Board committees. Our Principles of Governance are reviewed at least annually by our Nominating Committee and
are revised as necessary.
24
Board of
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Corporate
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3
Executive
Compensation
Annual
21
4 Audit
•
Other
In determining independence, the Board of Directors considered, among other factors, the business relationships
between the Company and our directors and nominees, their immediate family members (as defined by the NYSE)
and their affiliated companies. The Board of Directors considered whether any director or any nominee was a
director, partner, significant shareholder or executive officer of an organization that has a relationship with the
Company, and also considered charitable contributions that the Company or its affiliates made to organizations with
which such directors or nominees are or have been associated. In particular, the Board of Directors evaluated the
following relationships and determined that such relationships were in the normal course of business and did not
impair the directors' ability to exercise independent judgment:
Our Board of Directors has determined that William C. Ballard, Jr., Richard T. Burke, Timothy P. Flynn, Michele J.
Hooper, Rodger A. Lawson, F. William McNabb III, Valerie C. Montgomery Rice, M.D., Glenn M. Renwick,
Kenneth I. Shine, M.D. and Gail R. Wilensky, Ph.D. are each “independent” under the NYSE rules and the
Company's Standards for Director Independence, and have no material relationships with the Company that would
prevent the directors from being considered independent. Stephen J. Hemsley, Executive Chairman of the Board,
and David S. Wichmann, CEO, are not independent directors.
Our Board of Directors has adopted the Company's Standards for Director Independence, which are available on
our website at www.unitedhealthgroup.com. The Standards for Director Independence requirements exceed the
independence standards set by the NYSE.
Director Independence
Code of Conduct: Our Principles of Ethics & Integrity
Information
Meeting
5
•
Performance-based compensation arrangements, including performance-based equity awards that use a
balanced set of performance measures, with different metrics used for annual and long-term incentive
plans.
Double-trigger accelerated vesting of equity awards, requiring both a change in control and a qualifying
employment termination, which is our only change in control consideration.
No excise tax gross-ups and generally no executive-only perquisites such as company cars, security
systems or financial planning.
A compensation clawback policy that entitles the Board of Directors to seek reimbursement from our senior
executives if they are involved in fraud or misconduct that causes a material restatement, or in the event of
a senior executive's violation of non-compete, non-solicit or confidentiality provisions.
A stock retention policy that generally requires executive officers to hold, for at least one year, one-third of
the net shares acquired upon vesting or exercise of any equity award.
Stock ownership guidelines for our executive officers, each of whom complied with the applicable
ownership guidelines as of April 10, 2018. Mr. Wichmann, our CEO, owned shares equal to 140 times his
base salary as of April 10, 2018.
Prohibition on repricing of stock options and stock appreciation rights without shareholder approval.
Annual advisory shareholder vote to approve the Company's executive compensation.
The direct retention by the Compensation Committee of its independent compensation consultant,
Pay Governance LLC, which performs no other consulting or other services for the Company.
For 2017, we eliminated our long-term performance cash plan so that all future long-term incentive awards will be
delivered in equity.
On September 1, 2017, Stephen J. Hemsley retired from his role as Chief Executive Officer after serving more than
ten years in that role and became Executive Chairman of the Board. David S. Wichmann succeeded Mr. Hemsley
as Chief Executive Officer. Compensation changes made in connection with the CEO Succession are described
below in "Compensation Discussion and Analysis Elements of our Compensation Program - CEO Succession."
As discussed in detail below and reflected in the 2017 Summary Compensation Table, in 2017, our CEO,
Mr. Wichmann, received the following compensation for 2017:
•
Company matching contributions of $159,519 made under the Company's 401(k) plan and Executive
Savings Plan.
•
Annual cash incentive award of $4.25 million, which represents 163% of his target opportunity;
Long-term cash incentive award of $659,800 for the 2015-2017 performance period, which represents
above target performance by the Company against pre-set 2015-2017 long-term incentive plan
performance goals;
A performance-based restricted stock unit opportunity ("performance shares") with a target grant date fair
value of $5.55 million, restricted stock units ("RSUs") with a grant date fair value of $2.775 million, and
non-qualified stock options with a grant date fair value of $2.775 million; and
30
•
Base salary of $1.16 million;
4 Audit
•
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix in this proxy statement for
a reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
29
50
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•
Executive
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Other
5
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Information
We endeavor to maintain strong governance standards in the oversight of our executive compensation programs,
including the following policies and practices that were in effect during 2017:
•
•
•
•
Annual
Board of
Directors
•
Corporate
Governance
Provide standard benefits. We provide standard employee benefits such that the overwhelming majority of
management pay is at risk. We generally do not have "executive-only" benefits or perquisites.
Determination of Total Compensation
Role of the Compensation Committee
The Compensation Committee oversees the Company's policies and philosophy related to total compensation for
executive officers. The Compensation Committee reviews and approves the compensation for the named executive
officers based on its own evaluation, input from our Executive Chairman and CEO (for all executive officers except
themselves), internal pay equity considerations, the tenure, role and performance of each named executive officer,
input from its independent consultant and market data.
31
1
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
In addition, in making compensation decisions, the Compensation Committee considers the results of the
Company's annual shareholder advisory votes approving the Company's executive compensation. More than 95%
of the votes cast have been in favor of the Company's executive compensation at each of our annual meetings,
beginning with our inaugural vote in 2011. The Compensation Committee believes these shareholder votes reflect
strong support for the Company's executive compensation program.
Enhance the long-term value of the business. Our compensation system is weighted toward long-term
compensation to promote long-term shareholder value creation and avoid excessive risk-taking.
Reward long-term growth and focus management on sustained success and shareholder value creation.
Compensation of our executive officers is heavily weighted toward equity and we require significant stock
ownership by our management team. This encourages sustained performance and positive shareholder
returns.
Pay-for-performance. A substantial portion of the total compensation of our executive officers is at risk and
only earned based on achievement of enterprise-wide goals.
•
Our Compensation Committee uses the following principles to implement our compensation philosophy and achieve
our executive compensation program objectives:
Executive
Compensation
Annual
Other
4 Audit
5
Meeting
Information
Compensation Discussion and Analysis
Philosophy and Objectives of our Compensation Program
2
We seek to attract and retain highly qualified executives and establish a strong pay-for-performance alignment by
linking senior management compensation to enterprise and individual performance goals. The primary objectives of
our executive compensation program are to:
•
•
Align the economic interests of our executive officers with those of our shareholders.
Reward performance that advances our mission of helping people live healthier lives and helping to make
the health system work better for everyone.
Reward performance that emphasizes teamwork and close collaboration among executive officers while
also recognizing individual performance.
•
Reward performance that supports the Company's values.
Foster an entrepreneurial spirit with innovative thinking and action that leverages the ingenuity of our
employees.
Compensation Program Principles
•
1
The Secretary to the Board of Directors will not forward to the directors communications received which are of a
personal nature or not related to the duties and responsibilities of the Board of Directors, including, without
limitation, junk mail, mass mailings, business solicitations, routine customer service complaints, new product or
service suggestions and opinion surveys. The Secretary to the Board of Directors will forward such complaints and
suggestions received to the appropriate members of the Company's management.
UnitedHealth Group was named to both the Dow Jones Sustainability World and North America Indices for
the 19th consecutive year.
Independence:
Each of the Public Policy Committee members is an independent director under the NYSE listing standards.
27
27
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
Meeting
Information
Communication with the Board of Directors
The Board of Directors values the input and insights of our shareholders and other interested parties and believes
that effective communication strengthens the Board of Directors' role as an active, informed and engaged fiduciary.
The Board of Directors has adopted a Board of Directors Communication Policy to facilitate communication
between shareholders and other interested parties and the Board. Under this policy, the Board of Directors has
designated the Company's Secretary to the Board of Directors as its agent to receive and review communications.
Appropriate matters to raise in communications to the Board include:
•
The Public Policy Committee is responsible for assisting the Board of Directors in fulfilling its responsibilities
relating to the Company's public policy, health care reform and modernization activities, political contributions,
government relations, community and charitable activities and corporate social responsibility. The Public Policy
Committee is also responsible for overseeing the risks associated with these activities.
Board composition;
Gail R. Wilensky, Ph.D. (Chair), Valerie C. Montgomery Rice, M.D. and Kenneth I. Shine, M.D.
Primary Responsibilities:
Committee Members:
Board of
Directors
The Compensation Committee's Use of an Independent Compensation Consultant
2
Corporate
Governance
3
Executive
Compensation
4 Audit
5
Annual
Meeting
6
Other
Information
Nominating Committee
Committee Members:
Michele J. Hooper (Chair), William C. Ballard, Jr. and Richard T. Burke
Primary Responsibilities:
Meetings Held in 2017: 6
The Nominating Committee's duties include identifying and nominating individuals to be proposed as nominees
for election as directors at each Annual Meeting or to fill Board vacancies, conducting the Board evaluation
process, evaluating the categorical standards which the Board of Directors uses to determine director
independence, and monitoring and evaluating corporate governance. The Nominating Committee also oversees
Board processes and corporate governance-related risk.
Independence:
Each of the Nominating Committee members is an independent director under the NYSE listing standards.
Public Policy Committee
Meetings Held in 2017: 4
•
Board succession planning process;
•
In determining 2017 executive compensation, the Compensation Committee considered the Company's strong
growth, operating performance and financial results, all of which were achieved in an uncertain environment, as
well as individual executive performance. Some of our key business results for 2017 were:
•
Revenues increased 9.0% to $201.2 billion from $184.8 billion in 2016;
•
•
Operating earnings exceeded $15.2 billion, up 18% year-over-year;
Net earnings of $10.72 per share, included a one-time, non-cash deferred tax benefit of $1.22 per share
resulting from The Tax Cuts and Jobs Act;
Adjusted earnings per share¹ increased 25% to $10.07 per share from $8.05 per share in 2016;
•
Cash flows from operations grew 39% year-over-year to $13.6 billion;
•
•
•
•
Driven by net earnings growth, including the deferred tax revaluation, return on equity increased to 24.4%
in 2017;
Total shareholder return, which is defined as the increase in stock price, together with dividends paid, was
40% in 2017, 125% over the 2015-2017 time period and 324% over the 2013-2017 time period;
Our annual cash dividend rate increased to $3.00 per share, paid quarterly, representing a 20% increase
over the annual cash dividend rate of $2.50 per share paid quarterly since the second quarter of 2016;
We repurchased $1.5 billion in stock at an average price of $173.54 per share;
UnitedHealth Group was the top ranked company in the insurance and managed care sector on Fortune's
2018 "World's Most Admired Companies" list, based on 2017 results. This is the eighth consecutive year
UnitedHealth Group has ranked No. 1 overall in its sector;
UnitedHealth Group was included among the 2017 Best Employers for Diversity by Forbes; and
UnitedHealth Group's compensation program is designed to attract and retain highly qualified executives and to
maintain a strong link between pay and the achievement of enterprise-wide goals. We emphasize and reward
teamwork and collaboration among executive officers, which we believe fosters Company growth and performance,
optimizes the use of enterprise-wide capabilities, drives efficiencies and integrates products and services for the
benefit of our customers and other stakeholders.
Executive Summary
EXECUTIVE COMPENSATION
Information
•
CEO succession planning process;
Executive compensation;
Use of capital;
•
Corporate governance; and
•
General Board oversight, including accounting, internal controls, auditing and other related matters.
The policy, including information on how to contact the Board of Directors, may be found in the corporate
governance section of our website, www.unitedhealthgroup.com.
The Compensation Committee believes that total compensation for the executive officers listed in the 2017
Summary Compensation Table (the "named executive officers" or "NEOS") should be heavily weighted toward
long-term performance-based compensation. In 2017, long-term compensation represented 70-75% of the total mix
of compensation granted to our named executive officers. The elements of compensation for our named executive
officers were unchanged from 2016.
28
2
Corporate
Governance
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Board of
Directors
The Compensation Committee retains independent compensation consultant, Jon Weinstein of Pay Governance LLC,
to advise the Compensation Committee on executive and director compensation matters, assess total compensation
program levels and program elements for executive officers and evaluate competitive compensation trends.
Pay Governance does not provide any other services to the Company and does not perform any work for
management. The Compensation Committee has assessed the independence of Mr. Weinstein and of
officers and align their interests with
Competitive Positioning
Annual indirect compensation,
not variable
35
55
Board of
1
2
Directors
Corporate
Governance
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
As reflected in the charts below, the mix of total target compensation granted in 2017 to our named executive
officers was heavily weighted towards performance-based and long-term incentive compensation, with long-term
incentive awards making up approximately 72% of total target compensation for our named executive officers in
aggregate.
CEO Compensation Mix
Other NEOS Compensation Mix
constitutes the smallest part of total
remuneration
19%
To promote the health, well-being
and financial security of employees,
including executive officers;
Non-qualified stock options to
shareholders through the use of:
•
Performance shares to
encourage sustained
performance and growth and
potentially assist executives in
building ownership in the
Company
Type of Compensation
Annual compensation, not variable
Annual performance compensation,
variable
Pay Governance, specifically considering, in accordance with SEC rules, whether Mr. Weinstein and Pay Governance
had any relationships with the Company, our officers or our Board members that would impair their independence.
Based on this evaluation, the Compensation Committee concluded that Mr. Weinstein's and Pay Governance's work
for the Compensation Committee does not raise any conflict of interest.
Long-term performance
compensation, variable
•
RSUS to retain executive
Employee benefits
•
officers and build stock
ownership positions
encourage sustained stock price
appreciation
To motivate and retain executive
Non-qualified
19%
In connection with the CEO Succession activities approved by the Board on August 15, 2017, the Compensation
and Human Resources Committee, after considering market data, internal equity, advice from the Compensation
Committee's independent compensation consultant and other factors, made the following changes (other aspects of
compensation were not affected):
David S. Wichmann Chief Executive Officer
•
-
Approved an annual base salary increase to $1,300,000 effective September 1, 2017.
•
Approved an annual cash incentive target opportunity of 200% of base salary.
•
Awarded 30,031 stock options, 4,866 restricted stock units and 9,731 performance shares. The stock
•
options and restricted stock units vest ratably over a four-year period and the performance shares have the
same three-year cliff vesting schedule and performance criteria as the performance shares granted in
February 2017.
Entered into an amendment to his employment agreement, effective September 1, 2017 that:
-
-
Provides Mr. Wichmann will serve as the Company's CEO.
Replaces subsections (c) and (d) of the definition of "Good Reason," in Section 3.B.v of the
employment agreement with the following: (c) makes changes that substantially diminish his duties or
responsibilities from that of the Company's CEO; or (d) makes changes to his reporting relationship
that result in him not reporting to the Chairman.
36
66
CEO Succession
stock options
Long-term Incentives
Performance
shares
Restricted
stock units
9%
Base salary
18%
Non-qualified
stock options
17%
Annual cash
incentive award
18%
Restricted
stock units
37%
Performance
shares
75%
Long-term Incentives
11%
Base salary
18%
Annual cash
incentive award
36%
72%
To encourage and reward executive
officers for achieving three-year
corporate performance goals
Long-term performance
compensation, variable
Objective
Executive
Compensation
Annual
4 Audit
5
Meeting
Other
This screening process resulted in the 54 companies set forth under "Peer Group and Managed Care Companies"
below. As compared to the peer group, the Company is:
To provide a base level of cash
compensation for executive officers
based on role, scope of
responsibilities and experience
To encourage and reward executive
officers for achieving annual
corporate performance goals and
individual performance results
At the 97th percentile on a revenue basis;
•
At the 78th percentile on a market cap basis;
.
At the 77th percentile in earnings from operations; and
•
At the 84th percentile in number of employees.
Information
The Compensation Committee also considers market data from the four largest publicly traded managed care
companies with which we compete for business, all of which are in the 54-company peer group described above.
However, the Compensation Committee does not use this group of managed care companies as a primary
reference point for benchmarking compensation practices because the Company is substantially larger, more
complex and more diverse than these companies, and because we believe that the Company competes primarily
for talent and capital with other successful large companies across a broader group of sectors.
Once the process is concluded and peer group companies are selected, the Compensation Committee generally
uses the market data as follows:
•
3
•
Corporate
Governance
2
The Compensation Committee believes total compensation for the named executive officers should be heavily
weighted toward long-term performance-based compensation, but it does not target a specific mix of annual and
long-term compensation or cash and equity compensation and does not formulaically set compensation targets.
In general, the Compensation Committee's goal is to achieve total compensation for the named executive officers
as a group that falls within a range of the 50th to 75th percentiles of the market data for our peer group (as
discussed below) if paid at target. The Compensation Committee believes this range is an appropriate reflection of
the Company's relative size, complexity and consistently strong performance over the past several years. The
following briefly summarizes the processes followed by the Compensation Committee to select competitive
compensation benchmark data and how the Compensation Committee uses these data.
At the request of the Compensation Committee, Pay Governance conducts an annual review of the Company's
compensation peer group. This review ensures that the peer group companies remain appropriate from a business
and talent perspective and occurs at the second quarter Compensation Committee meeting because recent
financial and compensation data are generally available.
The Compensation Committee uses the following methodology, which formulates a peer group focused on the
industries reflected in the prior career experiences of approximately 250 of the Company's senior leaders:
•
All U.S. publicly traded companies in the following industries as the starting point:
Health care
Insurance
Technology
Pharma/Biotech/Life Sciences
•
Financial Services
•
Professional Services
Limit the list to the largest companies by revenue and market cap to avoid companies of significantly
smaller scope; and
Add major companies located near UnitedHealth Group's headquarters and primary operating locations to
reflect relevant geographic markets for talent.
32
32
Board of
1
Directors
At the fourth quarter Compensation Committee meeting, Pay Governance presents an annual review of the
market competitiveness of the Company's executive compensation program for the Company's executive
officers. The review compares the compensation opportunities provided to the Company's executive officers
to peer group companies on a position-by-position basis and on an aggregate basis.
•
Target total compensation of our named executive officers as a group in 2017, consisting of base salary, target
annual cash incentive award, target long-term cash incentive award and the grant date fair value of equity awards
(including performance shares at target) was between the 50th and the 75th percentiles of the market data for our
peer group.
Corporate
2
Governance
Executive
Compensation
Annual
4 Audit
5
Meeting
Elements of our Compensation Program
Other
Information
Overview
At the first quarter Compensation Committee meeting, the Compensation Committee determines pay
opportunities for each officer using the market competitiveness assessment from the previous fourth quarter
as a reference point. In addition, the Compensation Committee takes into consideration the Company's
performance against previously established performance goals, each officer's individual performance,
internal equity, the Executive Chairman and CEO's recommendations and other relevant business
performance that may not be adequately captured by the Company and individual officer goals.
Compensation Element
Base salary
Annual cash incentive awards
Long-term cash incentive awards
(no new awards after 2017
replaced with long-term
-
performance shares)
Equity awards
Board of
Directors
1
The compensation program for our named executive officers consists of the following elements:
34
=4
The companies that were included in the 2017 peer group and the four managed care companies are listed at the
end of this Compensation Discussion and Analysis.
33
33
1
2
Directors
Corporate
Governance
3
Board of
Annual
4 Audit
5
Meeting
Other
Information
Role of Management and CEO in Determining Executive Compensation
The Compensation Committee has the responsibility to approve and monitor all compensation for our executive
officers. Management recommends appropriate enterprise-wide financial and non-financial performance goals for
use in incentive compensation. Our Executive Chairman and CEO assist the Compensation Committee by
evaluating the performance of the executive officers that report directly to them and recommending compensation
levels for these executive officers.
Use of Tally Sheets and Wealth Accumulation Analysis
Executive
Compensation
When approving compensation decisions, the Compensation Committee reviews comprehensive tally sheet
information for each of our executive officers. These tally sheets are prepared by management and quantify the
elements of each executive officer's total compensation. The tally sheets include a summary of all equity awards
previously granted to each executive officer, the gain realized from past vesting or exercise of equity awards, the
projected value of accumulated equity awards based upon various stock price scenarios and compensation to be
paid under various potential employment termination scenarios. This is done to analyze the compensation each
executive officer has accumulated to date and to fully understand the amount the executive officer could potentially
accumulate in the future.
116%
David S. Wichmann
128
30,284
60,568
45
116%
John F. Rex
10,554
49,767
35,130
85,804
Paid
Award
182
Stephen J. Hemsley
Target)
(#)
(#)
(#)
(#)
Name
(% of
Actual
Shares Paid
21,108
Maximum
Shares
42,902
12,243
Value
Larry C. Renfro
Shares
46
46
The aggregate number of shares subject to equity awards made in 2017 for all employees was approximately 1%
of the Company's shares outstanding at the end of 2017.
The Company does not pay dividend equivalents on performance shares granted to employees. Unvested shares
of RSUs receive dividend equivalents, which are subject to the same terms as the RSUs and will be forfeited if the
underlying RSUs do not vest. The determination to pay dividend equivalents on RSUs was made after considering
market practices.
The Compensation Committee's equity award policy requires that all grants of equity be made at set times. We do
not have a specific program, plan or practice to time equity compensation awards to named executive officers in
coordination with our release of material information.
Equity Award Practices
Equity Awards
116%
16,501
28,450
14,225
60
Marianne D. Short
116%
16,501
28,450
14,225
60
Steven H. Nelson
116%
35,130
60,568
30,284
128
116%
Threshold Target
Shares
Modest US economic growth with a gradual increase in interest rates, and a more rapidly growing economy
in Brazil, with a stable Brazilian Real - U.S. Dollar exchange rate;
The use of performance shares as a component of the overall equity awards granted was based upon the
Compensation Committee's desire to encourage superior performance and build executive ownership; consideration
of competitive market data; the value of utilizing a balanced system to facilitate prudent decision-making and
mitigate risk; and conversations with shareholders about the desirability of this type of equity award as a central
component of a pay-for-performance program. The actual shares that were earned for the 2015-2017 performance
period were above target due to the Company's strong ROE and earnings growth performance and are set forth in
the table below as well as reflected in the 2017 Option Exercises and Stock Vested table:
Board of
1
2
Directors
Corporate
Governance
Executive
Annual
Other
4 Audit
5
39
6
Meeting
Information
At the beginning of 2017, the Compensation Committee believed that achievement of the annual incentive goals
required substantial performance on a broad range of initiatives contained in the 2017 business plan. These
initiatives included the following:
•
•
•
•
•
Grow enrollment in UnitedHealthcare medical benefit plans by approximately 1.4 million people (excluding
planned Individual ACA market exits);
Continue to enhance the quality and operations of our government benefit businesses to compensate for
continued expected funding pressures;
Compensation
The 2017 financial performance measures at target level represented year-over-year growth in revenues of
$14.2 billion, or 7.7%; year-over-year growth in operating income of $1.9 billion, or 14.7%; and year-over-year
increase in operating cash flows of $2.3 billion. These targets included expected financial results from the
acquisition of Surgical Care Affiliates, Inc. in March 2017, the impact of the one year moratorium of the Health
Insurance Industry Tax, and the view that there would be a continued challenging business environment in 2017.
The 2017 non-financial performance measures were based on survey data results and, at target levels,
represented increases over 2016 performance in all categories. These measures were viewed to be important to
longer-term financial success, customer satisfaction, and employee welfare that might not be immediately reflected
in annual financial results. The Compensation Committee was of the view that the breadth of financial and
non-financial performance measures for the 2017 annual cash incentive award would motivate executive officers to
achieve results that contribute to value creation for our shareholders on a long-term basis and avoid excessive
risks.
Context for the 2017 Annual Cash Incentive Plan Performance Goals
The Company's annual incentive plan allows for adjustments to the Company's reported results for the impact
of changes in accounting principles, extraordinary items and unusual or non-recurring gains or losses,
including significant differences from the assumptions contained in the financial plan upon which the incentive
targets were established. Adjustments to reported results are intended to better reflect executives' line of
sight/ability to affect payouts, align award payments with growth of the Company's business, avoid artificial
inflation or deflation of awards due to unusual or non-recurring items in the applicable period and emphasize
the Company's preference for long-term and sustainable growth. No adjustments have been made to the
Company's reported results for 2017.
6
Meeting
Information
Mr. Wichmann's base salary was increased to $1,300,000. There were no other changes to the base salaries of
the other named executive officers:
Name
Stephen J. Hemsley
David S. Wichmann
John F. Rex
Larry C. Renfro
Steven H. Nelson
Marianne D. Short
Annual Cash Incentive Awards
2017 Base Salary 2016 Base Salary
Employee Engagement
.
Employee Teamwork
1 point below
2016 results for
NPS; at 2016
results for
employee
engagement and
teamwork;
engagement and
teamwork
4 points above
2016 results for
NPS; 1 point
above 2016
results for
employee
engagement and
teamwork
7 points above
2016 results for
NPS; 2 points
above 2016
results for
employee
Long-Term Performance Shares
engagement; and
at threshold for
teamwork
Continue to innovate in commercial benefit products, service and distribution;
5
Deliver more effective and comprehensive clinical management, and continue expanding the proportion of
our spending under value-based contracts with our network;
Further improve our consolidated operating cost ratio after considering the impact of changes in business
mix.
Larry C. Renfro
Steven H. Nelson
Marianne D. Short
Target
Percentage
Target
Award Value
(% of Salary)
($)
Actual
Award Paid
($)
Paid
Award
John F. Rex
(% of Target)
2,600,000
5,000,000
192%
200%
2,600,000
4,250,000
163%
125%
1,062,500
2,000,000
200%
David S. Wichmann
Stephen J. Hemsley
Name
With respect to these initiatives, the Company significantly exceeded its enrollment targets, adding 1.8 million new
members (excluding planned individual ACA market exits), and improved net promoter scores in many, but not all,
of its 35 businesses. United Healthcare demonstrated sustained excellence in its Medicare plans by materially
increasing the percentage of members in 4+ Medicare Star rated plans through operational improvements that
elevated local plan quality. Optum was slightly below its revenue growth target, but achieved double digit
percentage revenue growth at its OptumHealth and OptumInsight businesses, and continued strong growth at
OptumRx. Optum also exceeded earnings growth projections and met or exceeded targeted market expansion and
consumers served growth targets. In addition, the amount of medical spend covered under value-based
arrangements increased to nearly $65 billion, the consolidated operating cost ratio decreased to 14.7% and the
Company achieved or made substantial progress on all of the other initiatives listed above.
Revenues and operating income for 2017 were above target levels. Cash flows from operations for 2017 were
significantly above target due to improved working capital driven by the Company's strong growth.
Non-financial performance measures were at or above target levels except for teamwork which, although at
threshold performance levels, still represents strong performance. The Company's current teamwork score is within
the top quartile of performers as measured by the external vendor who calculates this measure. Adjusted earnings
per share increased 25% in 2017, and the Company's total shareholder return was 40%, reflecting continued
successful performance in an uncertain environment.
While the Company uses defined performance measures and weightings to determine an overall funding level for
the Company's bonus pool, individual annual cash incentive awards are not purely formulaic. In determining the
amount of the actual annual incentive award to be paid, the Compensation Committee considers the CEO's
recommendations for executive officers, the business performance underlying each of the performance measures,
macroeconomic factors disproportionately impacting business performance, individual executive performance,
market positioning, teamwork and related matters. The Compensation Committee retains discretion to pay an
annual incentive award that is higher or lower than the performance level achieved based on these considerations
if threshold performance is achieved on any performance measure. However, the overall pool cannot be exceeded.
40
40
1
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
Meeting
Information
Determination of 2017 Annual Cash Incentive Award Opportunities
At the beginning of each year, the Compensation Committee approves an "annual cash incentive target
opportunity" for each executive officer as a percentage of the executive officer's base salary.
The target opportunities established for the named executive officers are intended to increase collaboration,
teamwork and accountability across the enterprise, to recognize the skills and versatility of each executive officer
and to reflect relative contributions to the success of the overall enterprise. At the end of the fiscal year, the
Compensation Committee reviews the Company's performance against the goals set at the beginning of the year
and determines annual cash incentive awards. The Compensation Committee has the discretion to increase or
decrease the awards made in view of actual performance, individual contributions and overall business and market
conditions.
The Compensation Committee evaluated the Company's 2017 performance against the performance goals, overall
business results, economic conditions and individual performance objectives, and exercised its discretion to adjust
the 2017 annual cash incentive awards such that they represented between 163% and 192% of the targets set for
named executive officers. In exercising this discretion, the Compensation Committee considered the dollar amounts
of the awards as opposed to the percentage of target paid. The target percentages for annual cash incentive
awards to our named executive officers and the actual 2017 annual cash incentive awards paid are set forth in the
table below. An explanation of how the individual amounts were determined follows the table.
2017 Annual Cash Incentive Awards
Enhance customer service and increase the Company's net promoter score across all business platforms;
Execute on Optum's growth and alignment initiatives, with major focus areas including care delivery,
technology-enabled services and pharmacy care services; and
188%
4 Audit
Annual
Directors
Corporate
Governance
Executive
Annual
4 Audit
5
Compensation
Meeting
Other
Information
The following table sets forth the performance measures and goals established for 2017, as well as actual 2017
performance results:
2
$15.2 billion
$13.6 billion
Measure
Weight
Threshold
Performance
Target
Performance
Maximum
Performance
Actual 2017
Performance
Revenue*
1/3
$189.1 billion
$199.0 billion
2017 Performance
1
Board of
38
Increase From
2017 to 2016
($)
1,000,000
($)
(%)
1,300,000
(23)%
1,300,000
1,100,000
18%
850,000
800,000
6%
1,100,000
1,100,000
0%
900,000
700,000
29%
800,000
800,000
0%
2017 Annual Incentive Plan Performance Goals
Annual cash incentive awards may be paid our Company meets or exceeds annual performance goals for that
year as determined by the Compensation Committee. In establishing the performance measures for the 2017
annual cash incentive awards, the Compensation Committee sought to align broadly the compensation of our
executive officers with key elements of the Company's 2017 business plan. Development of the Company's 2017
business plan was a robust process that involved input from all of the Company's business units and was reviewed
with the Company's Board of Directors in the fourth quarter of 2016 and the first quarter of 2017. These
performance measures are based on enterprise-wide measures because the Compensation Committee believes
that the named executive officers share the responsibility to support the goals and performance of the Company as
key members of the Company's leadership team.
$209.0 billion
Other
$201.2 billion
1/3
Affirmed that Mr. Hemsley would not participate in the annual cash incentive plan in 2018.
- Vice Chairman
Larry C. Renfro
In light of the broader responsibilities, Mr. Renfro will continue to pursue, including his expanding role as Vice
Chairman of the Company and his focus on enterprise growth, innovation, venture activities and other efforts, the
Compensation Committee made the following changes:
•
Approved an annual cash incentive target opportunity of 200% of base salary.
•
Awarded 7,934 stock options, 1,286 restricted stock units and 2,571 performance shares. The stock options
and restricted stock units vest ratably over a four-year period and the performance shares have the same
three-year cliff vesting schedule and performance criteria as the performance shares granted in February
2017.
Entered into an amendment to his employment agreement, effective August 15, 2017 that replaces
subsections (c) and (d) of the definition of "Good Reason," in Section 3.B.v of the employment agreement
with the following:
(c) makes changes so that Mr. Renfro no longer holds the position of Vice Chairman of the Company
or another position with equivalent or greater responsibilities; or (d) makes changes to his reporting
relationship that result in him not reporting to the CEO of the Company.
•
The changes referred to above are also reflected in the description of various elements of compensation that
follow.
Base Salary
The Compensation Committee generally determines base salary levels for our named executive officers early in the
fiscal year. In February, the Compensation Committee approved an increase in the base salary for Mr. Rex to
$850,000, which was effective February 19, 2017. This increase reflected Mr. Rex's strong performance and to
align his salary to market data. Mr. Nelson's base salary was increased to $900,000 effective April 2, 2017 in
connection with increases in responsibilities when he assumed the role of CEO, UnitedHealthcare. In connection
with the CEO succession on September 1, 2017, Mr. Hemsley's base salary was decreased to $1,000,000 and
37
36
Board of
1
2
Directors
Corporate
Governance
Executive
Compensation
Annual Compensation
Approved a reduction in annual base salary to $1,000,000 effective September 1, 2017.
•
Stephen J. Hemsley - Executive Chairman
$12.61 billion
Cash Flows from
$10.3 billion
$14.835 billion
$12.1 billion
$17.06 billion
$13.9 billion
Operations*
Stewardship:
1/3
•
Net Promoter Score
•
1
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Annual
Other
4 Audit
5
Meeting
Information
Operating Income*
200%
Between target
and maximum for
NPS; at target for
employee
4,000,000
Other
4 Audit
5
6
Meeting
Information
•
Excluded from 2016 and 2017 results was the estimated impact (approximately $0.30 per share) of
federally mandated one year moratorium in 2017 for the collection of the health insurance industry tax. This
moratorium was a provision included in the 2016 federal government budget; and
Excluded from 2017 results was the income tax benefit ($1.22 per share) as a result of the Tax Cuts and
Jobs Act enacted on December 22, 2017, which required the revaluation of the Company's net deferred tax
liabilities.
It was not possible to predict the occurrence, or impact to the Company, of any of these four adjustments when the
goals for the 2015-2017 long-term plans were set. Since all of these events were outside of the control of
management, but would in aggregate have resulted in a net benefit to management, the Committee excluded them
from final results.
Annual
2015-2017 Long-Term Cash Incentive Awards
For the 2015-2017 performance period, the target opportunity for each executive officer was 50% of average base
salary, and the maximum cash incentive award that an executive officer could earn was set by the Compensation
Committee to be equal to two times the applicable long-term cash incentive target opportunity. In choosing this
target opportunity, the Compensation Committee believed it was important to provide the same relative target
opportunity to all of the named executive officers to increase collaboration, teamwork and accountability across the
enterprise and to recognize the skills and versatility of each executive officer.
The target percentages for long-term cash incentive awards to our named executive officers and the actual
long-term cash incentive awards paid for the 2015-2017 performance period are set forth in the table below:
Long-Term Cash Incentive Award
Name
Stephen J. Hemsley
David S. Wichmann
Larry C. Renfro
Marianne D. Short
Target
Percentage
At the beginning of each three-year performance period, the Compensation Committee approves a “long-term cash
incentive target opportunity" for each executive officer as a percentage of the executive officer's average base
salary over the performance period. At the end of a performance period, the Compensation Committee reviews the
Company's achievement of the performance goals set at the beginning of the performance period and determines
long-term cash incentive awards based on such performance. In determining these awards, the Compensation
Committee can use discretion to increase or decrease the actual awards in view of actual performance, individual
contributions and overall business and market conditions.
Threshold
Executive
Compensation
Directors
•
Ongoing improvements to our consolidated operating cost ratio on a comparable business mix basis; and
Effective cross-enterprise collaboration among various business units for the benefit of customers and our
overall reputation and performance.
To achieve maximum performance for both the long-term cash incentive plan and the performance share plan, the
Company would have to achieve cumulative three-year earnings per share ("EPS") performance of $22.94 and an
average return on equity ("ROE”) of 21.6%. These maximum performance levels corresponded to a compound
annual growth rate in EPS of 16.2% over the three-year period. For long-term compensation purposes (see
adjustments described below), the Company generated cumulative EPS of $22.21 which was between target and
maximum performance levels, and accompanying ROE of 19.1%, which was between the threshold and target
levels. This represented a compound annual EPS growth rate of 15.6% over the three-year performance period.
Factors that positively or negatively influenced our results subsequent to the approval of the long-term business
plan in early 2015 included:
Continued relatively favorable medical cost trend experience over the three-year period;
•
.
Significant unexpected losses in individual health insurance exchange products in 2015 and 2016;
Significant losses from a new state Medicaid managed care contract;
Acquisitions of Catamaran in mid-2015, and Surgical Care Affiliates, Inc. in 2017;
Corporate
Governance
•
Greater than anticipated downward rate pressure in Medicare Advantage payment rates received from the
federal government.
Similar to the annual incentive plan, the Company's long-term incentive plan allows for adjustments to the
Company's reported results in determining long-term incentive plan awards, namely adjustments that account for
the impact of changes in accounting principles, extraordinary items and unusual or non-recurring gains or losses.
Four adjustments were made in determining 2015-2017 performance:
•
Excluded from 2016 results was the recognition of the $350 million negative impact ($0.23 per share) for
our estimated share of guaranty association assessments resulting from the liquidation of Penn Treaty.
Penn Treaty is completely unaffiliated with, was never owned by, and does not share any executive officers
or directors with, UnitedHealth Group. Under state guaranty association laws, we and other insurance
companies were required to cover a portion of the Penn Treaty's obligations to policyholders when it
became insolvent. This charge will be funded over several years;
Excluded from 2016 and 2017 results was the income tax benefit ($0.46 per share) from adoption of
ASU 2016-09, which modifies several aspects of the accounting for share-based payment awards, including
income tax consequences;
44
1
Board of
2
Challenging Brazilian economy and significant devaluation of the Brazilian Real against the U.S. Dollar; and
Target
(% of 3-Year
Award
2,200,000
1,718
405,449
810,898 470,400 116%
The primary factors considered by the Compensation Committee in the determination of the long-term cash
incentive award amounts were achievement of the 2015-2017 EPS and ROE goals between target and maximum
45
45
Board of
1
2
1,116,666 647,700 116%
Directors
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
performance levels. Because the Long-Term Cash Incentive Award program is being phased out, with no new
participants added after 2016, Mr. Rex and Mr. Nelson did not participate in the program.
2015-2017 Performance Share Awards
Corporate
Governance
558,333
2,366
50%
Award
Average
Value
Maximum
Award
Value
Actual
Paid
Award
Award
Paid
(% of
Base Salary)
($)
($)
($)
($)
Target)
50%
2,724
50%
2,410
642,756
568,718
1,285,512 745,600 116%
1,137,436 659,800 116%
•
Development and expansion of the Optum Local Care Delivery platform and capabilities;
50%
Information
•
•
•
developing new business platforms addressing multibillion dollar growth opportunities; developing and
implementing more modern and engaging approaches to serving care providers and consumers through
intuitive technologies; enterprise wide technological advancement and simplification initiatives; and
expanded development of global businesses and operations.
Mr. Nelson's individual performance considerations included his strong performance following assumption of
the duties of CEO of UnitedHealthcare, including the business results described above, and additional
enterprise responsibilities as part of the Office of the Chief Executive.
Mr. Rex's individual performance considerations included strong performance as Chief Financial Officer and
additional enterprise responsibilities as part of the Office of the Chief Executive; oversight of all finance,
audit and financial compliance functions across the enterprise and responsibility for treasury, long-term
capital allocation and financial planning, mergers and acquisitions and venture and private equity
investment activity.
Mr. Renfro's individual performance considerations included strong leadership as Vice Chairman of
UnitedHealth Group in addition to his responsibilities as CEO of Optum; significant progress towards the
multi-year "One Optum" strategic direction, related development of business partnerships and continued
growth, including the launch of Optum Ventures; related organizational and operational simplification
initiatives; recruitment of high level senior talent from nontraditional sources to strengthen and diversify the
Optum leadership team; and successful acquisition and integration activities focused on the care delivery
business.
Ms. Short's individual performance considerations included her strong leadership as a UnitedHealth Group
executive in general; additional enterprise responsibilities as part of the Office of the Chief Executive;
leadership of the legal department; oversight of enterprise wide compliance and privacy matters;
participation in cost management initiatives; and distinctive leadership and judgment in ongoing litigation
and business matters.
The Compensation Committee did not make specific assessments of, quantify or otherwise assign relative
weightings to the factors listed above as it reached its decisions with respect to any of the named executive
officers. See the 2017 Summary Compensation Table and other related compensation tables below for details
regarding 2017 total compensation for the named executive officers.
Long-Term Incentive Compensation
Information
Long-term incentive compensation, consisting of the long-term cash incentive program and equity awards in 2017,
represents the largest portion of executive officer compensation. This combination of long-term incentives provides
a compelling performance-based compensation opportunity, aids in aligning and retaining the senior management
team and accelerates the advancement of business unit capabilities across the enterprise. Going forward,
beginning with the 2017-2019 performance period, all long-term incentives will be delivered in the form of equity, as
the Committee eliminated future long-term cash awards.
42
42
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Annual
4 Audit
5
Meeting
The Compensation Committee determined that equity-based compensation for 2017 should include grants of
performance shares, RSUs and non-qualified stock options to achieve balance and effectiveness in our equity-
based compensation and to align the interests of our executive officers and our shareholders. The mix of equity-
based compensation granted in February 2017 was as follows, based on the grant date fair value of the total
award: 50% performance shares, 25% RSUs and 25% non-qualified stock options. Performance share grants were
selected to ensure a strong pay-for-performance alignment of the Company's compensation program with drivers of
Meeting
6
5
Continued growth and alignment of the Optum businesses, including growth in technology-enabled services
and specialty networks products and services, driving distinctive revenue, margin and earnings
performance;
182%
150%
1,350,000
2,500,000
185%
100%
800,000
1,500,000
188%
In determining the 2017 annual cash incentive award amounts, the Compensation Committee took into account the
Company's performance against the 2017 annual performance goals set forth in the table above, business results
described under "Context for the 2017 Annual Cash Incentive Plan Performance Goals," including each executive
officer's role in achieving those results and a qualitative assessment of individual performance and
accomplishments. Individual factors considered are as follows:
•
Mr. Wichmann's individual performance considerations included his strong leadership as President of
UnitedHealth Group until September 1, 2017 and as CEO since that date; this included leadership in
41
1
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
Other
Information
For Mr. Hemsley, the Compensation Committee coordinates a formal performance evaluation by all
non-management directors. The 2017 performance evaluation focused on the following areas: strategic
focus; vision and values; corporate performance; Board relations; leadership and organization effectiveness;
corporate reputation and government relations; and overall performance. The Compensation Committee
concluded that Mr. Hemsley's performance was outstanding in each category.
Long-Term Awards
Commercial risk-based growth in all years from expansion into exchanges and growth in existing markets,
leveraging enhanced products, services and distribution. Commercial fee-based enrollment declines in
2015, followed by modest expansion thereafter;
Continued funding pressure in government businesses;
An expectation that medical cost trends would be consistent with historical levels and that there would not
be net favorable or unfavorable development in previously reported medical cost payable estimates;
•
Delivery of more effective and comprehensive clinical management;
•
Continued enhancement of the quality and operations of our government businesses to compensate for
continued expected funding pressures;
43
43
Medicaid, Medicare Advantage, Medicare Supplement, Part D and international enrollment growth over the
three-year period;
Board of
2
Directors
•
Executive
Compensation
Annual
4 Audit
5
Meeting
shareholder value. The Compensation Committee's decision to grant performance shares was informed, in part, by
past discussions held between the Company and certain of its shareholders regarding the merits of performance
shares in a pay-for-performance executive compensation program. RSU grants were selected because they are full
value shares with time vesting and, as such, provide added retention value. Non-qualified stock options were
selected because they have value only if the Company's stock price increases and, as such, provide incentives for
sustained long-term stock appreciation.
Other
1
—
Corporate
Governance
Threshold
Weight Performance
2015-2017 Long-Term Cash Incentive and Performance Share Goals and Context
2015-2017
Performance Measure
Target
Performance
Maximum
Performance
The long-term cash incentive award and performance share programs create financial incentives for achieving or
exceeding three-year financial goals for the enterprise. The earned long-term cash incentive award and
performance shares for the 2015-2017 performance period were based on achieving the following performance
results versus the pre-set goals:
Actual
2015-2017
Performance
Cumulative Earnings Per Share
Return on Equity
$20.12
17.60%
$21.30
50%
50%
$22.21
•
•
•
$22.94
⋅
Other key assumptions and elements of the long-term business plan were:
•
19.10%
21.60%
19.60%
The performance measures and goals for the 2015-2017 performance period were established during the first
quarter of 2015 based on the Company's long-term business plan. The first year of the long-term business plan
was based on the Company's 2015 business plan. Subsequent years were based on assumptions and growth
initiatives developed in conjunction with the Company's business units and reviewed by the Board of Directors.
Year ($)(2)
Executive Chairman (1)
2017 1,206,538
Stephen J. Hemsley
Stock
Awards
Option
Awards
($)(3) ($)(4)
8,325,219 2,775,462
7,012,640 2,337,015
Bonus
($)
2016 1,300,000
2017 1,162,308
Salary
Non-Equity
The following table provides certain summary information for the years ended December 31, 2017, 2016 and 2015
relating to compensation paid or granted to, or accrued by us on behalf of, our named executive officers.
2017 Summary Compensation Table*
Information
Compensation
Meeting
5
Name and Principal Position
($)(5)
137,358
All Other
Compensation
($)(7)
David S. Wichmann
CEO
4 Audit
8,325,566 2,775,328
14,518,164
145,679
3,672,000
7,012,546 2,337,939
2015 1,350,000
15,843,911
148,398
4,908,500
18,454,153
170,481
230,853
5,745,600
($)
Total
Change in
Pension Value
and
Non-Qualified
Deferred
Incentive Plan Compensation
Earnings
($)(6)
Other
Board of
Directors
Executive
Compensation
1
50
50
Walgreens Boots Alliance, Inc.
Wells Fargo & Company
United Parcel Service, Inc.
Visa, Inc.
U.S. Bancorp
The Goldman Sachs Group, Inc.
The Travelers Companies, Inc.
The Allstate Corporation
Target Corp.
Prudential Financial, Inc.
Procter & Gamble Co.
Pfizer Inc.
Oracle Corporation
Morgan Stanley
4,909,800
Merck & Co. Inc.
MetLife, Inc.
Microsoft Corporation
2
Annual
Corporate
Governance
Annual
Corporate
Governance
2
Board of
Directors
51
During fiscal 2017, Messrs. Ballard, Lawson, Witty and Dr. Wilensky served on the Compensation Committee.
Mr. Witty stepped down from the Board on March 13, 2018. None of these persons had ever been an officer or
employee of the Company or any of its subsidiaries. Furthermore, during 2017, none of these persons served as a
member of the compensation committee (or other board committee performing equivalent functions) or as a director
of another entity where an executive officer of such entity served on our Compensation Committee or Board.
Compensation Committee Interlocks and Insider Participation
Gail R. Wilensky, Ph.D.
William C. Ballard, Jr.
Rodger A. Lawson (Chair)
The Compensation Committee has reviewed and discussed the above Compensation Discussion and Analysis with
management. Based on its review and discussions, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in the proxy statement and incorporated by
reference into the Company's Annual Report on Form 10-K for the year ended December 31, 2017. This report
was provided by the following independent directors who comprise the Compensation Committee:
Compensation Committee Report
Information
Meeting
6
5
4 Audit
Other
Executive
Compensation
216,974
104,130
2016 1,100,000
John F. Rex
Stephen J. Hemsley
David S. Wichmann
Name
(2) Amounts reported reflect the base salary earned by named executive officers in the years ended
December 31, 2017, 2016 and 2015. Amounts reported for 2017 include the following amounts deferred by
the named executive officers under our Executive Savings Plan:
(1) Mr. Hemsley served as Chief Executive Officer through August 31, 2017, at which time Mr. Wichmann
succeeded Mr. Hemsley as Chief Executive Officer. Mr. Hemsley has served as Executive Chairman since
September 1, 2017.
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation
program necessary for an understanding of the information disclosed in this table. Please see "Executive
Employment Agreements" below for a description of the material terms of each named executive officer's
employment agreement.
86,496
5,682,147
5,798,127
100,155
6,494,869
2,715,170 905,169 1,970,400
2,325,023 774,849 1,798,100
2,325,202 775,156 1,662,600
2015 832,693
*
and Chief Legal Officer
2016 800,000
2017 800,000
Larry C. Renfro
Executive Vice President
Steven H. Nelson
Amounts reported for 2015 reflect one additional pay period.
General Mills, Inc.
Annual
Executive
Compensation
Corporate
Governance
Directors
2
1
Board of
$48,000
$66,000
$50,538
$69,738
$72,392
Deferred
Amount
52
52
Marianne D. Short
Marianne D. Short
Executive Vice President and CEO,
UnitedHealthcare
7,580,444
1,400,000
7,930,845
88,205
2,000,000
11,581,817
144,724
3,686,700
4,950,071 1,650,322
3,750,131 1,250,201
3,125,283 1,875,049
2016 721,923
Executive Vice President and CFO
2017 842,308
John F. Rex
2015 1,150,000
12,316,446
142,216
4,474,500
4,950,066 1,649,664
62,968
7,185,223
Larry C. Renfro
2017 1,100,000
22,470
2,500,000
11,589,358
152,265
3,686,700
4,950,071 1,650,322
3,150,092 1,050,190
2015 1,150,000
2017 857,692
Steven H. Nelson
17,389,976
12,324,995
4,474,500
4,950,066 1,649,664
2016 1,100,000
Vice Chairman and CEO, Optum (8)
14,236,877
173,490
4,647,700
6,236,636 2,079,051
150,765
General Electric Company
Benefits
Express Scripts Holding Company
Other
Annual
Executive
Compensation
Corporate
Governance
Directors
2
1
Board of
47
In addition to generally available benefits, our executive officers are eligible to receive supplemental long-term
disability coverage equal to 60% of base salary, and all of our named executive officers, other than Mr. Hemsley,
receive supplemental group term life insurance coverage of $2 million. Executive officers are also eligible to
participate in our non-qualified Executive Savings Plan. See the 2017 Non-Qualified Deferred Compensation table
In 2006, the accrued value of the benefit payable under Mr. Hemsley's individual supplemental executive retirement
plan agreement (the “SERP") was frozen based on his then-current age and average base salary and converted
into a lump sum cash benefit of $10,703,229. On June 7, 2016, the Company amended Mr. Hemsley's SERP to
convert the $10,703,229 cash benefit into deferred stock units ("DSUS”) to further align Mr. Hemsley's interests
with those of shareholders, allow Mr. Hemsley to earn a return on the SERP balance that will be tied to the
Company's stock price performance, and provide the opportunity for Mr. Hemsley to receive deferred dividend
equivalents on the SERP balance. Pursuant to the amended SERP, the number of DSUs issued was based on the
amount of the cash benefit divided by the average closing price of the Company's common stock over the
preceding five trading days from the date of conversion of the cash balance. Mr. Hemsley is eligible to receive
dividend equivalents in the form of additional DSUs, which are paid at the same rate and at the same time that
dividends are paid to the Company's shareholders. During 2017, Mr. Hemsley received dividend equivalents in the
form of an additional 1,205 DSUs that were added to the SERP balance. Upon termination of Mr. Hemsley's
employment for any reason, the DSUs held in the SERP will be converted into shares of common stock and will be
paid six months and one day after his termination.
Supplemental Retirement Benefits
Other Compensation
The grant date fair values and terms of these equity awards are discussed in the 2017 Grants of Plan-Based
Awards table.
31,539
5,646
11,291
4 Audit
36,592
5
Meeting
for other executive officers who are not direct reports of the CEO, two times base salary.
•
for executive officers who are direct reports of the CEO, three times base salary; and
•
for the CEO, eight times base salary;
•
for the Executive Chairman, eight times base salary;
•
The Compensation Committee believes that executive stock ownership aligns management's interests with those of
shareholders and fosters a long-term outlook, while also mitigating compensation risk. Under our stock ownership
guidelines, each executive officer must beneficially own at least the following amounts of the Company's common
stock within five years of the executive officer's election or appointment as an executive officer:
Executive Stock Ownership Guidelines and Stock Retention Policy
Other Compensation Practices
The Company has a policy of entering into employment agreements with each of our named executive officers.
These employment agreements are described in greater detail in “Executive Employment Agreements."
Employment Agreements and Post-Employment Payments and Benefits
We do not provide perquisites such as excise tax gross-ups, company automobiles, security services, private jet
services, financial planning services or club memberships to our executive officers. We prohibit personal use of
corporate aircraft by any executive officer unless the Company is reimbursed for the full incremental cost to the
Company of such use. Because there is essentially no incremental cost to the Company, we permit an executive
officer's family member to accompany the executive officer on a business flight on Company aircraft provided a
seat is available.
Perquisites
for additional information regarding contributions, earnings and distributions for each named executive officer under
the Executive Savings Plan. Our Executive Savings Plan does not provide for guaranteed or above-market interest.
Information
6
Stock options and stock appreciation rights ("SARS") do not count towards satisfying the ownership requirements
under the guidelines, regardless of their vesting status, and performance shares do not count towards satisfying the
ownership requirements until they are vested. Time-based RSUs and restricted stock awards are counted toward
the satisfaction of the ownership requirements. The Compensation Committee periodically reviews compliance with
the ownership requirements. As of April 10, 2018, all of our named executive officers were in compliance with the
ownership requirements, including Mr. Wichmann, who owned shares with a value equal to 140 times his base
salary.
6,550
63,730
David S. Wichmann
Stephen J. Hemsley
Name
In February 2017, the Compensation Committee granted the following target number of performance shares, RSUs
and stock options to our named executive officers:
Equity Awards - 2017
Information
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
1
Other
John F. Rex
13,100
Larry C. Renfro
Marianne D. Short
11,408
22,816
43,561
7,798
15,595
63,730
11,408
22,816
96,706
17,311
34,621
Award (#)
(#)
Shares (#)
Annual
Stock Option
Annual
RSU
Award
Target Number
of Performance
Steven H. Nelson
The Board has established a stock retention policy for executive officers that are subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which includes our named executive officers.
Under this policy, Section 16 officers are generally required to retain for at least one year one-third of the net
shares acquired upon the vesting or exercise of any equity awards.
48
48
Bank of America Corporation
Anthem Inc.
American International Group, Inc.
Ameriprise Financial, Inc.
AmerisourceBergen Corporation
Amgen Inc.
American Express Company
Aetna Inc.
Accenture, plc
AbbVie Inc.
Abbott Laboratories
3M Company
Humana Inc.
CIGNA Corp.
Anthem Inc.
Aetna Inc.
Managed Care Companies
Peer Group and Managed Care Companies
Internal Revenue Code Section 162(m)(6) addresses the tax deductibility of compensation paid by health insurance
providers, including the Company. Section 162(m)(6) provides an annual tax deduction limit of $500,000 per person
per year for compensation that we pay to any of our employees, directors, officers and any other individuals who
provide services to or on behalf of the Company. Any outstanding stock options and SARs that were granted prior
to 2010 are not subject to the tax deduction limitation. While the Committee considers the impact of
Section 162(m)(6), it believes that shareholder interests are best served by not restricting the Committee's
discretion and flexibility in crafting the executive compensation program, even if non-deductible compensation
expenses could result. The Committee also considers the accounting consequences of its compensation decisions.
Accounting and Tax Considerations
Berkshire Hathaway Inc.
Best Buy Co., Inc.
As discussed in "Enterprise-Wide Incentive Compensation Risk Assessment," a compensation risk assessment is
performed annually and the results are reviewed with the Compensation Committee.
Biogen Inc.
Cardinal Health, Inc.
Medtronic plc
McKesson Corporation
MasterCard Incorporated
JPMorgan Chase & Co.
Johnson & Johnson
International Business Machines Corp.
Humana Inc.
Hewlett-Packard Company
HCA Healthcare
Gilead Sciences Inc.
Peer Group
Eli Lilly and Company
CVS Health Corporation
Citigroup, Inc.
Cisco Systems, Inc.
Cargill, Incorporated
CIGNA Corp.
Bristol-Myers Squibb Company
In addition, our Compensation Committee retains discretion to adjust compensation for quality of performance,
adherence to Company values and other factors.
Information
Meeting
If the Board of Directors determines that an executive officer has engaged in fraud or misconduct, the Board of
Directors may take a range of actions to remedy the misconduct, prevent its recurrence and impose such discipline
as would be appropriate, including, without limit: (i) terminating employment and (ii) initiating legal action against
the executive officer. In addition, with respect to our senior executives, including our named executive officers, if
the fraud or misconduct causes, in whole or in part, a material restatement of the Company's financial statements,
action may include (a) seeking reimbursement of the entire amount of cash incentive compensation awarded to the
executive officer, if the executive officer would have received a lower (or no) cash incentive award if calculated
based on the restated financial results; (b) canceling all outstanding vested and unvested equity awards subject to
the clawback policy and requiring the executive officer to return to the Company all gains from equity awards
realized during the 12-month period following the filing of the incorrect financial statements; and (c) seeking
reimbursement of the entire amount of any bonus paid.
Potential Impact on Compensation from Executive Misconduct/Compensation Clawbacks
In general, SEC rules prohibit uncovered short sales of our common stock by our executive officers, including the
named executive officers. Accordingly, our insider trading policy prohibits short sales of our common stock by all
employees and directors. Our insider trading policy prohibits hedging transactions by all directors, executive officers
and employees and requires advance approval of the Compensation Committee of any pledging of common stock
by directors, executive officers and other members of management. In 2017, no executive officer or director sought
or received advance approval from the Compensation Committee regarding pledging transactions, and no executive
officer had any pledges outstanding.
Transactions in Company Securities; Prohibition on Hedging and Short Sales
Information
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
Directors
2
1
Board of
Consideration of Risk in Named Executive Officer Compensation
Our compensation programs are balanced, focused on long-term pay-for-performance, allow for discretion and are
overseen by an independent Compensation Committee. The Compensation Committee believes that the design of
the compensation program for our executive officers does not encourage excessive or unnecessary risk-taking, as
illustrated by the following list of features:
•
•
6
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
2
FedEx Corporation
1
49
49
We have a clawback policy that entitles the Board of Directors to seek reimbursement from any executive
involved in fraud or misconduct causing a restatement of financials, or violation of certain employment
agreement provisions, including any non-compete, non-solicit or confidentiality provisions. The executive
would be required to reimburse the Company the entire amount of a bonus paid, not just the amount that
would not have been earned had the executive received a lower award based on the restated earnings.
We generally require executive officers to hold, for at least one year, one-third of the net shares acquired
upon vesting or exercise of any equity award granted; and
We have stock ownership guidelines for our executive officers;
Our equity awards are delivered through a balanced mix of performance shares, RSUs and stock options
to encourage sustained performance over time;
Our annual cash bonus program includes a variety of financial and non-financial measures that require
substantial performance on a broad range of initiatives;
•
Board of
4 Audit
Directors
6
2,500,034
15,595 31,1907.798
2/8/2017
RSU Award(4)
47
2/8/2017
Performance Share Award (3)(4)
956,250 1,062,500 2,125,000
Annual Cash Incentive Award (2)
John F. Rex
946,277
1,829,051
160.31
194.50
30,031
8/15/2017
1,250,097
Stock Option Award(4)
2/8/2017
|
2/8/2017
RSU Award (4)
5,142
2,571
8
8/15/2017
Performance Share Award (3)(4)(5)
Stock Option Award(4)(5)
3,657,633
2/8/2017
Performance Share Award (3)(4)
Annual Cash Incentive Award (2)
Larry C. Renfro
1,250,201
160.31
43,561
1,980,000 2,200,000 4,400,000 69 22,816 45,632 ==
946,437
= = = = = 4,866 63,730
2/8/2017
David S. Wichmann
2,775,462
160.31
96,706
2/8/2017
Stock Option Award (3)
--- 17,311 - 2,775,126
Annual Cash Incentive Award (2)
5,550,093
RSU Award (4)
34,621 69,242
104
2/8/2017
Performance Share Award (3)(4)
2,340,000 2,600,000 5,200,000
Annual Cash Incentive Award (2)
2/8/2017
RSU Award (4)(5)
2,340,000 2,600,000 5,200,000
2/8/2017
Stock Option Award (4)
8/15/2017
RSU Award(4)(5)
1,828,816
1,892,680
3,657,633
| | | |
Performance Share Award (3)(4)
11,408
RSU Award(4)
9,731 19,462
29
8/15/2017
Performance Share Award (3)(4)(5)
22,816 45,632
69
2/8/2017
8/15/2017
11,408
1,286
500,060
(2) Amounts represent estimated payouts of annual cash incentive awards granted under our Executive Incentive
Plan in 2017. The Executive Incentive Plan permits a maximum annual bonus pool for executive officers equal
to 2% of the Company's net income (as defined in the plan) and no executive officer may receive more than
25% of such annual bonus pool. The Compensation Committee has generally limited annual cash incentive
payouts to not more than two times the target amount, and the maximum amounts shown for each named
executive officer equal two times each executive officer's target amount. In order for any amount to be paid,
the Company must achieve approved performance measures of (i) revenue, (ii) operating income, (iii) cash
flow, (iv) net promoter score, (v) employee engagement and (vi) employee teamwork. The estimated threshold
award represents the amount that may be paid if threshold performance is achieved on each of the
performance measures. Once threshold performance is achieved, the Compensation Committee has the
discretion to pay an award. The actual annual cash incentive amounts earned in connection with the 2017
awards are reported in the 2017 Summary Compensation Table.
Other
Information
Meeting
6
5
4 Audit
Annual
(3) Amounts represent grants under the 2011 Stock Incentive Plan with the terms set forth below. In addition, the
RSUs are eligible to receive dividend equivalents, which are subject to the same terms as the RSUs and will
be forfeited if the underlying RSUs do not vest. No dividend equivalents are paid on performance shares.
Executive
Compensation
Directors
2
1
Board of
55
(1) The actual value to be realized by a named executive officer depends upon the appreciation in value of the
Company's stock and the length of time the award is held. No value will be realized with respect to any stock
option award if the Company's stock price does not increase following the grant date. For a description of the
assumptions used in computing grant date fair value for stock option awards pursuant to FASB ASC
Topic 718, see Note 11 to the Consolidated Financial Statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2017. The grant date fair value of each RSU award and
targeted grant date value of each performance share award was computed in accordance with FASB ASC
Topic 718 based on the closing stock price on the grant date.
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation
program necessary for an understanding of the information disclosed in this table.
Corporate
Governance
*
*
RSU Award
5
99
56
Except as provided in footnote 4 to the Outstanding Equity Awards at 2017 Fiscal Year-End table with respect to
Messrs. Hemsley, Wichmann, Renfro and Nelson.
Unvested award will vest in full upon death or disability.
Unvested award will vest in full if, within two years of a change in
control, an executive terminates employment for Good Reason or is
terminated without Cause (i.e., "double trigger" vesting), as these
terms are defined in the award agreement.
Unless the executive officer is retirement-eligible, award is subject
to earlier termination upon certain events related to termination of
employment.
If the executive officer is retirement-eligible, upon retirement, the
number of performance shares that are earned at the end of the
performance period based on actual performance, if any, will vest
as if the executive officer had been continuously employed
throughout the entire performance period, provided the executive
officer had served for at least one year of the performance period.
Upon death, disability or termination of employment for Good
Reason or other than for Cause (as these terms are defined in the
award agreement), the executive officer will receive at the end of
the applicable performance period, a pro rata number of
performance shares that are earned, if any, based on the number
of full months employed plus, if applicable, the number of months
for any severance period.
Award Type and Vesting Terms
Performance Share Award (3-year
performance period with cliff
vesting)
a change in control, an executive terminates employment for Good
Reason or is terminated without Cause (i.e., “double trigger"
vesting). The number of performance awards that vest will be
dependent upon the performance vesting criteria that have been
satisfied.
.
.
•
(4-year ratable vesting)
Stock Option Award
and
(4-year ratable vesting*)
Termination Provisions
($)(1)
905,169
31,539
RSU Award(4)
2/8/2017
Performance Share Award (3)(4)
1,215,000 1,350,000 2,700,000
Annual Cash Incentive Award (2)
Steven H. Nelson
250,000
2/8/2017
1,829,051
63,730
7,934
8/15/2017
Stock Option Award(4)(5)
2/8/2017
Stock Option Award (4)
250,127
1,828,816
160.31
194.50
160.31
39 13,100 26,200 6.550
Stock Option Award (3)
1,810,060
905,110
720.00 800.00 100.00 34 11.2091 22582 58461810
| | │
2/8/2017
2/8/2017
Stock Option Award (3)
RSU Award (3)
2/8/2017
2,100,061
1,050,031
Performance Share Award (3)(4)
Annual Cash Incentive Award (2)
Marianne D. Short
1,050,190
160.31
36,592
1
2/8/2017
1,600,000
or Option
Awards
Unvested performance share awards will vest if, within two years of
Fair Value
David S. Wichmann
Period
2015-2017
Stephen J. Hemsley
Name
$745,600
Total Amount of
Long-Term Cash
Incentive Award
The long-term cash incentive awards for the 2015-2017 incentive period under our 2008 Executive Incentive
Plan, including amounts deferred by the named executive officers, were the following:
2015-2017
$ 90,000
$120,000
$255,000
$300,000
$1,500,000
$2,500,000
$4,000,000
$2,000,000
$240,000
$4,250,000
$659,800
2015-2017
Directors
2
1
Board of
53
53
$39,588
John F. Rex
Amount of
Long-Term Cash
Incentive Award
Deferred
2015-2017
Marianne D. Short
2015-2017
Steven H. Nelson
$647,700
2015-2017
Larry C. Renfro
$470,400
Corporate
Governance
$5,000,000
Total Amount of
Annual Cash
Incentive Award
$11,100,186
$5,550,093
$2,775,126
Maximum
Target
Restricted
Stock Units
Performance Shares
$2,775,253
Marianne D. Short
Larry C. Renfro
Stephen J. Hemsley
David S. Wichmann
Name
(3) The amounts reported in this column reflect the aggregate grant date fair value of the RSUs and performance
shares (at target) granted in 2017, 2016 and 2015 and are computed in accordance with FASB ASC
Topic 718, based on the closing stock price on the grant date. The grant date fair value of RSUs granted in
2017 and the grant date fair value of performance shares granted in 2017 if target performance and maximum
performance is achieved are as follows:
Information
of Stock
Meeting
Steven H. Nelson
Amount of Annual
Cash Incentive
Award Deferred
$5,550,313
$1,250,097
Marianne D. Short
Steven H. Nelson
Larry C. Renfro
John F. Rex
Stephen J. Hemsley
David S. Wichmann
Name
(5) Amounts reported include both annual and long-term cash incentive awards to our named executive officers
under our 2008 Executive Incentive Plan. The 2017 annual incentive awards, including amounts deferred by
the named executive officers, were the following:
$11,100,626
The amounts reported in this column for 2017 reflect the aggregate grant date fair value of stock options
granted in 2017 computed in accordance with FASB ASC Topic 718. For a description of the assumptions
used in computing the aggregate grant date fair value, see Note 11 to the Consolidated Financial Statements
included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017. These same
assumptions have been used in computing aggregate grant date fair values since fiscal year 2009.
See the 2017 Grants of Plan-Based Awards table for more information on stock awards granted in 2017.
(4) The actual value to be realized by a named executive officer depends upon the performance of the
$ 3,620,120
$ 4,200,122
$ 8,315,386
$4,157,693
$2,100,061
$1,810,060
$2,078,943
$1,050,031
$ 905,110
$2,500,034 $ 5,000,068
Company's stock and the length of time the award is held. No value will be realized with respect to any award
if the Company's stock price does not increase following the award's grant date or if the executive officer does
not satisfy the vesting criteria.
Executive
Compensation
John F. Rex
Other
5
4 Audit
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
Meeting
54
As permitted by SEC rules, we have omitted perquisites and other personal benefits that we provided to
certain named executive officers in 2017 if the aggregate amount of such compensation to each of such
named executive officers was less than $10,000. The Company provides each of Messrs. Wichmann, Rex,
Renfro and Nelson and Ms. Short a $2 million face value term life insurance policy. The value of Company
stock owned by Mr. Wichmann exceeded limits set forth in the Hart-Scott-Rodino (HSR) regulations and he
was required to make an HSR filing in 2017 in order to maintain and increase his stock ownership levels in
the Company. Due to Mr. Wichmann's position as CEO and a director of the Company, he is not able to rely
on the passive investor exemption contained in the HSR regulations. The Compensation Committee approved
the payment of the $45,000 HSR filing fee on Mr. Wichmann's behalf. This amount was imputed as income to
Mr. Wichmann, and Mr. Wichmann did not receive any tax gross-up on this amount.
$30,480
$ 61,500
$10,320
$12,150
$12,150
2017
2017
(8) Mr. Renfro will step down as CEO of Optum effective July 1, 2018 to lead enterprise-wide growth efforts and
Optum's next-generation investment initiatives through an expanded Optum Ventures.
Marianne D. Short
2017 Grants of Plan-Based Awards*
The following table presents information regarding each grant of an award under our compensation plans made
during 2017 to our named executive officers for fiscal year 2017.
Grant Date
Annual
Options
(#)
or Units
(#)
Underlying
of Shares
Exercise
Other
Information
All Other
Option
Awards:
Number of
Securities
Estimated Future Payouts
Under Equity Incentive
Plan Awards
Threshold Target Maximum
(#) (#) (#)
Target Maximum
($)
($)
Threshold
($)
Grant
Date
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
Stephen J. Hemsley
Name
All Other
Stock
Awards:
Number
Steven H. Nelson
of Stock
$145,500
Contributions
Under Executive
Savings Plan
Year
Name
Hart-Scott-
Rodino
Company Matching
Contributions
Under 401(k)
Savings Plan
Company Matching
Insurance
(7) All other compensation includes the following:
(6) Named executive officers participate in our Executive Savings Plan, which is a non-qualified deferred
compensation plan. The Executive Savings Plan does not credit above-market earnings or preferential
earnings to the amounts deferred, and accordingly, no non-qualified deferred compensation earnings have
been reported. Under the Executive Savings Plan, there are no measuring investments tied to Company stock
performance. The measuring investments are a collection of unaffiliated mutual funds identified by the
Company.
Information
Meeting
6
$15,840
5
4 Audit
As described in the Compensation Discussion and Analysis section of the 2017 proxy statement, on
June 7, 2016, the Company amended Mr. Hemsley's SERP to convert the cash benefit into DSUs. The DSUS
held in the SERP are eligible to receive dividend equivalents in the form of additional DSUs, which are paid at
the same rate and at the same time that dividends are paid to the Company's shareholders. The amounts
reported in the table reflect the value of dividend equivalents granted.
Premiums
or Grant
Price of
Option
Awards
($/Sh)
2017
$12,150
Filing Fee
$12,455
$ 67,269
Larry C. Renfro
2017
John F. Rex
$45,000
$ 8,481
$147,369
Stephen J. Hemsley
$156,196
$12,150
$12,150
2017
David S. Wichmann
2017
$12,455
2/12/2014 2/12/2017
$ 600,723
$160.75
3,737
2/12/2017
2/12/2014
6,853
$179.39
6/4/2017
6/4/2013
$ 746,050
$160.51
4,648
$1,229,360
12,706
2/12/2014 2/12/2017
$2,042,490
Larry C. Renfro
$ 425,047
$183.21
2,320
6/7/2017
6/7/2016
$ 229,269
$160.75
$160.44
2/9/2017
2/9/2016
2/6/2017
$160.75
1,363
2/10/2017
2/10/2015
1,429
$ 219,102
$160.75
John F. Rex
David S. Wichmann
$ 702,085
$160.44
4,376
2/9/2017
2/9/2016
$ 890,555
$160.75
5,540
2/10/2017
2/10/2015
2/6/2013
$1,126,375
7,007
$160.75
2/6/2013
2/6/2017
5,229
$160.51
$ 605,501
$160.44
3,774
2/9/2017
2/9/2016
$ 628,693
3,911
2/6/2013
$7,208,352
44,842
2/12/2014 2/12/2017
2/10/2015 2/10/2017
$ 675,793
$160.75
4,204
2/12/2017
$ 839,307
$160.75
2/12/2014
2/12/2017
4,992
2/12/2014
$1,492,101
$160.51
9,296
2/6/2017
2/6/2013
Marianne D. Short
$ 302,590
$160.44
1,886
2/9/2017
2/9/2016
$ 295,298
$160.75
1,837
2/12/2017
2/10/2017
2,802
$ 450,422
$160.44
1,773
2/9/2017
$1,398,845
$4,587,484
2/9/2016
$ 295,298
$160.75
1,837
2/10/2017
2/10/2015
$2,402,730
$160.75
14,947
2/12/2017
2/12/2014
$160.75
2/10/2015
$2,282,811
$160.75
3,379
2/10/2017
2/10/2015
$6,881,386
$160.75
42,808
2/12/2017
2/12/2014
$ 614,387
$160.75
3,822
2/12/2017
2/12/2014
$ 801,266
$160.51
$160.75
$ 543,174
2/9/2016
2/9/2017
14,201
2/12/2014
$ 540,602
$160.75
3,363
2/12/2017
2/12/2014
2/6/2017
$ 634,175
3,951
2/6/2017
2/6/2013
Steven H. Nelson
$ 495,599
$160.44
3,089
$160.51
$160.75
45,299
$160.51
(5) Vest 100% at the end of the three-year performance period. The number of performance shares that the
executive officer will receive is dependent upon the achievement of a cumulative EPS measure and an
average ROE measure approved by the Compensation Committee. The number of performance shares
reported above for grants made in 2017 and 2016 is at the target number established by the Compensation
Committee because we currently believe that is the probable outcome of the performance conditions based on
the Company's performance through December 31, 2017.
(2) Based on the per share closing market price of our common stock on December 31, 2017 of $220.46.
(3) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date.
(4) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date, other than for
retirement eligible executive officers. A portion of a retirement eligible executive officer's award that otherwise
would have vested on the next specified vesting date is cancelled to pay applicable FICA taxes owed by the
executive officer. The cancellation occurs in the year of grant if the executive officer is retirement eligible
during that year or in the first year the executive officer becomes retirement eligible. The remainder of the
award vests proportionally over the remaining vesting period. Messrs. Hemsley, Wichmann, Renfro and Nelson
are retirement eligible. These RSUs are eligible to and did receive dividend equivalents converted into
additional shares; accordingly, the number of shares shown has been rounded up to the nearest whole share.
For more information on RSUs cancelled in 2017, please see the 2017 Option Exercises and Stock Vested
table.
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
Directors
2
1
Board of
2017 Option Exercises and Stock Vested
88
The following table presents information regarding the exercise of stock options during fiscal year 2017 by our
named executive officers and vesting of restricted stock awards held by our named executive officers for fiscal year
2017.
Stephen J. Hemsley
David S. Wichmann
58,805,548(2)
378,642
19,853,313(3)(4)(5)
104,740
(#)
($)(1)
Vesting
Value
Realized on
Exercise
Value
Realized on
Vesting
($)
Stock Awards
Number of
Shares
Acquired on
Option Awards
Number of
Shares
Acquired on
Exercise
(#)
Marianne D. Short
Steven H.Nelson
Larry C. Renfro
John F. Rex
Name
58
(1) The expiration date shown is the latest date that stock options/SARs may be exercised. Stock options/SARS
may terminate earlier in certain circumstances, such as in connection with the named executive officer's
termination of employment.
3,730(4) 822,316
2,846(4) 627,429
9,803
2/9/2016
160.31
31,539(3)
2/8/2017
Marianne D. Short
3,559(4) 784,617
3,258(4) 718,259
3,272,508
14,844(5)
2/9/2016
2/10/2015
2/12/2014
5,484(4) 1,209,003
2,888,026
$ 284,460
13,100(5)
6,345(4) 1,398,819
29,410(3)
111.16
2/10/2015
17,187
3,074,094
13,944(5)
2,489,214
11,291(5)
5,731(4) 1,263,456
5,398(4) 1,190,043
2/8/2017
2/8/2017
2/9/2016
2/9/2016
2/10/2015
2/12/2014
2/8/2027
2/9/2026
2/10/2025
2/12/2024
2/6/2023
98,912
57.38
2/6/2013
70.24
8,392(3)
25,176
2/12/2014
108.97
17,188(3)
52,967
28,538
18,105,524(3)(4)(5)
93,794
2/10/2015
$ 70.24
$162.29
10,070
2/24/2017
2/12/2014
$ 57.38
$162.29
11,257
2/24/2017
2/6/2013
$ 33.94
$222.38
203,642
12/21/2017
2/9/2016
6/5/2008
2/24/2017
2/24/2017
Other
Information
8,715
2/6/2017
2/12/2017
2/12/2014
2/6/2013
Stephen J. Hemsley
Value Realized
on Vesting
Market Price
at Vesting
on Vesting
Number of
Shares Acquired
Vesting
Date
Date of
Award
Name
(3) Reflects the vesting of a portion of the RSUs granted. The value realized on vesting was computed based on
the following:
$108.97
$111.16
17,187
10,435
$162.07
$162.07
$ 54.41
$171.16
25,000
Executive
Compensation
Corporate
Governance
2
Board of
Directors
1
59
59
(1) Computed by determining the market value per share of the shares acquired based on the difference
between: (a) the per share market value of our common stock at exercise, defined as the closing price on the
date of exercise, or the weighted average selling price if same-day sales occurred, and (b) the exercise price
of the stock options.
8,562,821(3)(4)
47,156
7,891,084(3)(4)(5)
42,633
3,551,679(2)
48,949
17,207,570(3)(4)(5)
Annual
4 Audit
5
Meeting
4/24/2017
5/28/2007
$ 54.41
$171.16
150,000
4/24/2017
5/28/2007
8,191,133(3)(4)
Exercise
Price
Number of
Options
Exercised
Exercise
Date
Date of
Award
Steven H. Nelson
David S. Wichmann
Name
(2) The value was computed as described in footnote 1 above and was based on the following:
Market Price
at Exercise
60
N/A
Board of
Marianne D. Short
Steven H. Nelson
1,802,045
808,071
151,615
145,500
291,000
133,876
67,269
134,538
7,599,451
($)(6)
(f)
14,607,356
1,325,268
147,369
338,208
123,000
2,585,557
61,500
1,306,486
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
Directors
2
1
Board of
63
63
(5) Under our Executive Savings Plan, unless an employee in the plan elects to receive distributions during the
term of his or her employment with the Company, benefits will be paid no earlier than at the beginning of the
year following the employee's termination. However, upon a showing of severe financial hardship, an
employee may be allowed to access funds in his or her deferred compensation account earlier. Benefits can
be received either as a lump sum payment, in five or ten annual installments, in pre-selected amounts and on
pre-selected dates, or a combination thereof. An employee may change his or her election with respect to the
timing and form of distribution for such deferrals under certain conditions. However, for deferrals relating to
services performed on or after January 1, 2004, employees may not accelerate the timing of the distributions.
(4) Amounts deferred are credited with earnings from measuring investments selected by the employee from a
collection of unaffiliated mutual funds identified by the Company. The Executive Savings Plan does not credit
above market earnings or preferential earnings to amounts deferred. The returns on the mutual funds
available to employees during 2017 ranged from 0.78% to 31.17%, with a median return of 16.27% for the
year ended December 31, 2017. Employees may change their selection of measuring investments on a daily
basis.
(2) Named executive officers are eligible to participate in our Executive Savings Plan, which is a non-qualified
deferred compensation plan. Under the plan, employees may generally defer up to 80% of their eligible annual
base salary (100% prior to January 1, 2007) and up to 100% of their annual and long-term cash incentive
awards. Amounts deferred, including Company credits, are credited to a bookkeeping account maintained for
each participant, and are distributable pursuant to an election made by the participant as to time and form of
payment that is made prior to the time of deferral. The Company maintains a Rabbi Trust for the plan. The
Company's practice is to set aside amounts in the Rabbi Trust to be used to pay for all benefits under the
plan, but the Company is under no obligation to do so except in the event of a change in control.
(3) For the first 6% of the employee's base salary and annual incentive award deferrals under our Executive
Savings Plan, the Company provides a matching credit of up to 50% of amounts deferred at the time of each
deferral. This matching credit does not apply to deferrals of long-term cash incentive awards or other special
incentive awards.
(1) All amounts in these columns have been reported as compensation in the 2017 Summary Compensation
Table.
113,482
156,196
312,392
(e)
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
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Board of
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62
(1) In 2006, the amount of Mr. Hemsley's supplemental retirement benefit was frozen based on his age and
average base salary at the time and converted into a lump sum of $10,703,229. On June 7, 2016, the
Company amended Mr. Hemsley's SERP to convert the $10,703,229 cash benefit into a number of DSUS
based on the average closing price of the Company's common stock over the preceding five trading days
from the date of conversion ($135.846), which resulted in 78,789 DSUs issued on June 7, 2016. The DSUS
held in the SERP are eligible to receive dividend equivalents in the form of additional DSUs, which are paid at
the same rate and at the same time that dividends are paid to the Company's shareholders. During 2017,
Mr. Hemsley received dividend equivalents equal to 1,205 DSUs, which were added to the SERP. As of
December 31, 2017, the amount of the benefit to which Mr. Hemsley is entitled is 81,018 DSUs, which had a
value of $17,861,316 as of December 31, 2017. The SERP balance will be paid six months and one day after
termination of his employment for any reason.
Marianne D. Short
N/A
2/8/2017
2/8/2017
2/9/2016
Information
2017 Non-Qualified Deferred Compensation
The following table presents information as of the end of 2017 regarding the non-qualified deferred compensation
arrangements for our named executive officers for fiscal year 2017.
Name (a)
($)(5)
($)(4)
(d)
(c)
(b)
Last FYE
Distributions
in Last FY
5
Aggregate
Withdrawals/
Registrant
Contributions
in Last FY
($)(1)(3)
Aggregate
Balance at
Executive
Contributions
in Last FY
($)(1)(2)
Larry C. Renfro
John F. Rex
David S. Wichmann
Stephen J. Hemsley
Aggregate
Earnings
N/A
6
Information
Executive
Compensation
Corporate
Governance
2
Board of
Directors
1
65
Under his employment agreement, any adjustments to Mr. Wichmann's base salary are at the sole discretion of the
Compensation Committee and ultimately the independent members of the Board of Directors. Mr. Wichmann's
employment agreement does not set any minimum or target level for any bonus or other incentive compensation.
All bonus and incentive compensation awards are solely at the discretion of the Compensation Committee.
Mr. Wichmann is eligible to participate in the Company's generally available employee benefit programs. In
addition, the Company provides Mr. Wichmann with a $2 million term life insurance policy and additional long-term
disability coverage, which covers 60% of eligible base salary subject to the terms of the policy.
Summary of Compensation Components
On December 1, 2006, the Company entered into an employment agreement with Mr. Wichmann. On August 16, 2017,
the employment agreement was amended to reflect Mr. Wichmann serving as CEO.
David S. Wichmann
Pursuant to the employment agreement, Mr. Hemsley is subject to provisions prohibiting his solicitation of the
Company's employees and customers or competing with the Company during the term of the employment
agreement and the longer of two years following termination or the period that severance payments are made to
him under the employment agreement. In addition, he is prohibited at all times from disclosing confidential
information related to the Company.
Non-Solicitation, Non-Competition and Confidentiality Provisions
As defined in the employment agreement, "Good Reason" generally means (a) an assignment of duties
inconsistent with his position or duties or other diminution of duties, (b) a relocation of primary work location by
more than 25 miles, (c) failure by the Board of Directors to nominate Mr. Hemsley to serve on the Board of
Directors, (d) the Company's failure to pay or provide Mr. Hemsley's base salary, incentive compensation or other
benefits, or (e) any other material breach of Mr. Hemsley's employment agreement that is not remedied.
As defined in the employment agreement, “Cause” generally means (a) willful and continued failure to perform his
duties after written notice and a failure to remedy the deficiency, (b) a violation of the Company's Code of Conduct
that is materially detrimental to the Company and is not remedied after written notice, (c) engaging in fraud,
material dishonesty or gross misconduct in connection with the Company's business, (d) conviction of a felony, or
(e) willful and material breach of the employment agreement that is not remedied after written notice.
Material Definitions
Annual
If Mr. Hemsley's employment is terminated by the Company for Cause, by Mr. Hemsley without Good Reason or
because of his retirement or upon expiration of the term of the employment agreement, he will not be entitled to
any further compensation from the Company other than earned but unpaid salary and benefits.
Other
5
99
66
Messrs. Rex, Renfro and Nelson and Ms. Short have entered into employment agreements with the Company.
Under those agreements, they each report to the CEO of the Company. The table below and the narrative that
follows summarize the material terms of their respective employment agreements.
John F. Rex, Larry C. Renfro, Steven H. Nelson and Marianne D. Short
Pursuant to the employment agreement, Mr. Wichmann is subject to provisions prohibiting his solicitation of the
Company's employees and customers or competing with the Company during the term of the employment
agreement and for two years following termination of his employment for any reason. In addition, he is prohibited at
all times from disclosing confidential information related to the Company.
Non-Solicitation, Non-Competition and Confidentiality Provisions
As defined in the employment agreement, “Good Reason" exists if the Company (a) reduces Mr. Wichmann's base
salary or long- or short-term target bonus percentage other than in connection with a general reduction affecting a
group of similarly situated employees, (b) moves Mr. Wichmann's primary work location more than 50 miles,
(c) makes changes that substantially diminish Mr. Wichmann's duties or responsibilities, or (d) changes
Mr. Wichmann's reporting relationship.
Mr. Wichmann with written notice of Cause within 120 days of discovery, and Mr. Wichmann will have 60 days to
remedy the conduct, if the conduct is reasonably capable of being remedied.
As defined in the employment agreement, "Cause” means (a) material failure to follow the Company's reasonable
direction, or to perform any duties reasonably required on material matters; (b) material violation of, or failure to act
upon or report known or suspected violations of, the Company's Code of Conduct; (c) conviction of any felony,
commission of any criminal, fraudulent or dishonest act, or any conduct that is materially detrimental to the
Company's interests, or (d) material breach of the employment agreement. The Company must provide
Material Definitions
If Mr. Wichmann's employment is terminated because of his death or disability, by the Company for Cause, or by
Mr. Wichmann without Good Reason, he will not be entitled to any further compensation from the Company other
than earned but unpaid salary and benefits.
If Mr. Wichmann's employment is terminated by the Company without Cause, or by Mr. Wichmann for Good
Reason, the Company will provide Mr. Wichmann with outplacement services and will pay Mr. Wichmann
severance compensation equal to the sum of (a) 200% of his annualized base salary as of his termination date,
(b) 200% of the average of his last two calendar year bonuses, excluding any equity awards and any special or
one-time bonus or incentive compensation payments, and (c) $12,000 to offset the costs of benefit continuation
coverage. The severance compensation will be payable over a 24-month period.
Termination Provisions
Information
Meeting
4 Audit
If Mr. Hemsley's employment is terminated because of his death or permanent disability, the Company will pay him
or his beneficiaries a lump sum in an amount equal to two years total compensation of base salary plus the
average bonus for the last two calendar years, excluding any special or one-time bonus or incentive compensation
payments.
Information
Meeting
Stephen J. Hemsley
We have entered into an employment agreement with each of the named executive officers. The following is a
summary of the material terms of those agreements.
Executive Employment Agreements
$1,048,812
$ 174,473
$1,341,537
$8,156,476
$2,745,620
Reported
Previously
Amount
Steven H. Nelson
Marianne D. Short
John F. Rex
Larry C Renfro
David S. Wichmann
Stephen J. Hemsley
Name
(6) This column includes the amounts shown in columns (b) and (c) as well as the following amounts reported in
the summary compensation table for prior years:
On November 7, 2006, the Board of Directors entered into an employment agreement with Mr. Hemsley. On
December 14, 2010, the employment agreement was amended to extend the employment period to December 1, 2014.
The employment agreement extends automatically for additional one-year periods after December 1, 2014 unless
sooner terminated in accordance with its terms. During the period of his employment, the Board of Directors will
nominate Mr. Hemsley for election to the Board of Directors by the shareholders of the Company.
Summary of Compensation Components
Under his employment agreement, Mr. Hemsley receives a base salary of $1,300,000, with any increases at the
sole discretion of the Compensation Committee and ultimately the independent members of the Board of Directors.
Mr. Hemsley's base salary was reduced to $1,000,000 in connection with is appointment as Executive Chairman.
Mr. Hemsley's employment agreement does not set any minimum or target level for any bonus or other incentive
compensation. All bonus and incentive compensation awards are solely at the discretion of the Compensation
Committee. (The Compensation Committee determined that Mr. Hemsley would not participate in the 2018 annual
incentive plan.) Mr. Hemsley is eligible to participate in the Company's generally available employee benefit
programs.
Termination Provisions
6
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Other
Annual
Executive
Compensation
Corporate
Governance
Meeting
Directors
1
Board of
64
If Mr. Hemsley's employment is terminated by the Company without Cause, other than upon expiration of the term
of the employment agreement, or by Mr. Hemsley for Good Reason, the Company will pay Mr. Hemsley a lump
sum in an amount equal to his annual base salary for 12 months.
Supplemental Retirement
Other Compensation
Upon termination of Mr. Hemsley's employment for any reason, he is entitled to a supplemental retirement benefit,
payable in common stock upon settlement of DSUS, which will be paid six months and one day after his
termination. See "Compensation Discussion and Analysis
Benefits" and "2017 Pension Benefits" for more information.
2
N/A
N/A
Retirement Pay
16,501
12/31/2017
2/10/2015
Marianne D. Short
$ 3,637,810
$220.46
16,501
12/31/2017
2/10/2015
Steven H. Nelson
$ 7,744,760
$220.46
35,130
12/31/2017
2/10/2015
$220.46
Larry S. Renfro
$ 3,637,810
Name
2/10/2015 12/14/2017
2/9/2016
$ 42,923
$221.25
194
12/14/2017
$176,336
$221.25
797
2/8/2017 12/14/2017
2/12/2014
Stephen J. Hemsley
David S. Wichmann
Value Realized
on Vesting
Market Price
at Vesting
Number of
Shares
Acquired
on Vesting
Vesting
Date
Date of
Award
(5) Reflects the cancellation on December 14, 2017 of RSUs for the payment of FICA tax liability. The value
realized was computed based on a closing stock price of $221.25 on December 14, 2017.
$ 2,699,092
$220.46
12,243
Date of
Award
Name
(4) Also reflects the performance shares earned for the 2015-2017 performance period that ended on
December 31, 2017 because performance targets were met. The value shown as realized on
December 31, 2017 is based on the number of shares earned for the 2015-2017 performance period using
the per share closing market price of our common stock on December 31, 2017, although shares were not
issued until the Compensation Committee certified the performance results on February 13, 2018:
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
Directors
2
1
Performance
Period
Completion Date
Number of
Shares Acquired
Market Price
at End of
Performance
on Vesting
12/31/2017
2/10/2015
John F. Rex
$10,971,633
$ 7,744,760
$220.46
35,130
12/31/2017
360
2/10/2015
$220.46
49,767
12/31/2017
2/10/2015
Stephen J. Hemsley
Value Realized
on Vesting
Period
David S. Wichmann
$221.25
$ 79,650
12/14/2017
The following table presents information regarding the present value of accumulated benefits payable under our
non-qualified defined-benefit pension plans covering our named executive officers for fiscal year 2017.
2017 Pension Benefits
Information
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
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Board of
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$ 67,260
$221.25
Name
Stephen J. Hemsley
Number of
Years
Credited
Present
Value of
Supplemental Executive
Steven H. Nelson
Larry C. Renfro
John F. Rex
David S. Wichmann
17,861,316(1)
(1)
304
Individual Agreement for
Benefit ($)
(#)
Plan Name
During Last
Fiscal Year
Accumulated
Service
Payments
($)
60
2/8/2017 12/14/2017
$221.25
12/14/2017
2/8/2017
Larry C. Renfro
$ 49,118
$221.25
222
12/14/2017
8/15/2017
$116,156
$115,271
$221.25
525
2/8/2017 12/14/2017
$221.25
521
516
$221.25
$114,165
8/15/2017
263
2/9/2016 12/14/2017
$ 37,834
$221.25
171
2/10/2015 12/14/2017
$ 34,515
$ 58,189
$221.25
12/14/2017
2/12/2014
Steven H. Nelson
$ 12,833
$221.25
58
12/14/2017
156
2/8/2027
2/9/2026
2/10/2025
2/12/2024
3
10,071(3)
2/9/2016
2/12/2024
70.24
20,980(3)
62,938
2/12/2014
16,282(4) 3,589,530
2/9/2016
2/10/2025
108.97
51,839(3)
51,839
2/10/2015
7,632,546
34,621(5)
2/8/2017
2/9/2026
111.16
88,703(3)
29,567
2/9/2016
Have Not
Vested ($)(2)
Plan
Awards:
Market
Value of
Unearned
Shares or
Units That
Incentive
Equity
Awards:
Number of
Unearned
Shares or
Units That
Have Not
Vested (#)
Plan
42,057(5)
Equity
Incentive
9,271,886
99,312
2/9/2016
2,145,296
9,731(5)
8/15/2017
4,679(4) 1,031,532
8/15/2017
8/15/2027
2/8/2027
160.31
63,730(3)
2/8/2017
194.50
30,031(3)
8/15/2017
David S. Wichmann
2/23/2019
29.74
169,683
2/23/2009
11,247(4) 2,479,513
7,113(4) 1,568,132
2/12/2014
2/9/2020
33.00
114,036
2/9/2010
2/10/2015
2/6/2023
57.38
2/6/2013
20,871
Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
16,775(4)
Outstanding Equity Awards at 2017 Fiscal Year-End
Other
Information
Meeting
5
4 Audit
Annual
Executive
Compensation
Corporate
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Board of
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57
(5) Amounts represent grants made to Mr. Wichmann in connection with his appointment as Chief Executive
Officer and to Mr. Renfro in recognition of additional duties undertaken in his current position.
(4) Amounts represent the estimated future number of performance shares that may be earned under our 2011
Stock Incentive Plan at each of the threshold, target and maximum levels. The performance share award will
be paid out in shares of Company common stock. The number of performance shares that the executive
officer will receive will be determined at the conclusion of the 2017-2019 performance period and will be
dependent upon the Company's achievement of a cumulative EPS measure and an average ROE measure
approved by the Compensation Committee. The Compensation Committee has the discretion to reduce the
number of performance shares an executive officer is entitled to receive. The estimated threshold award
represents the number of performance shares that may be awarded if threshold performance is achieved on
one of the performance measures.
Information
Meeting
6
5
70.24
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
Directors
2
1
Board of
The following table presents information regarding outstanding equity awards held at the end of fiscal year 2017 by
our named executive officers.
($)(2)
3,698,217
Option/SAR Awards
Number of
Securities
2/8/2017
Have Not
Vested (#)
That
Stock
Award
Grant Date
SAR
Expiration
Date(1)
2/8/2027
160.31
96,706(3)
2/8/2017
Stephen J. Hemsley
Number
of
Shares or
Units of
Stock
Option/
Option/
SAR
Exercise/
Grant
Price ($)
Exercisable Unexercisable
Grant
Name
SARS (#)
SARS (#)
SAR
Options/
Options/
Option/
Unexercised
Date of
Underlying
Underlying
Securities
Number of
Stock Awards
62,614(3)
Unexercised
2/9/2026
1,238(4) 272,929
3,794(4) 836,425
2/12/2014
8/15/2017
8/15/2017
2,767(4) 610,013
2/10/2015
2/6/2023
6/5/2022
8/15/2027
2/8/2027
2/9/2026
111.16
62,614(3)
20,871
2/9/2016
160.31
63,730(3)
2/8/2017
194.50
7,934(3)
8/15/2017
Larry C. Renfro
56.04
80,000
6/5/2012
57.38
52,972
2/6/2013
11,246(5) 2,479,293
2/9/2016
2/12/2024
70.24
2,571(5)
11,190(3)
566,803
36,592
108.97
17,188(3)
160.31
111.16
31,308(3)
36,592(3)
2/9/2016
2/10/2015
2/12/2014
2/8/2017
Steven H. Nelson
7,939(4) 1,750,232
4,268(4) 940,923
2/10/2015
2/12/2014
6,544,796
29,687(5)
2/9/2016
2/9/2016 11,493(4) 2,533,747
2/12/2024
2/6/2023
70.24
57.38
59,587
2/6/2013
12,588(3)
111.16
2/12/2014
5,030,015
22,816(5)
2/8/2017 11,064(4) 2,439,169
2/8/2017
2/10/2025
108.97
36,593(3)
2/10/2015
33,567
37,763
1,552,259
959,883
2/23/2019
29.74
113,122
2/23/2009
2/10/2015
2/9/2020
33.00
76,024
37,763
2/12/2014
2/10/2015
36,592
36,593(3)
2/12/2014
108.97 2/10/2025
22,816(5)
2/9/2010
5,030,015
6,544,796
29,687(5)
2/9/2016
2/6/2023
57.38
59,587
2/6/2013
2/9/2016 10,971(4) 2,418,667
70.24 2/12/2024
12,588(3)
2/8/2017 11,055(4) 2,437,185
2/8/2017
7,579(4) 1,670,866
4,075(4)
2/12/2014
John F. Rex
42,312(3)
898,375
136.94
6/7/2026
2/8/2017
15,595(5)
3,438,074
2/9/2016
7,905
23,718(3)
14,104
2/9/2026
6/7/2016
111.16
12,752
2/8/2017
43,561(3)
160.31
2/10/2015
2/8/2017
7,041(4)
4,354(4)
2/8/2027
6/7/2016
2/9/2016
2/10/2025
108.97
12,752(3)
7,916(4) 1,745,161
4 Audit
Directors
Corporate
Governance
3
Executive
Compensation
Annual
Other
5
We consistently applied total direct compensation as the measure to determine the median employee in our global
employee population as of October 1, 2017. That workforce population consisted of 243,569 global full-time,
part-time, temporary and seasonal employees employed on that date. 65,752 of those employees were located
outside the United States and we then applied the de minimis exemption to exclude 8,884 employees in the
Philippines and 3,068 employees in Portugal (4.9% of our global employee population).
Meeting
Governance
2
Corporate
Board of
Directors
72
For these reasons, the Board of Directors recommends you vote FOR approval of the compensation of the
named executive officers, as disclosed in this proxy statement. Executed proxies will be voted FOR
approval of the compensation of the named executive officers unless you specify otherwise.
In addition to our annual advisory vote to approve the Company's executive compensation, we are committed to
ongoing engagement with our shareholders on executive compensation and corporate governance issues. These
engagement efforts take place throughout the year where appropriate through meetings, telephone calls and
correspondence involving our senior management, directors and representatives of our shareholders.
This advisory proposal, commonly referred to as a "Say-on-Pay” proposal, is not binding on the Board of Directors.
Although the voting results are not binding, the Board and the Compensation Committee will review and consider
them when evaluating our executive compensation program. More than 95% of the votes cast were in favor of our
executive compensation program at each of our annual meetings since our inaugural vote in 2011. An advisory
vote regarding the frequency of future Say-on-Pay votes is included as Proposal 3 for this Annual Meeting.
As discussed in the Compensation Discussion and Analysis, the Board of Directors believes that our executive
compensation program attracts and retains highly qualified executives while linking executive compensation directly
to Company-wide performance and long-term shareholder interests. In deciding how to vote on this proposal, the
Board of Directors asks you to consider the key points with regard to our executive compensation program included
in the Compensation Discussion and Analysis and in the “Executive Summary" section on pages 29-30 of this
proxy statement.
"Resolved, that the shareholders approve, on an advisory basis, the compensation of the named executive
officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC,
including the Compensation Discussion and Analysis, the compensation tables and the related narrative
disclosures."
The Board of Directors recognizes the significant interest of shareholders in executive compensation matters. As
required by the Exchange Act, we are seeking shareholders' views on our executive compensation philosophy and
practices through an advisory vote on the following resolution at the Annual Meeting:
Proposal 2 — Advisory Approval of the Company's
Executive Compensation
6
-
Meeting
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Executive
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Board of
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71
employer-paid health insurance contributions. Our median employee compensation was $58,378 and our Chief
Executive Officer's compensation was $17,404,604. Accordingly our CEO to median employee pay ratio is 298:1.
Information
Information
The Compensation Discussion and Analysis, the compensation tables and the related narrative disclosures appear
on pages 29-71 of this proxy statement.
award that the executive officer would have received but for his or her death, disability or retirement, calculated at
the achievement of the maximum performance target, as more fully described in footnote 2 to the 2017 Grants of
Plan-Based Awards table. For the purposes of this table, the potential amounts have not been prorated because the
table assumes a death, disability or retirement as of December 31, 2017.
1
69
(1) Represents the maximum amount the Compensation Committee may in its discretion determine, but is not required,
to pay the executive officer (or the executive officer's estate, if applicable) based upon a prorated portion of the
18,290,990
2,136,000
17,754,990
15,070,889
17,686,889
19,206,889
15,070,889
14,706,584
18,693,584
480,000
2,000,000
Total(4)
Acceleration of Equity (3)
Insurance Benefits
536,000
536,000
536,000
Executive
Compensation
1,600,000 1,600,000
69
Board of
1
2
Board of
70
70
For purposes of reporting annual total compensation and the ratio of annual total compensation of our CEO to our
median employee, both the CEO and median employee's annual total compensation were calculated consistent
with the Summary Compensation Table executive compensation disclosure requirements, plus the value of
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are
providing the following information about the relationship between the annual total compensation of our median
employee and the annual total compensation of our CEO.
CEO Pay Ratio
(4) Does not include value of benefits, plans or arrangements that would be paid or available following termination of
employment that do not discriminate in scope, terms or operation in favor of our executive officers and that are
generally available to all salaried employees or accrued balances under any non-qualified deferred compensation
plan that is described above.
For "For Good Reason or Not for Cause," the amount includes the value of unvested equity awards held by the
named executive officer that will not immediately vest upon termination but will continue to vest through any
applicable severance. For "Retirement," the amount includes the value of certain unvested equity awards granted in
2014, 2015, 2016 and 2017 that will continue to vest and be exercisable for a period of five years (but not after the
award's expiration date). The value of the awards that will not immediately vest is based on their intrinsic values on
December 31, 2017. However, because these awards would continue to vest after termination of employment or
retirement, the actual value the named executive officer would receive is not determinable. At December 31, 2017,
Messrs. Hemsley, Wichmann, Renfro and Nelson had met the retirement eligibility provisions.
(ii) intrinsic value of the unvested stock options, which is calculated based on the difference between the closing
price of our stock on December 31, 2017 ($220.46) and the exercise or grant price of the unvested stock options as
of that date, and (iii) the number of performance shares earned if target performance is achieved multiplied by the
closing stock price on December 31, 2017 ($220.46). If maximum performance is achieved for the performance
shares, the amounts for Acceleration of Equity would be (a) for "For Good Reason or Not for Cause," $69,587,484
for Mr. Hemsley; $53,324,145 for Mr. Wichmann; $23,309,658 for Mr. Rex; $49,073,862 for Mr. Renfro; $25,483,908
for Mr. Nelson; and $20,269,892 for Ms. Short; (b) for "Death” and “Disability,” $53,229,793 for Mr. Hemsley;
$39,394,600 for Mr. Wichmann; $23,151,275 for Mr. Rex; $37,248,829 for Mr. Renfro; $19,451,682 for Mr. Nelson;
and $17,950,097 for Ms. Short; (c) for "Retirement," $69,587,484 for Mr. Hemsley; $53,324,145 for Mr. Wichmann;
$49,073,862 for Mr. Renfro; and $25,483,908 for Mr. Nelson; and (d) for "Change in Control," $69,587,484 for
Mr. Hemsley; $53,324,145 for Mr. Wichmann; $29,387,648 for Mr. Rex; $49,073,862 for Mr. Renfro; $25,483,908 for
Mr. Nelson; and $23,318,298 for Ms. Short.
2
(3) Represents the (i) unvested RSUs multiplied by the closing stock price on December 31, 2017 ($220.46),
Information
Other
Meeting
5
4 Audit
Annual
Executive
Compensation
Corporate
Governance
Directors
(2) With respect to "Death,” “Disability” and “Retirement,” represents the maximum amount the Compensation
Committee may in its discretion determine, but is not required, to pay the executive officer (or the executive officer's
estate, if applicable) based upon the portion of the incentive periods the executive officer served prior to death,
disability or retirement and measurement of Company and executive performance based on performance through
the end of the fiscal year of the Company which ends closest to the executive officer's date of death, disability or
retirement, calculated at the achievement of the maximum performance target. With respect to "Change in Control,"
represents the amount payable by the Company or its successor to each executive officer (or to be credited to the
named executive officer's account in the Company's Executive Savings Plan if a timely deferral election is in effect),
which is a prorated portion of the maximum long-term cash incentive award for which the executive officer is eligible
for the 2016-2018 performance period.
Annual
The Board of Directors recommends you vote FOR ratification of the appointment of Deloitte as our
independent registered public accounting firm for the year ending December 31, 2018. Executed proxies
will be voted FOR ratification of this appointment unless you specify otherwise.
5
(3) All Other Fees include consulting fees and fees relating to communications training for international employees.
Audit Committee's Consideration of Independence of Independent
Registered Public Accounting Firm
The Audit Committee has reviewed the nature of non-audit services provided by Deloitte & Touche and has
concluded that these services are compatible with maintaining the firm's ability to serve as our independent
registered public accounting firm.
Audit and Non-Audit Services Approval Policy
The Audit Committee has adopted a Policy for Approval of Independent Auditor Services (the "Policy") outlining the
scope of services that Deloitte & Touche may provide to the Company. The Policy sets forth guidelines and
procedures the Company must follow when retaining Deloitte & Touche to perform audit, audit-related, tax and
other services. The Policy also specifies certain non-audit services that may not be performed by Deloitte & Touche
under any circumstances. Pursuant to these guidelines, the Audit Committee approves fee thresholds annually for
each of these categories, and services within these thresholds are deemed pre-approved. The Audit Committee
has delegated authority to the Chair of the Audit Committee to pre-approve permitted audit and non-audit services
between regularly scheduled quarterly Audit Committee meetings, provided that such pre-approvals are presented
to the Audit Committee at its next scheduled meeting. All fees reported above were approved pursuant to the
Policy. The services provided by our independent registered public accounting firm and related fees are discussed
with the Audit Committee, and the Policy is evaluated and updated periodically by the Audit Committee.
75
Board of
Directors
2
(2) Tax Fees include tax compliance, planning and support services. In 2017 and 2016 approximately $285,000
and $285,000, respectively, of Tax Fees were related to international tax services, approximately $1,787,000
and $4,447,000, respectively, of Tax Fees were for business model operating design services and
approximately $194,000 and $109,000, respectively, of Tax Fees were related to tax compliance (review and
preparation of corporate and expatriate tax returns, review of the tax treatment for certain expenses and claims
for refunds).
Corporate
Governance
Annual
Other
4 Audit
5
Meeting
Information
-
Ratification of Independent Registered Public
Executive
Compensation
Proposal 3
Accounting Firm
(1) Audit-Related Fees for 2017 and 2016 include benefit plan and other required audits, an audit of one of our
subsidiaries, certain AICPA agreed-upon procedures and due diligence services.
Total
1,600,000
536,000
Aggregate fees billed to the Company for the fiscal years ended December 31, 2017 and 2016 represent fees
billed by the Company's principal independent registered public accounting firm, Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates, which includes Deloitte Consulting
(collectively, "Deloitte & Touche"). The Audit Committee pre-approved the audit and non-audit services provided in
the years ended December 31, 2017 and 2016 by Deloitte & Touche, as reflected in the table below.
Fee Category
Audit Fees
Audit-Related Fees (1)
Total Audit and Audit-Related Fees
Year
2017
$21,077,000
2016
$27,168,000 $29,373,000
$19,691,000
4,037,000
$24,800,000
$23,728,000
2,266,000
102,000
5,441,000
204,000
Tax Fees (2)
All Other Fees (3)
3,723,000
4 Audit
The Audit Committee is directly responsible for the appointment, evaluation, compensation, retention and oversight
of the independent registered public accounting firm retained to audit the Company's financial statements. The
Audit Committee has appointed Deloitte & Touche LLP ("Deloitte") as our independent registered public accounting
firm for the year ending December 31, 2018. Deloitte has been retained as our independent registered public
accounting firm since 2002. The Audit Committee is responsible for approving audit fees associated with the
retention of Deloitte. In order to assure continuing auditor independence, the Audit Committee periodically
considers whether there should be a rotation of our independent registered public accounting firm. Further, as part
of the Audit Committee's assessment of Deloitte and in conjunction with the mandated rotation of the audit firm's
lead engagement partner, in November 2015, the Audit Committee interviewed candidates to become Deloitte's
new lead engagement partner and following those interviews, selected the individual who became the new lead
engagement partner in 2017.
Representatives of Deloitte are expected to be present at the meeting, will have an opportunity to make a
statement and will be available to respond to questions from shareholders.
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
Directors
2
1
5
Board of
The Audit Committee has adopted a Policy for Approval of Independent Auditor Services (the "Policy”) outlining the
scope of services the independent registered public accounting firm may provide to the Company. The Policy sets
forth guidelines and procedures the Company must follow when retaining the independent registered public
accounting firm to perform audit, audit-related, tax and other services. The Policy also specifies certain non-audit
services that may not be performed by the independent registered public accounting firm under any circumstances.
Pursuant to these guidelines, the Audit Committee approves fee thresholds annually for each of these categories,
and services within these thresholds are deemed pre-approved.
While it is not the duty of the Audit Committee to plan or conduct audits, the Audit Committee engages with the
Company's independent registered public accounting firm and the internal auditors regarding the overall scope and
plans for their respective audits. The Company's independent registered public accounting firm is responsible for
performing an independent audit of the Company's consolidated financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States), expressing an opinion as to the
conformity of the consolidated financial statements with generally accepted accounting principles in the United
States of America, and auditing management's assessment of the effectiveness of internal control over financial
reporting. The Audit Committee's responsibility is to monitor and oversee these processes. The Audit Committee
also oversees management's processes to identify and quantify material risks facing the Company, including risks
disclosed in the Company's Annual Report on Form 10-K. The Audit Committee meets regularly with the internal
auditors and independent registered public accounting firm, with and without management present, to discuss the
results of their examinations, the evaluation of the Company's internal control over financial reporting and the
overall quality of the Company's accounting and reporting.
The Audit Committee has responsibility for selecting and evaluating the independent registered public accounting
firm, which reports directly to the Audit Committee, overseeing the performance of the Company's internal audit
function, and assisting the Board of Directors in its oversight of enterprise risk management including privacy and
data security. Management has primary responsibility for the Company's consolidated financial statements and the
overall reporting process, for maintaining adequate internal control over financial reporting and, with the assistance
of the Company's internal auditors, for assessing the effectiveness of the Company's internal control over financial
reporting. Deloitte & Touche LLP ("Deloitte") has served as the Company's independent registered public
accounting firm since 2002.
The Audit Committee of our Board of Directors is comprised of four non-employee directors, all of whom are audit
committee financial experts, as defined by the SEC. The Board of Directors has determined all of the members of
the Audit Committee are independent within the meaning of the listing standards of the NYSE, the rules of the SEC
and the Company's Standards for Director Independence. The Audit Committee operates under a written charter
adopted by the Board of Directors accessible in the corporate governance section of our website at
www.unitedhealthgroup.com/About/Corporate Governance.aspx.
Audit Committee Report
AUDIT
Other
Information
Meeting
73
The Board of Directors has proposed that shareholders ratify the appointment of Deloitte at the Annual Meeting. If
shareholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment but is
not obligated to appoint another independent registered public accounting firm. The Audit Committee evaluates, at
least every three years, whether to rotate our independent registered public accounting firm.
Meeting
Management represented to the Audit Committee that the Company's consolidated financial statements were
prepared in accordance with generally accepted accounting principles. The Audit Committee has reviewed and
discussed with management and Deloitte in separate sessions the Company's consolidated financial statements for
the years ended December 31, 2017, December 31, 2016 and December 31, 2015, management's annual report
on the Company's internal control over financial reporting and Deloitte's attestation. The Audit Committee discussed
with management and Deloitte the process used to support certifications by the Company's CEO and CFO as
required by the SEC and the Sarbanes-Oxley Act of 2002 to accompany the Company's periodic filings with the
SEC and the process used to support management's annual report on the Company's internal controls over
financial reporting.
76
Disclosure of Fees Paid to Independent Registered Public
Accounting Firm
Other
Information
Meeting
5
4 Audit
Annual
Executive
Compensation
Information
Corporate
Governance
Board of
Directors
74
Timothy P. Flynn
Michele J. Hooper
Richard T. Burke
Glenn M. Renwick, Chair
Members of the Audit Committee
Based upon the Audit Committee's review of the financial statements, independent discussions with management
and Deloitte, and the Audit Committee's review of the representation of management and the report of the
independent registered public accounting firm to the Audit Committee, and subject to the limitations of the Audit
Committee's role, the Audit Committee recommended to the Board of Directors that the audited consolidated
financial statements for the years ended December 31, 2017, December 31, 2016 and December 31, 2015 be
included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the
SEC.
The Audit Committee discussed with Deloitte matters required to be discussed by the applicable Public Company
Accounting Oversight Board standards and Rule 2-07 of Regulation S-X. Deloitte provided to the Audit Committee
the written disclosures and the letter required by applicable requirements of the Public Company Accounting
Oversight Board regarding Deloitte's communications with the Audit Committee concerning independence, and the
Audit Committee discussed with Deloitte the accounting firm's independence. In considering the independence of
Deloitte, the Audit Committee took into consideration whether the provision of non-audit services is compatible with
maintaining the independence of Deloitte. In connection with its selection of Deloitte as the Company's independent
registered public accounting firm for the year ending December 31, 2018, the Audit Committee conducted a
performance evaluation of Deloitte's services.
2
Long-Term Cash Incentive (2)
Larry C. Renfro
3,987,000
Reduces the executive officer's base salary or long- or short-term target bonus percentage
other than in connection with a general reduction affecting a group of similarly situated
employees;
Exists if the Company:
The Company must provide the executive officer with written notice of Cause within 120 days
of discovery, and the executive officer will have 60 days to remedy the conduct, if the conduct
is reasonably capable of being remedied.
Material breach of the employment agreement.
Conviction of any felony, commission of any criminal, fraudulent or dishonest act, or any
conduct that is materially detrimental to the Company's interests; or
A material violation of, or failure to act upon known or suspected violations of, the
Company's Code of Conduct;
Material failure to follow the Company's reasonable direction or to perform any duties
reasonably required on material matters;
•
*
Moves the executive officer's primary work location more than 50 miles;
Good Reason
Means:
Term
Cause
Applicable definitions for the employment agreements follow.
Information
Meeting
5
4 Audit
Other
Annual
Definition
Executive
Compensation
Makes changes that substantially diminish the executive officer's duties or responsibilities*;
Changes the executive officer's reporting relationship.
Cash Payments
Stephen J. Hemsley
Name
The following table describes the potential payments to named executive officers upon termination of employment
or a change in control of the Company as of December 31, 2017. Amounts are calculated based on the benefits
available to the named executive officers under existing plans and arrangements, including each of their
employment agreements described under "Executive Employment Agreements."
Potential Payments Upon Termination or Change in Control
Other
Information
Meeting
5
4 Audit
or
Annual
Corporate
Governance
2
Board of
Directors
98
68
Pursuant to their respective employment agreements, each executive officer is subject to provisions prohibiting his
or her solicitation of the Company's employees or competing with the Company during the term of the employment
agreement and for two years following termination for any reason. In addition, each executive officer is prohibited at
all times from disclosing confidential information related to the Company.
Non-Solicitation, Non-Competition and Confidentiality Provisions
For Mr. Rex, "Good Reason" also exists if the Company makes a change so that he no longer serves as both CFO and a
member of the Office of the CEO of the Company. For Mr. Renfro, "Good Reason" also exists if the Company makes a
change so that he no longer holds the positions of Vice Chairman of the Company and CEO of Optum, Inc. or other
equivalent positions.
The executive officer must give the Company written notice of the circumstances constituting
Good Reason within 120 days of becoming aware of the circumstances, and the Company will
I have 60 days to remedy the circumstances.
Executive
Compensation
Corporate
Governance
2
Board of
Directors
Annual Cash Incentive (1)
Marianne D.
Short
Steven H.
Nelson
Renfro
Larry C.
John F.
Rex
Compensation Component
Summary of Compensation Components
Information
✓
Meeting
4 Audit
Other
Annual
Executive
Compensation
Governance
2
Corporate
Board of
Directors
1
5
Participation in incentive compensation plans (1)
✓
✓
1
67
490
Each employment agreement and each executive officer's employment may be terminated (a) by mutual agreement
(b) by the Company with or without Cause, (c) by the executive officer and (d) upon the executive officer's death or
disability that renders him or her incapable of performing the essential functions of his or her job, with or without
reasonable accommodation. Each executive officer may also terminate his or her employment agreement and
employment at any time for Good Reason. If the executive officer's employment is terminated by the Company
without Cause or by the executive officer for Good Reason, the Company will provide the executive officer with
outplacement services consistent with those provided to similarly situated executives and pay the executive officer
severance compensation equal to the sum of (a) 200% of his or her annualized base salary as of his or her
termination date, (b) 200% of the average of his or her last two calendar year bonuses, excluding any equity
awards and any special or one-time bonus or incentive compensation payments, and (c) $12,000 to offset the costs
of benefit continuation coverage. The severance compensation will be payable over a 24-month period for
Messrs. Rex and Nelson and Ms. Short and will be payable over a 12-month period for Mr. Renfro. In addition, if
the Company terminates Mr. Rex's employment without Cause or if Mr. Rex terminates employment for Good
Reason, Mr. Rex has the option to remain employed in an advisory capacity for one year (at his then-current
annual base salary and target bonus) following notification of termination.
Termination Provisions and Material Definitions
(5) Required to reimburse the Company for full incremental costs associated with such use.
(4) Mr. Renfro's employment agreement (a) states that for purposes of determining his eligibility for retirement, he
will receive two years of service credit for each year he remains employed with the Company after age 59 and
(b) clarifies that he will be deemed eligible for retirement if, prior to otherwise becoming eligible for retirement,
his employment is terminated by the Company without Cause or he resigns for Good Reason.
(3) Annual benefit covers 60% of eligible base salary in the event of a qualifying long-term disability, subject to
the terms of the policy.
(2) Benefit provided at the Company's expense.
(1) Any adjustments to base salary, actual bonuses payable and stock-based awards are at the discretion of the
Compensation Committee.
Generally available employee benefit programs
✓
✓
✓
✓
Reasonable non-business use of corporate aircraft (5)
Additional service credit (4)
One-time sign-on / promotion equity award and / or bonus
Long-term disability policy (2)(3)
$2 million term life insurance policy (2)
Stock-based awards (1)
For Good Reason
or Not For Cause
($)
Death
($)
Base salary(1)
Change
In Control
($)
4,400,000
737,000
4,400,000
737,000
660,000
31,019,731
31,019,731
36,932,248
Acceleration of Equity(3)
2,000,000
Insurance Benefits
4,400,000
737,000
Long-Term Cash Incentive (2)
737,000
Annual Cash Incentive (1)
Cash Payments
24,477,095 22,987,095 2,125,000 23,470,281
21,354,291
Total(4)
23,470,281
2,000,000 510,000
20,352,095 20,352,095
17,392,291
Acceleration of Equity (3)
Insurance Benefits
8,962,000
Long-Term Cash Incentive (2)
36,932,248 36,932,248
45,894,248
Cash Payments
Disability Retirement
($)
($)
Marianne D. Short
19,547,261 22,023,374 19,323,374
16,307,261 16,307,261 19,323,374 19,323,374
21,007,261
2,000,000
19,323,374
23,035,374
Total (4)
Acceleration of Equity(3)
Total(4)
540,000
2,700,000
2,700,000 2,700,000
Annual Cash Incentive (1)
3,712,000
Cash Payments
Steven H. Nelson
42,069,248 37,669,248
36,816,731
38,156,731
Insurance Benefits
2,125,000 2,125,000 2,125,000
Long-Term Cash Incentive (2)
3,962,000
Cash Payments
David S. Wichmann
52,683,052 52,683,052
77,518,650 76,527,495 71,327,495
77,098,650
71,544,368
783,127
17,861,316
17,861,316
783,127
5,200,000
5,200,000
783,127
17,861,316
420,000
44,504,207 44,504,207
52,683,052
8,750,000
8,750,000
5,200,000
783,127
17,861,316
17,861,316
Acceleration of Equity(3)
Insurance Benefits
DSUS in the SERP
Long-Term Cash Incentive (2)
Annual Cash Incentive (1)
1,000,000
Annual Cash Incentive (1)
9,362,000
Annual Cash Incentive (1)
Total(4)
5,200,000
45,599,619 40,399,619
5,200,000
Cash Payments
40,634,847 39,414,847
48,966,037
39,604,037 39,604,037
32,639,265
32,639,265
39,604,037
Total(4)
John F. Rex
Acceleration of Equity (3)
795,582
795,582
795,582
795,582
Insurance Benefits
2,000,000
5,200,000
780,000
Long-Term Cash Incentive (2)
The record date for the Annual Meeting is April 10, 2018. Only owners of record of shares of common stock of the
Company at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting, or
at any adjournments or postponements of the Annual Meeting. On April 10, 2018, there were 961,076,816 shares
of common stock issued, outstanding and entitled to vote. Each owner of record on the record date is entitled to
one vote for each share of common stock held.
•
The record date was established by our Board of Directors as required by the Delaware General Corporation Law.
Owners of record of common stock at the close of business on the record date are entitled to:
•
receive notice of the Annual Meeting; and
12. What is the record date and what does it mean?
voting at the Annual Meeting; or
13. If I submit a proxy, may I later revoke it and/or change my vote?
Shareholders of record may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
signing another proxy card with a later date and delivering it to an officer of the Company before the
Annual Meeting;
•
The Notice is not a proxy card and it cannot be used to vote your shares.
voting again over the Internet or by telephone prior to 11:59 p.m., Eastern Time, on June 3, 2018;
⋅
vote at the Annual Meeting and any adjournments or postponements of the Annual Meeting.
•
Directors
By Telephone or Internet. All shareholders of record can vote by telephone from the United States and Canada,
using the toll-free telephone number on the proxy card, or through the Internet using the procedures and
instructions described on the Notice or proxy card. Street name holders may vote by Internet or telephone if their
bank or broker makes those methods available, in which case the bank or broker will enclose the instructions with
the proxy materials. The Internet and telephone voting procedures are designed to authenticate shareholders'
identities, allow shareholders to vote their shares and to confirm that their instructions have been properly
recorded.
You can listen to the live webcast of the Annual Meeting by visiting www.unitedhealthgroup.com and clicking on
"Investors" and then on the link to the webcast. An archived copy of the webcast will also be available on our
website for 14 days following the Annual Meeting.
10. How can I listen to the live webcast of the Annual Meeting?
•
11. What different methods can I use to vote?
By Written Proxy. All shareholders of record who received proxy materials by mail can vote by written proxy card. If
you received a Notice or the proxy materials electronically, you may request a proxy card at any time by following
the instructions on the Notice or on the voting website. If you are a street name holder, you will receive instructions
on how you may vote from your bank or broker, unless you previously enrolled in electronic delivery.
12
79
In Person. All shareholders of record may vote in person at the Annual Meeting. Street name holders may vote in
person at the Annual Meeting if they have a legal proxy, as described in Question 8.
Board of
2
Corporate
Governance
Executive
Compensation
4 Audit
Annual
Meeting
Other
Information
1
notifying the Secretary to the Board of Directors in writing before the Annual Meeting.
•
•
to allow the independent inspectors of the election to certify the results of the vote.
We have retained Broadridge Financial Solutions to tabulate the votes. We have retained CT Hagberg LLC to act
as independent inspector of the election.
15. How may I confirm my vote was counted?
We are offering our shareholders the opportunity to confirm their votes were cast in accordance with their
instructions. Vote confirmation is consistent with our commitment to sound corporate governance standards and an
important means to increase transparency. Beginning May 21, 2018 and for up to two months after the Annual
Meeting, you may confirm your vote beginning 24 hours after your vote is received, whether it was cast by proxy
card, electronically or telephonically. To obtain vote confirmation, log onto www.proxyvote.com using your control
number (located on your Notice or proxy card) and receive confirmation on how your vote was cast. If you hold
your shares through a bank or brokerage account, the ability to confirm your vote may be affected by the rules of
your bank or broker and the confirmation will not confirm whether your bank or broker allocated the correct number
of shares to you.
16. What are my choices when voting for director nominees and what vote is needed to
elect directors?
In the vote on the election of director nominees, shareholders may:
⋅
vote in favor of a nominee;
•
vote against a nominee; or
abstain from voting with respect to a nominee.
A director nominee will be elected if the number of votes cast "for" the nominee exceeds the number of votes cast
"against" the nominee. To address a provision in Delaware law that allows a director who has not been re-elected
to remain in office until a successor is elected and qualified, we have a policy requiring any director who does not
receive a greater number of votes “for” than “against” his or her election in an uncontested election to tender his
or her resignation from the Board of Directors following certification of the shareholder vote. Under this policy, the
Board of Directors will determine whether to accept or reject the offer to resign within 90 days of certification of the
shareholder vote. The text of this policy appears in our Principles of Governance, which is available on our website
at www.unitedhealthgroup.com.
81
If you hold shares in our 401(k) savings plan and do not vote your shares or specify your voting instructions on
your proxy card, the administrators of the 401(k) savings plan will vote your 401(k) plan shares in the same
proportion as the shares for which they have received voting instructions. To allow sufficient time for voting by
the 401(k) administrators, your voting instructions must be received by 11:59 p.m. Eastern Time on
May 30, 2018.
Board of
if a shareholder makes a written comment on the proxy card or otherwise communicates his or her vote to
management; or
•
in the case of a contested proxy solicitation;
•
submitting new voting instructions in the manner provided by your bank or broker; or
contacting your bank or broker to request a legal proxy in order to vote your shares in person at the
Annual Meeting.
80
60
1
Board of
Directors
2
Street name holders may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
Corporate
Governance
4 Audit
Annual
Meeting
Other
Information
14. Are votes confidential? Who counts the votes?
We hold the votes of all shareholders in confidence from directors, officers and employees except:
⋅
as necessary to meet applicable legal requirements and to assert or defend claims for or against the
Company;
Executive
Compensation
If you hold your shares in street name, you will receive one Notice or voting instruction form for each account you
have with a bank or broker. If you hold shares in multiple accounts, you may need to provide voting instructions for
each account.
Board of
•
Also, once the business of the Annual Meeting is concluded, management of the Company will give a business
update. Management, Chairs of each standing Board committee and representatives of Deloitte & Touche LLP will
be available to respond to questions from shareholders.
2.
What is a proxy?
It is your legal designation of another person to vote the stock you own in the manner you direct. That other
person is called a proxy. If you designate someone as your proxy in a written document, that document also is
called a proxy or a proxy card. We have designated Dannette L. Smith and Faraz A. Choudhry to serve as proxies
for the Annual Meeting. The Board of Directors will use the proxies at the 2018 Annual Meeting of Shareholders.
The proxies also may be voted at any adjournments or postponements of the meeting.
3. What is a proxy statement?
The Company's Board of Directors is soliciting proxies for use at the 2018 Annual Meeting of Shareholders. A
proxy statement is a document we give you when we are soliciting your vote pursuant to SEC regulations.
4. What is the difference between a shareholder of record and a shareholder who holds
stock in street name?
Shareholders of Record. If your shares are registered in your name with our transfer agent, EQ Shareowner
Services, you are a shareholder of record with respect to those shares and the Notice of Internet Availability of
Proxy Materials ("Notice") or the proxy materials were sent directly to you by Broadridge Financial Solutions.
Street Name Holders. If you hold your shares in an account at a bank or broker, then you are the beneficial owner
of shares held in “street name.” The Notice or proxy materials were forwarded to you by your bank or broker, who
is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you
have the right to direct your bank or broker on how to vote the shares held in your account.
77
1
2
Directors
Corporate
Governance
Executive
Compensation
ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting
firm.
an advisory vote to approve our executive compensation (a “Say-on-Pay" vote); and
•
•
1
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Annual
Other
Annual
4 Audit
Information
ANNUAL MEETING
Questions and Answers About the Annual Meeting and Voting
1. What is the purpose of the Annual Meeting?
At the Annual Meeting, shareholders will act upon the matters outlined in the Notice of Annual Meeting of
Shareholders. These include:
•
election of directors;
Meeting
in any Company benefit plan.
4 Audit
5.
Executive
Compensation
4 Audit
Annual
Meeting
Other
Information
Please note that use of cameras, phones or other similar electronic devices and the bringing of large bags,
packages or sound or video recording equipment will not be permitted in the meeting room. Attendees will also be
required to comply with meeting guidelines and procedures that will be available at the meeting. A copy of the
meeting guidelines and procedures is also available on our website at www.unitedhealthgroup.com/Investors/
Annual Meeting.aspx.
8. How can I vote at the Annual Meeting if I own shares in street name?
If you are a street name holder, you may not vote your shares at the Annual Meeting unless you obtain a legal
proxy from your bank or broker. A legal proxy is a bank's or broker's authorization for you to vote the shares it
holds in its name on your behalf. To obtain a legal proxy, please contact your bank or broker for further
information.
9. What shares are included on the Notice, proxy card or voting instruction form?
If you are a shareholder of record, you will receive only one Notice or proxy card for all the shares of common
stock you hold:
•
in certificate form;
•
in book-entry form; and
Corporate
Governance
Directors
2
1
How many shares must be present to hold the Annual Meeting?
Other
Information
In order to conduct the Annual Meeting, holders of a majority of the shares entitled to vote as of the close of
business on the record date must be present in person or by proxy. This constitutes a quorum. Your shares are
counted as present if you attend the Annual Meeting and vote in person, if you vote your proxy over the Internet or
by telephone, or by mail. Abstentions and broker non-votes will be counted as present for purposes of establishing
a quorum. If a quorum is not present, we will adjourn the Annual Meeting until a quorum is obtained.
6. How can I access the proxy materials for the Annual Meeting?
Shareholders may access the proxy materials, which include the Notice of Annual Meeting of Shareholders, Proxy
Statement (including a form of proxy card) and Annual Report for the year ended December 31, 2017 on the
Internet at www.unitedhealthgroup.com/proxymaterials. We will also provide a hard copy of any of these documents
free of charge upon request to: UnitedHealth Group Incorporated, 9900 Bren Road East, Minnetonka,
Minnesota 55343, Attention: Secretary to the Board of Directors.
Instead of receiving future copies of our proxy materials by mail, you can elect to receive an e-mail that will provide
electronic links to these documents. Opting to receive your proxy materials online will save the cost of producing
and mailing documents to your home or business, will give you an electronic link to the proxy voting site and will
also help preserve environmental resources.
Shareholders of Record. If you vote on the Internet at www.proxyvote.com, simply follow the prompts for enrolling
in the electronic proxy delivery service. You also may enroll in the electronic proxy delivery service at any time by
going directly to www.unitedhealthgroup.com and following the enrollment instructions.
Meeting
Street Name Holders. If you hold your shares in a bank or brokerage account, you also may have the opportunity
to receive the proxy materials electronically. Please check the information provided in the proxy materials you
receive from your bank or broker regarding the availability of this service.
How do I attend the Annual Meeting? What do I need to bring?
To attend the Annual Meeting, you will need to bring an admission ticket and valid photo identification.
Only our shareholders are entitled to attend the meeting. The procedure you must follow in order to attend the
meeting depends on whether you are a shareholder of record or a street name holder of our common stock.
Shareholders of Record. If you are a shareholder of record and received a Notice, the Notice is your admission
ticket. If you are a shareholder of record and received proxy materials by mail, your admission ticket is attached to
your proxy card. You will need to bring the Notice or the admission ticket and valid photo identification with you to
the Annual Meeting in order to be admitted to the meeting.
Street Name Holders. If you hold your shares in street name, bring with you to the Annual Meeting valid photo
identification and your most recent brokerage statement or a letter from your broker or other nominee indicating
that you hold our shares. We will use that statement or letter to verify your ownership of common stock and admit
you to the Annual Meeting; however, you will not be able to vote your shares at the Annual Meeting without a legal
proxy, as described in Question 8.
78
Board of
7.
2
(6) Includes the indirect holdings included in footnotes 3, 4 and 5.
Corporate
Governance
*
Valerie C. Montgomery Rice, M.D.
543(2)
543
Glenn M. Renwick
79,066(2)
79,066
*
Kenneth I. Shine, M.D.
29,150(2)
29,150
Gail R. Wilensky, Ph.D.
56,677(2)
28,370
85,047
*
Stephen J. Hemsley
David S. Wichmann
John F. Rex
Larry C. Renfro
3,251,068(4)(5)
628,018
3,879,086
181
767,988(4)
181
28,035
of April 10, 2018
Total(1)
Stock
Outstanding
William C. Ballard, Jr.
71,913 (2)
20,000
91,913
Richard T. Burke
1,862,533(2)(3)
30,640
1,893,173
*
Timothy P. Flynn
1,877
*
1,877
Michele J. Hooper
32,582(2)
5,000
*
37,582
Rodger A. Lawson
28,035(2)
F. William McNabb III
411,646
1,179,633
*
85
55
Board of
1
2
Directors
Corporate
Governance
Executive
Compensation
4 Audit
Annual
Meeting
Other
Information
(4) Includes the following number of shares held in trust for the individuals pursuant to our 401(k) plan:
Mr. Hemsley - 312.7836; and Mr. Wichmann - 234.3994. Pursuant to the terms of the 401(k) plan, a
participant has sole voting power over his or her shares; however, the plan trustee votes all unvoted shares in
the same proportions as the actual proxy votes submitted by plan participants.
(5) Includes 81,286.341 DSUs, 70,000 shares held in charitable foundations and 1,672,453 shares held in grantor
retained annuity trusts, all of which are beneficially owned by Mr. Hemsley.
Householding Notice
We have adopted “householding” procedures that allow us to deliver one Notice or single copies of proxy
statements and annual reports to any household at which two or more shareholders reside who share the same
last name or whom we believe to be members of the same family. Each registered shareholder living in that
household will receive a separate proxy card if the householded proxy materials are received by mail.
If you participate in householding but wish to receive a separate copy of the Notice, this proxy statement or our
2017 Annual Report for the year ended December 31, 2017, please notify us at: Secretary to the Board of
Directors, UnitedHealth Group Center, 9900 Bren Road East, Minnetonka, Minnesota 55343, telephone
(877) 536-3550. You may opt-in or opt-out of householding at any time by contacting our transfer agent,
EQ Shareowner Services, at P.O. Box 64854, St. Paul, Minnesota 55164-0854, telephone (800) 468-9716. Your
householding election will apply to all materials mailed more than 30 days after your request is received.
Your participation in the householding program is encouraged. As an alternative to householding, you may choose
to receive documents electronically. Instructions for electing electronic delivery are described in Question 6 of the
"Questions and Answers About the Annual Meeting and Voting" section of this proxy statement.
We have been notified that some banks and brokers will household proxy materials. If your shares are held in
“street name” by a bank or broker, you may request information about householding from your bank or broker.
Other Matters at Meeting
In accordance with the requirements of advance notice described in our Bylaws, no shareholder nominations or
shareholder proposals other than those included in this proxy statement will be presented at the 2018 Annual
Meeting. We know of no other matters that may come before the Annual Meeting. However, if any matters calling
for a vote of the shareholders, other than those referred to in this proxy statement, should properly come before
the meeting, the persons named as proxies will vote on such matters according to their individual judgment.
98
86
(3) Includes 86,000 shares held in trust for the benefit of Mr. Burke's children. Mr. Burke does not have voting or
dispositive power over these shares and disclaims beneficial ownership of these shares.
-
Mr. Renwick - 43,097; Dr. Shine — 28,948; and Dr. Wilensky - 21,082.
-
47,870
237,662
285,532
*
142,408
222,500
364,908
*
Steven H. Nelson
38,249
38,249
Common Stock
Directors
78,147
139,806
217,953
All current directors, executive officers and
director nominees as a group (18 individuals)
6,483,271(6)
1,913,740
8,397,011
0.87%
*
Less than 1%.
(1) Unless otherwise noted, each person and group identified possesses sole voting and dispositive power with
respect to the shares shown opposite such person's or group's name. Shares not outstanding but deemed
beneficially owned by virtue of the right of an individual to acquire them within 60 days of April 10, 2018 are
treated as outstanding only when determining the amount and percent owned by such individual or group.
(2) Includes the following number of vested DSUs which are considered owned under the Company's stock
ownership guidelines for directors: Mr. Ballard 22,613; Mr. Burke · 22,613; Mr. Flynn — 1,877;
Ms. Hooper - 29,212; Mr. Lawson - 21,035; Mr. McNabb 181; Dr. Montgomery Rice - 543;
Marianne D. Short
Identity of Group
*
Ownership of
•
FOR the advisory approval of our executive compensation; and
FOR the ratification of the appointment of Deloitte & Touche LLP as the Company's independent registered
public accounting firm.
21. Are my shares voted if I do not provide a proxy?
If you are a shareholder of record and do not provide a proxy, you must attend the Annual Meeting in order to
vote. If you hold shares through an account with a bank or broker, your shares may be voted by the bank or broker
on some matters if you do not provide voting instructions. Banks and brokers have the authority under NYSE rules
to vote shares for which their customers do not provide voting instructions on routine matters. The ratification of
Deloitte & Touche LLP as our independent registered public accounting firm is considered a routine matter. The
other matters being voted on at the Annual Meeting are not considered routine and banks and brokers cannot vote
shares without instruction on those matters. Shares that banks and brokers are not authorized to vote are counted
as "broker non-votes."
82
62
1
Board of
Directors
2
Corporate
Governance
Executive
Compensation
4 Audit
Annual
Meeting
Other
Information
22. How are abstentions and broker non-votes counted?
Abstentions have no effect on the election of directors. Abstentions have the effect of an "AGAINST" vote on the
advisory vote to approve our executive compensation and the ratification of the appointment of the Company's
independent registered public accounting firm. Broker non-votes have no effect on the vote for any matter at the
meeting.
23. Does the Company have a policy about directors' attendance at the Annual Meeting
of Shareholders?
The Company expects directors to attend the Annual Meeting, absent a compelling reason.
24. What are the deadlines for submitting director nominees and other shareholder
proposals for the 2019 Annual Meeting?
Shareholder Director Nominations for Inclusion in the Company's Proxy Materials (Proxy Access). To be considered
for inclusion in our proxy statement for our 2019 Annual Meeting, director nominations submitted pursuant to
Section 3.04 of our Bylaws must be received at our principal executive offices at UnitedHealth Group Center,
9900 Bren Road East, Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors, no earlier than
November 21, 2018 and no later than December 21, 2018, and must be submitted in accordance with Section 3.04
of our Bylaws. If we do not receive the information required by our Bylaws by the deadline described above, the
director nominee will be excluded from our proxy statement for our 2019 Annual Meeting.
Other Shareholder Proposals to Be Considered for Inclusion in the Company's Proxy Materials (SEC Rule 14a-8).
To be considered for inclusion in our proxy statement for our 2019 Annual Meeting, shareholder proposals
submitted pursuant to SEC Rule 14a-8 must be received no later than December 21, 2018 and be submitted in
accordance with Rule 14a-8. These shareholder proposals must be in writing and received by the deadline
described above at our principal executive offices at UnitedHealth Group Center, 9900 Bren Road East,
Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors. If we do not receive a shareholder
proposal by the deadline described above, the proposal may be excluded from our proxy statement for our 2019
Annual Meeting.
FOR the election of all director nominees;
Other Shareholder Proposals for Presentation at the 2019 Annual Meeting (Advance Notice Provision). A
shareholder proposal that is not submitted for inclusion in our proxy statement for our 2019 Annual Meeting
pursuant to Section 3.04 of our Bylaws or SEC Rule 14a-8 and is sought to be presented at the 2019 Annual
Meeting must comply with the "advance notice" deadlines in our Bylaws. As such, these shareholder proposals
must be received no earlier than February 4, 2019, and no later than the close of business on March 6, 2019.
These shareholder proposals must be in writing and received within the "advance notice" deadlines described
above at our principal executive offices at UnitedHealth Group Center, 9900 Bren Road East, Minnetonka,
Minnesota 55343, Attention: Secretary to the Board of Directors. These shareholder proposals must be in the form
provided in our Bylaws and must include the information set forth in the Bylaws. If we do not receive a shareholder
proposal and the required information by the “advance notice" deadlines described above, the proposal may be
excluded from consideration at the 2019 Annual Meeting. The "advance notice” requirement described above
supersedes the notice period in SEC Rule 14a-4(c)(1) of the federal proxy rules regarding the discretionary proxy
voting authority with respect to such shareholder business.
•
20. What if I do not specify a choice for a matter when returning a proxy?
or Vesting Within 60 Days
Executive
Compensation
Annual
4 Audit
5
Meeting
Other
Information
17. What are my choices when voting on each of the other proposals considered at the
Annual Meeting?
For each of the other proposals, shareholders may:
vote for the proposal;
•
vote against the proposal; or
•
abstain from voting on the proposal.
18. What vote is needed to approve each of the other proposals?
The proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting
firm must be approved by the holders of a majority of the shares of common stock present and entitled to vote in
person or by proxy at the Annual Meeting in order to pass. For the advisory vote to approve our executive
compensation, there is no minimum approval necessary since it is an advisory vote; however, the Board of
Directors will consider the results of the advisory vote when considering future decisions related to such proposal.
19. What is the Board's recommendation with regard to each proposal?
The Board of Directors makes the following recommendation with regard to each proposal:
•
•
•
The Board of Directors recommends a vote FOR advisory approval of the Company's executive
compensation.
The Board of Directors recommends a vote FOR ratification of the appointment of Deloitte & Touche LLP
as our independent registered public accounting firm.
Shareholders should specify their choice for each matter in the manner described in the Notice or on their proxy
card. If no specific instructions are given, proxies that are signed and returned will be voted:
83
The Board of Directors recommends a vote FOR each of the director nominees.
1
6.88%
57,586,845
5.94%
(1) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by
BlackRock, Inc. on January 23, 2018. BlackRock, Inc. reported having sole voting power over 59,194,634
shares and sole dispositive power over 68,561,148 shares.
(2) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by The
Vanguard Group, Inc. on February 9, 2018. The Vanguard Group, Inc. reported having sole voting power over
1,383,090 shares, shared voting power over 215,662 shares, sole dispositive power over 65,204,167 shares
and shared dispositive power over 1,563,785 shares.
(3) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by FMR LLC
on February 13, 2018. FMR LLC reported having sole voting power over 6,933,658 shares and sole
dispositive power over 57,586,845 shares.
84
==
Board of
1
2
Directors
Executive
Compensation
4 Audit
Annual
Meeting
Other
Information
The following table provides information about the beneficial ownership of our common stock as of April 10, 2018
by each director and nominee for director, each named executive officer, and by all of our current directors,
executive officers and director nominees as a group. As of April 10, 2018, there were 961,076,816 shares of our
common stock issued, outstanding and entitled to vote.
Number of Shares
Deemed Beneficially
Owned as a Result of
Equity Awards
Exercisable
Percent of
Common
80
Name of Beneficial Owner or
66,767,952
Boston, Massachusetts 02210
Corporate
Governance
FMR LLC (3)
2
245 Summer Street
Corporate
Governance
Executive
Compensation
4 Audit
Annual
Meeting
Board of
Directors
25. How are proxies solicited and what is the cost?
We bear all expenses incurred in connection with the solicitation of proxies. We have engaged Morrow Sodali LLC
to assist with the solicitation of proxies for a base fee of $20,000 plus expenses. We will reimburse brokers,
fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of common stock.
Our directors, officers and employees may also solicit proxies by mail, telephone and personal contact. They will
not receive any additional compensation for these activities.
26. Where can I find more information about my voting rights as a shareholder?
The SEC has an informational website that provides shareholders with general information about how to cast their
vote and why voting should be an important consideration for shareholders. You may access that information at
https://www.sec.gov/files/sec-guide-to-proxy-brochures.pdf or at www.investor.gov.
Other
Information
The following table provides information about shareholders known to us to beneficially own more than 5% of the
outstanding shares of our common stock, based solely on the information filed by such shareholders in 2018 for
the year ended December 31, 2017 on Schedule 13G under the Exchange Act.
The Vanguard Group, Inc. (2)
100 Vanguard Boulevard
Security Ownership of Certain Beneficial Owners and Management
New York, New York 10055
55 East 52nd Street
BlackRock, Inc. (1)
Malvern, Pennsylvania 19355
7.10%
Class
68,561,148
Amount and Nature of Percent of
Beneficial Ownership
Name and Address of Beneficial Owner
•
•
•
•
•
•
1
•
•
Revenues increased 12% to $226.2 billion from $201.2 billion in 2017;
•
―
We are a diversified health care company whose mission is to help people live healthier lives and to help make the
health system work better for everyone. UnitedHealth Group, Optum and UnitedHealthcare are actively engaged in
helping to achieve the Triple Aim better health outcomes, lower costs and a better consumer experience. We
put the needs of others first, one person at a time. In turn, we grow and earn the opportunity to serve more people
in more ways, delivering exceptional returns for society and for our shareholders. We again achieved strong
business results in 2018, including:
•
Operating earnings increased 14% year-over-year to $17.3 billion; net earnings to UnitedHealth Group
common shareholders increased to $12 billion; and cash flows from operations grew 16% year-over-year to
$15.7 billion;
Corporate Governance
Return on equity was consistent with the prior year at 24.4% in 2018;
Cumulative shareholder return for UnitedHealth Group, which is defined as the increase in stock price,
together with dividends reinvested when paid, was 122% over the 2016-2018 time period and 258% over
the 2014-2018 time period. Cumulative shareholder return for the S&P 500 Index was 30% over the
2016-2018 time period and 50% over the 2014-2018 time period;
Our annual cash dividend rate increased to $3.60 per share, paid quarterly, representing a 20% increase
over the annual cash dividend rate of $3.00 per share paid quarterly since the second quarter of 2017;
UnitedHealth Group was the top ranked company in the insurance and managed care sector on Fortune's
2019 "World's Most Admired Companies" list. This is the ninth consecutive year UnitedHealth Group has
ranked No. 1 overall in its sector. The Company ranked No. 1 on all nine key attributes of reputation
innovation, people management, use of corporate assets, social responsibility, quality of management,
financial soundness, long-term investment, quality of products and services and global competitiveness.
The Company was rated No. 1 in innovation for the tenth consecutive year.
UnitedHealth Group was named to both the Dow Jones Sustainability World and North America Indices for
the 20th consecutive year;
UnitedHealth Group was included among the 2018 Best Employers for Diversity by Forbes;
UnitedHealth Group was named one of America's Most JUST Companies by JUST Capital and Forbes in
2018. The JUST 100 rankings measure how U.S. companies perform on issues Americans care about
most, including worker pay and treatment, customer respect, product quality and environmental impact; and
In the 2017-2018 Newsweek Green Rankings, created in partnership with Corporate Knights Capital and
HIP Investor, UnitedHealth Group ranked in the top 10% out of the largest 500 U.S. companies in
corporate sustainability and environmental impact.
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for
a reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
1
UnitedHealth Group is committed to meeting high standards of ethical behavior, corporate governance and
business conduct. Our company and our people are committed to the shared cultural values of integrity,
compassion, innovation, relationships and performance. This commitment has led us to implement many
governance best practices, including the following:
•
•
Business Results
•
Diluted earnings per share increased 14% to $12.19 per share from $10.72 in 2017. Adjusted earnings per
share increased 28% to $12.88 per share from $10.07 per share in 2017;
This summary highlights information contained elsewhere in this proxy statement. We encourage you to review the
entire proxy statement.
71
89
•
Disclosure of Fees Paid to Independent Registered Public Accounting Firm ..
69
71
4
Audit Committee's Consideration of Independence of Independent
Registered Public Accounting Firm ………......
71
Audit and Non-Audit Services Approval Policy..
Audit
Proposal 3 Ratification of Independent Registered Public
Accounting Firm...
72
Proposal 4- Shareholder Proposal Regarding Amendment to Proxy
Access Bylaw.......
73
5
Proxy Summary
Annual Meeting
Other Information
Questions and Answers About the Annual Meeting and Voting..
Security Ownership of Certain Beneficial Owners and Management
Householding Notice ......
Other Matters at Meeting...
Certain Relationships and Transactions
Section 16(a) Beneficial Ownership Reporting Compliance….....
Appendix A - Reconciliation of Non-GAAP Financial Measures..
==
80% 0 0 0 2 2
88
87
86
86
76
84
6
Board Structure and Composition - Our directors are elected annually by a majority vote of our
shareholders. We have an Executive Chairman of our Board of Directors and an Independent Lead
Director, and nine of our eleven directors are independent.
Performance based compensation arrangements, including performance based equity awards, that use a
variety of performance measures, with different measures used for annual and long term plans.
Nominating Advisory Committee
•
Base salary $1.3 million.
•
Cash incentive awards
-
Annual cash incentive award of $4.5 million and long-term cash incentive award
of $890,600, which reflect the Company's performance against pre-set goals and continued strong
leadership by Mr. Wichmann.
Equity awards
―
Performance shares with a target grant date fair value of $5.55 million, restricted stock
units with a grant date fair value of $2.775 million and stock options with a grant date fair value of
$2.775 million.
•
Company matching contributions - $178,875 under our 401(k) and executive savings plan.
Information regarding compensation paid to each of our named executive officers in 2018 is described in the
"Compensation Discussion and Analysis" section.
3
Strong Governance Standards in Oversight of Executive Compensation Policies
Summary of Compensation Paid to CEO David S. Wichmann in 2018
We maintain strong governance standards in the oversight of our executive compensation policies and practices,
including:
•
Double trigger change in control arrangements for equity grants.
•
•
.
No excise tax gross ups in the event of a change in control.
Our 2011 Stock Incentive Plan prohibits the repricing of stock options and stock appreciation rights without
shareholder approval.
Annual advisory shareholder votes to approve the Company's executive compensation.
•
Stock ownership guidelines requiring executive officers to beneficially own specified amounts of the
Company's common stock within five years of their appointment as an executive officer.
•
•
Audit Committee Report
A stock retention policy generally requiring executive officers to hold, for at least one year, one third of the
net shares acquired upon vesting or exercise of any equity award.
•
We provide standard employee benefits and very limited
-
Standard benefits and very limited perquisites
perquisites to our executive officers.
-
Our Nominating Advisory Committee, comprised of long-term
shareholders of the Company and a member of the medical community, provides our Nominating and
Corporate Governance Committee (the "Nominating Committee”) with additional input regarding desirable
characteristics of director candidates and the composition of our Board.
Proxy Access -
_
A shareholder or group of shareholders who have owned at least 3% of our common
stock for at least three years, and who comply with specified procedural and disclosure requirements, may
include in our proxy materials shareholder-nominated director candidates representing up to 20% of the
Board.
―
Stock Ownership Guidelines - Each of our executive officers and directors were in compliance with our
stock ownership guidelines as of April 9, 2019. Mr. Wichmann, our CEO, is required to own shares equal to
eight times his base salary by the fifth anniversary of his appointment as CEO. As of April 9, 2019,
Mr. Wichmann owned shares equal to 169 times his base salary.
-
Stock Retention Policy - We generally require executive officers to hold, for at least one year, one-third of
the net shares acquired upon vesting or exercise of any equity award. Our directors are generally required
to hold all equity awards granted until completion of service on the Board, or until they have met our stock
ownership requirements.
-
Independent Compensation Consultant
Our Compensation and Human Resources Committee (the
"Compensation Committee”) uses an independent compensation consultant that performs no other
consulting or services for the Company.
Political Contributions Disclosure We publicly disclose our political contributions and public advocacy
efforts and the contributions of our federal and state political action committees.
Environmental Policy - We seek to minimize our environmental impact and to heighten our employees'
awareness of the importance of the environment.
Short Selling and Hedging Transactions in Company Securities - Our insider trading policy prohibits all
directors, executive officers and employees from engaging in short sales and hedging transactions relating
2
to our common stock, and requires advance approval of the Compensation Committee of any pledging of
common stock by directors, executive officers and other members of management.
Reward long-term growth and focus management on sustained success and shareholder value creation
Compensation of our executive officers is weighted toward equity awards that encourage sustained
performance and drive shareholder returns over time.
Enhance the value of the business Incentive compensation is designed to grow and sustain the
longer-term value of the Company and avoid excessive risk-taking.
A substantial portion of the total compensation of our executive officers is earned
based on achievement of enterprise-wide goals that drive long-term performance, including growth and
shareholder value.
Pay-for-performance
•
•
Chief Executive Officer ("CEO") Succession Planning - Our succession plan, which is reviewed annually
by our Board of Directors, addresses both an unexpected loss of our CEO and longer-term succession.
Board Refreshment and Tenure Since January 2017, we have appointed five new directors to the Board
who are standing for election this year, four of whom are independent, advancing both the skill and
experience profile of the Board as well as its diversity.
•
Our executive compensation program uses a mix of base salary, annual and long-term cash incentives, equity
awards and broad-based benefits to attract and retain highly qualified executives and maintain a strong relationship
between executive pay and Company performance. Shareholders again expressed strong support for our executive
compensation program at our 2018 Annual Meeting of Shareholders, with more than 95% of the votes cast in favor
of our Say-on-Pay proposal.
Executive Compensation
Our Board of Directors, assisted by its committees, oversees management's enterprise-wide risk management
activities. Risk management activities include assessing and taking actions necessary to mitigate and manage risk
incurred in connection with the long-term strategic direction and operation of our business.
Enterprise-Wide Risk Oversight
See the "Corporate Governance" portion of this proxy statement for further information on our governance
practices.
Absence of Rights Plan — We do not have a shareholder rights plan, commonly referred to as a "poison
pill.”
Our Overall Compensation Program Principles
Page
—
88
•
•
•
•
Elect the eleven nominees set forth in the attached proxy statement to the Company's
Board of Directors.
Conduct an advisory vote to approve the compensation paid to the Company's named
executive officers as disclosed in the attached proxy statement (a "Say-on-Pay" vote).
Ratify the appointment of Deloitte & Touche LLP as the independent registered public
accounting firm for the Company for the year ending December 31, 2019.
Consider a shareholder proposal set forth in the attached proxy statement, if properly
presented at the Annual Meeting.
Transact other business that properly may come before the Annual Meeting or any
adjournments or postponements of the meeting.
To attend the Annual Meeting in person, you will need to bring an admission ticket and
valid photo identification. You may attend the Annual Meeting by following the procedures
described under Question 7 of the "Questions and Answers About the Annual Meeting and
Voting" section in the attached proxy statement.
Important. Even if you plan to attend the Annual Meeting, we still encourage you to submit
your proxy by Internet, telephone or mail prior to the meeting. If you later choose to revoke
your proxy or change your vote, you may do so by following the procedures described
under Question 13 of the "Questions and Answers About the Annual Meeting and Voting"
section in the attached proxy statement.
You can listen to the live webcast of the Annual Meeting by visiting our website at
www.unitedhealthgroup.com and clicking on "Investors" and then on the link to the
webcast. See Question 10 of the "Questions and Answers About the Annual Meeting and
Voting" section in the attached proxy statement.
By Order of the Board of Directors,
Dannett L. Smitt
Dannette L. Smith
April 9, 2019. Only shareholders of record of the Company's common stock at the close of
business on the record date are entitled to receive notice of, and to vote at the Annual
Meeting and any adjournments or postponements of the meeting.
Secretary to the Board of Directors
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 3, 2019:
The Notice of Internet Availability of Proxy Materials, Notice of Annual Meeting of Shareholders, Proxy
Statement and Annual Report are available at www.unitedhealthgroup.com/proxymaterials.
Table of Contents
Page
Proxy Summary...
Proposal 1
―
1
Board of
Directors
Election Of Directors..
Director Nomination Process
2019 Director Nominees
Director Compensation.
Cash Compensation
April 19, 2019
Equity-Based Compensation
Chicago, Illinois 60654
Lower Level Conference Center
A clawback policy entitling the Board of Directors to seek reimbursement from senior executives if they are
involved in fraud or misconduct that causes a material restatement or in the event of a senior executive's
violation of non-compete, non-solicit or confidentiality provisions.
April 19, 2019
UNITEDHEALTH GROUP
9900 Bren Road East, Minnetonka, Minnesota 55343
Dear Shareholder:
We cordially invite you to attend our 2019 Annual Meeting of Shareholders. We will hold our meeting on Monday,
June 3, 2019, at 10:00 a.m. Central Time in the lower level conference center at 300 North LaSalle, Chicago,
Illinois 60654.
As a shareholder of UnitedHealth Group, you play an important role in our company by considering and taking
action on the matters set forth in the attached proxy statement. We appreciate the time and attention you invest in
making thoughtful decisions.
Attached you will find a notice of meeting and proxy statement containing further information about the items upon
which you will be asked to vote and the meeting itself, including:
•
How to obtain admission to the meeting if you plan to attend; and
•
Different methods you can use to vote your proxy, including by Internet, telephone and mail.
Every shareholder vote is important, and we encourage you to vote as promptly as possible. If you cannot attend
the meeting in person, you may listen to the meeting via webcast. Instructions on how to access the live webcast
are included in the proxy statement.
Sincerely,
David S. Wichmann
Chief Executive Officer
300 North LaSalle
A
Stephen J. Hemsley
Executive Chairman of the Board
UNITEDHEALTH GROUP
Notice of 2019 Annual Meeting of Shareholders
Date
Time
Location
Record Date
Items of Business
Admission to the
Annual Meeting
Proxy Voting
Webcast
June 3, 2019
10:00 a.m. Central Time
eu
Stock Ownership and Retention Guidelines
Director Deferral Plan......
1
Compensation Discussion and Analysis
30
Compensation Committee Report..
48
Compensation Committee Interlocks and Insider Participation..
48
3
2018 Summary Compensation Table …....
49
2018 Grants of Plan-Based Awards...
52
Outstanding Equity Awards at 2018 Fiscal Year-End...
55
2018 Option Exercises and Stock Vested.
28
56
2018 Pension Benefits
58
2018 Non-Qualified Deferred Compensation
59
Executive Employment Agreements.....
Potential Payments Upon Termination or Change in Control
CEO Pay Ratio
-
- Advisory Approval of the Company's Executive
Proposal 2
Compensation
60
65
66
68
Executive
Compensation
Executive Summary .
27
Communication with the Board of Directors
6
6
13
13
13
14
14
Other Compensation
15
2018 Director Compensation Table
Overview......
16
18
Principles of Governance...
20
Compliance and Ethics...
Director Independence
24
Board Committees..
24
Board Meetings and Annual Meeting Attendance....
23
21
¡
Board Leadership Structure...
20
20
Code of Conduct: Our Principles of Ethics & Integrity.
Corporate
Governance
2
Risk Oversight......
21
This proxy statement and our Annual Report for the year ended December 31, 2018, are first being mailed to the
Company's shareholders and made available on the Internet at www.unitedhealthgroup.com/investors/annual-reports.html
on or about April 19, 2019. Website addresses included throughout this proxy statement are for reference only. The
information contained on our website is not incorporated by reference into this proxy statement.
Clawback Policy — We have adopted a clawback policy that entitles the Board of Directors to seek
reimbursement from our senior executives if they are involved in fraud or misconduct that causes a
material restatement or in the event of a senior executive's violation of non-compete, non-solicit or
confidentiality provisions.
If you participate in householding but wish to receive a separate copy of the Notice, this proxy statement or our
2018 Annual Report for the year ended December 31, 2018, please notify us at: UnitedHealth Group Center,
9900 Bren Road East, Minnetonka, Minnesota 55343, Attn: Secretary to the Board of Directors, telephone
(877) 536-3550. You may opt-in or opt-out of householding at any time by contacting our transfer agent, EQ
Shareowner Services, at P.O. Box 64854, St. Paul, Minnesota 55164-0854, telephone (800) 468-9716. Your
householding election will apply to all materials mailed more than 30 days after your request is received.
Corporate
2
Governance
Executive
Compensation
4 Audit
LO
5
Annual
Meeting
6
Other
Information
OTHER INFORMATION
Certain Relationships and Transactions
Approval or Ratification of Related-Person Transactions
The Board of Directors has adopted a written Related-Person Transactions Approval Policy, which is administered
by the Nominating Committee. A copy of the policy is available on our website at www.unitedhealthgroup.com.
Under the policy, "related-person" transactions are prohibited unless approved or ratified by the Nominating
Committee. In general, a related-person transaction is any transaction or series of transactions (or amendments
thereto) directly or indirectly involving:
Board of
Directors
•
A director, executive officer or shareholder beneficially owning more than 5% of our common stock, or any
of their respective immediate family members, in which the Company or its subsidiaries is directly or
indirectly a participant and the amount involved exceeds $120,000; provided that if a director is an
executive officer of an entity that is a party to a transaction with the Company or its subsidiaries, and the
director was actively involved in the transaction, then the amount shall be $1.00.
Related-person transactions under the policy do not include:
•
•
Indemnification and advancement of expenses made pursuant to the Company's Certificate of Incorporation
or Bylaws or pursuant to any agreement or instrument.
Interests arising solely from the ownership of a class of the Company's equity securities, if all holders of
that class of equity securities receive the same benefit on a pro rata basis.
Any transaction that involves the providing of compensation to a director or executive officer in connection
with his or her duties to the Company or any of its subsidiaries, including the reimbursement of business
expenses incurred in the ordinary course.
Under the policy, the Company determines whether a transaction falls under the definition of a related-person
transaction requiring review by the Nominating Committee. In determining whether to approve or ratify a related-
person transaction, the Nominating Committee will consider, among other things, whether the terms of the related-
person transaction are fair to the Company and on terms at least as favorable as would apply if the other party
was not an affiliate; the business reasons for the transaction; whether the transaction could impair the
independence of a director under the Company's Standards for Director Independence; and whether the transaction
would present an improper conflict of interest for any director or executive officer of the Company.
Any member of the Nominating Committee who has an interest in the transaction under discussion will abstain from
voting on the approval of the related-person transaction, but may, if so requested by the Chair of the Nominating
Committee, participate in some or all of the Nominating Committee's discussions of the related-person transaction.
Any related-person transaction that is not approved or ratified, as the case may be, will be voided, terminated or
amended, or other actions will be taken in each case as determined by the Nominating Committee so as to avoid
or otherwise address any resulting conflict of interest.
87
2
Board of
1
2
A director or an immediate family member of a director in which an executive officer of the Company is
directly or indirectly a participant and the amount involved exceeds $1.00; or
Directors
86
In accordance with the requirements of advance notice described in our Bylaws, no shareholder nominations or
shareholder proposals other than those included in this proxy statement will be presented at the 2019 Annual
Meeting. We know of no other matters that may come before the Annual Meeting. However, if any matters calling
for a vote of the shareholders, other than those referred to in this proxy statement, should properly come before
the meeting, the persons named as proxies will vote on such matters according to their individual judgment.
7,793,722
0.82%
(1) Unless otherwise noted, each person and group identified possesses sole voting and dispositive power with
respect to the shares shown opposite such person's or group's name. Shares not outstanding but deemed
beneficially owned by virtue of the right of an individual to acquire them within 60 days of April 9, 2019, are
treated as outstanding only when determining the amount and percent owned by such individual or group.
(2) Includes the following number of vested DSUs which are considered owned under the Company's stock
ownership guidelines for directors: Mr. Ballard - 23,693; Mr. Burke - 23,693; Mr. Flynn — 3,169;
30,384; Mr. McNabb — 1,449; Dr. Montgomery Rice - 1,315; Dr. Noseworthy — 180;
45,062; and Dr. Wilensky - 21,706.
Ms. Hooper
Mr. Renwick
-
-
-
-
(3) Includes 86,000 shares held in trust for the benefit of Mr. Burke's children. Mr. Burke does not have voting or
dispositive power over these shares and disclaims beneficial ownership of these shares. Also includes
1,488,500 shares held indirectly in a limited liability partnership.
85
55
Board of
1
98
2
Corporate
Governance
Executive
Compensation
4 Audit
Annual
Meeting
Other
Information
(4) Includes the following number of shares held in trust for the individuals pursuant to our 401(k) plan:
Mr. Hemsley - 316.3605; and Mr. Wichmann - 237.0823. Pursuant to the terms of the 401(k) plan, a
participant has sole voting power over his or her shares; however, the plan trustee votes all unvoted shares in
the same proportions as the actual proxy votes submitted by plan participants.
(5) Includes 82,416.272 DSUs, 125,560 shares held in charitable foundations and 902,493 shares held in grantor
retained annuity trusts, all of which are beneficially owned by Mr. Hemsley.
(6) Includes the indirect holdings included in footnotes 3, 4 and 5.
Householding Notice
We have adopted “householding” procedures allowing us to deliver one Notice or single copies of proxy
statements and annual reports to any household at which two or more shareholders reside who share the same
last name or whom we believe to be members of the same family. Each registered shareholder living in that
household will receive a separate proxy card if the householded proxy materials are received by mail.
Your participation in the householding program is encouraged. As an alternative to householding, you may choose
to receive documents electronically. Instructions for electing electronic delivery are described in Question 6 of the
"Questions and Answers About the Annual Meeting and Voting" section of this proxy statement.
We have been notified that some banks and brokers will household proxy materials. If your shares are held in
“street name” by a bank or broker, you may request information about householding from your bank or broker.
Other Matters at Meeting
Directors
1,613,872
Corporate
Governance
Annual
Year Ended
December 31, 2018
Year Ended
December 31, 2017
11,986
$
10,558
(1,197)
899
896
(225)
(334)
$
EA
12,660
$
89
9,923
SA
12.19
$
10.72
(1.22)
0.91
0.91
(0.22)
(0.34)
EA
$
12.88
$
10.07
$
Executive
Compensation
Adjusted diluted earnings per share
Intangible amortization per share
4 Audit
5
Meeting
Other
Information
As required under SEC rules, transactions in which the Company was or is to be a participant and the amount
involved exceeds $120,000, and in which any related person had or will have a direct or indirect material interest,
are disclosed below.
Related-Person Transactions
Fees Paid to Family Member of Executive Officer
Brent Asplund, Mr. Hemsley's son-in-law, is a contractor providing technology services to Optum. The
compensation paid to Mr. Asplund is consistent with the Company's overall compensation principles based on the
contractor's years of experience, performance and comparable positions within the Company.
Transactions with 5% Shareholders
BlackRock, Inc. beneficially owned approximately 7.30% of our common stock as of December 31, 2018. The
Company paid BlackRock $5.4 million for investment management fees in 2018. BlackRock maintains a self-funded
health insurance plan through the Company and paid the Company $2.4 million for administrative services,
$1.1 million for biometric screenings and lab tests and $467,800 for an employee assistance program in 2018.
FMR LLC beneficially owned approximately 6.78% of our common stock as of December 31, 2018. The Company
and its employees paid Fidelity Management & Research Company ("Fidelity"), a wholly owned subsidiary of
FMR LLC, $43.1 million in benefits management fees in 2018. Fidelity maintains a self-funded health insurance
plan through the Company and paid the Company $22.6 million for administrative services, $73.1 million for
premium payments on behalf of affiliated entities, $6.5 million for prescription drug payments and $1.2 million for an
employee assistance program and wellness services in 2018.
Section 16(a) Beneficial Ownership Reporting Compliance
was filed
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own
more than 10% of our common stock, to file initial reports of ownership and reports of changes in ownership with
the SEC and the NYSE. Executive officers, directors and greater-than-10% beneficial owners are required by SEC
rules to furnish us with copies of all Section 16(a) reports they file. Due to a clerical error, one Form
one day late on behalf of the Company's Chief Accounting Officer in 2018. Except for the foregoing, based solely
on our review of these reports and written representations from our executive officers and directors, we believe that
all of our executive officers and directors complied with all Section 16(a) filing requirements during 2018.
Tax effect per share of intangible amortization
80
Appendix A - Reconciliation of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures
Adjusted net earnings per share is a non-GAAP financial measure. Non-GAAP financial measures should be
considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with
GAAP.
Adjusted net earnings per share excludes from GAAP net earnings per share, intangible amortization and other
items, if any, that do not reflect the Company's underlying business performance. Management believes the use of
adjusted net earnings per share provides investors and management useful information about the earnings impact
of acquisition-related intangible asset amortization. In addition, adjusted net earnings per share excludes the
earnings impact of the deferred tax revaluation recognized after The Tax Cuts and Jobs Act of 2017 was enacted
in December 2017. Management believes the exclusion of these items provides a more useful comparison of the
Company's underlying business performance from period to period.
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED NET EARNINGS AND EARNINGS PER SHARE
(in millions, except per share data)
(unaudited)
GAAP net earnings attributable to UnitedHealth Group
common shareholders
Revaluation of U.S. net deferred tax liabilities due to tax
reform
Intangible amortization
Tax effect of intangible amortization
Adjusted net earnings attributable to UnitedHealth Group
common shareholders
GAAP diluted earnings per share
Revaluation of U.S. net deferred tax liabilities due to tax
reform per share
88
6,179,850 (6)
*
Annual
Glenn M. Renwick
Gail R. Wilensky, Ph.D.
Stephen J. Hemsley
John F. Rex
Andrew P. Witty
Steven H. Nelson
All current directors, executive officers and
director nominees as a group (17 individuals)
*
Less than 1%.
72,933(2)
1,762,163(2)(3)
3,169
Number of Shares
Deemed Beneficially
Owned as a Result
of Equity Awards
Exercisable or Vesting
Within 60 Days of
April 9, 2019
Percent of
Common
Total(1)
John H. Noseworthy, M.D.
Valerie C. Montgomery Rice, M.D.
F. William McNabb III
Michele J. Hooper
Board of
1
2
Directors
Corporate
Governance
Executive
Compensation
4 Audit
Stock
Outstanding
59,007
Other
Information
The following table provides information about the beneficial ownership of our common stock as of April 9, 2019,
by each director and nominee for director, each named executive officer, and by all of our current directors,
executive officers and director nominees as a group. As of April 9, 2019, there were 952,244,528 shares of our
common stock issued, outstanding and entitled to vote.
Name of Beneficial Owner or
Identity of Group
Ownership of
Common Stock
William C. Ballard, Jr.
Richard T. Burke
Timothy P. Flynn
Meeting
5,000
David S. Wichmann
5,000
3,083,204(4)(5)
551,259
3,634,463
*
849,523(4)(5)
377,486
1,227,009
67,941
60,936
345,241
*
77,993
451
*
20,884
38,123
284,305
5,000
451
*
62,941(2)
*
1,767,163
*
33,754
33,754(2)
1,449(2)
1,449
3,169
180(2)
1,315
*
180
81,031(2)
1,315
81,031
6
5
4 Audit
Other
Annual
Directors
Corporate
Governance
2
1
Meeting
Board of
Executive
Compensation
Information
•
The DSUS immediately vest upon grant and must be retained until completion of the director's service on the Board
of Directors. Upon completion of service, the DSUs convert into an equal number of shares of the Company's
common stock. A director may defer receipt of the shares for up to ten years after completion of service pursuant
to the Director Deferral Plan. Non-employee directors who have met their stock ownership requirement may elect to
receive common stock in lieu of DSUs and/or in-service distributions on pre-selected dates.
If a director elects to convert his or her cash compensation into common stock or DSUs, such conversion grants
are made on the day the eligible cash compensation becomes payable to the director. The director receives the
number of shares of common stock or DSUs, as applicable, equal to the cash compensation foregone, divided by
the closing price of our common stock on the date of grant, rounded up to the nearest share. The DSUs
immediately vest upon grant. A director may only elect to receive common stock if he or she has met the stock
ownership guidelines.
The Company pays dividend equivalents in the form of additional DSUs on all outstanding DSUs. Dividend
equivalents are paid at the same rate and at the same time that dividends are paid to Company shareholders and
are subject to the same vesting conditions as the underlying grant.
Stock Ownership and Retention Guidelines
Under our stock ownership guidelines, we require non-employee directors to achieve ownership of shares of the
Company's common stock (excluding stock options, but including vested DSUs and vested restricted stock units)
having a fair market value equal to five times the directors' annual base cash retainer. Non-employee directors
must comply with the stock ownership guidelines within five years of their appointment to the Board of Directors. All
of our non-employee directors have met the stock ownership requirement or have served as a director for less than
five years. Our directors are required to hold all equity awards granted until completion of service on the Board or
until they have met our stock ownership requirements.
Director Deferral Plan
Under the Director Deferral Plan, subject to compliance with applicable laws, non-employee directors may elect
annually to defer receipt of all or a percentage of their compensation. Amounts deferred are credited to a
bookkeeping account maintained for each director participant that uses a predetermined collection of unaffiliated
mutual funds as measuring investments. Subject to certain additional rules set forth in the Director Deferral Plan, a
participating director may elect to receive the distribution in one of the following ways:
•
a series of five or ten annual installments following the completion of his or her service on the Board of
Directors;
a delayed lump sum following either the fifth or tenth anniversary of the completion of his or her service on
the Board of Directors;
14
Stephen J. Hemsley
13
the first business day following the end of each fiscal quarter and prorated if the director did not serve the entire
quarter. The number of DSUs granted is determined by dividing $51,250 (the quarterly value of the annual equity
award; $43,750 prior to October 1, 2018) by the closing price of our common stock on the grant date, rounded up
to the nearest share. The grants are in consideration of general service and responsibilities and required meeting
preparation.
Non-employee directors receive annual grants of DSUs under the 2011 Stock Incentive Plan having an aggregate
fair value of $205,000 effective October 1, 2018 and pro-rated for the remainder of the year. Prior to
October 1, 2018, the aggregate fair value of the DSUs was $175,000. The grants are issued quarterly in arrears on
2
Cash retainers are payable on a quarterly basis in arrears on the first business day following the end of each fiscal
quarter, and are subject to pro rata adjustment if the director did not serve the entire quarter. Directors may elect to
receive deferred stock units ("DSUs") or common stock (if the director has met the stock ownership guidelines) in
lieu of their cash compensation or may defer receipt of their cash compensation to a later date pursuant to the
Directors' Compensation Deferral Plan ("Director Deferral Plan"). The cash retainers are in consideration of general
service and responsibilities and required meeting preparation.
Corporate
Governance
Executive
Compensation
Annual
Other
4 Audit
5
Meeting
Information
Director Compensation
We seek to compensate our non-employee directors fairly for work required for a company of our size, complexity
and scope and to align their interests with the long-term interests of our shareholders. Director compensation
reflects our desire to attract, retain and benefit from the expertise of highly qualified people. The Compensation
Committee annually reviews the compensation of our non-employee directors and makes recommendations to the
Board of Directors. In August 2018, the Compensation Committee, with the advice of its independent compensation
consultant, undertook a review of the structure, philosophy and overall mix of the director compensation program
as compared to the Company's compensation peer group and also the four large publicly traded managed health
care companies. Following this review, the Compensation Committee recommended, and the Board approved, an
increase in the annual grant of deferred stock units awarded to non-employee directors from $175,000 to $205,000,
effective as of October 1, 2018. No other changes were made to the compensation of non-employee directors. The
Compensation Committee's recommendations, and the Board's subsequent approval, were made after considering
the results of the market practices review and the complexity of the Company's structure and operations.
The following table highlights the material elements of our director compensation program:
Compensation Element
Annual Cash Retainer
Equity-Based Compensation
Annual Audit Committee Chair Cash Retainer
Annual Nominating Committee Chair Cash Retainer
Annual Public Policy Committee Chair Cash Retainer
Annual Lead Independent Director Cash Retainer
Annual Equity Award
Equity Conversion Program
Compensation Value
$125,000
$ 25,000
$ 20,000
$ 20,000
$ 20,000
$ 75,000
$205,000 aggregate fair value of deferred stock units*
At the director's election, cash compensation may be
converted into DSUs, or if the director has met the stock
ownership guidelines, into common stock
* Effective October 1, 2018, the annual deferred stock unit award was increased from $175,000 to $205,000.
Cash Compensation
Annual Compensation Committee Chair Cash Retainer
Board of
Directors
Director since 2000
Dr. Wilensky has been a senior fellow at Project HOPE, an international health foundation, since 1993. From 2008
to 2009, Dr. Wilensky was President of the Department of Defense Health Board and chaired its sub-committee on
health care delivery. From 2006 to 2008, Dr. Wilensky co-chaired the Department of Defense Task Force on the
Future of Military Health Care. During 2007, she also served as a commissioner on the President's Commission on
Care for America's Returning Wounded Warriors. From 2001 to 2003, she was the Co-Chair of the President's
Task Force to Improve Health Care for our Nation's Veterans. From 1997 to 2001, she was also Chair of the
Medicare Payment Advisory Commission. From 1992 to 1993, Dr. Wilensky served as the Deputy Assistant to
President George H. W. Bush for policy development, and from 1990 to 1992, she was the Administrator of the
Health Care Financing Administration (now known as the Centers for Medicare and Medicaid Services), directing
the Medicaid and Medicare programs for the United States. Dr. Wilensky is a nationally recognized health care
economist. Dr. Wilensky serves as a director of Quest Diagnostics Incorporated.
.
Valerie C. Montgomery Rice, M.D., President and Dean of the Morehouse School of Medicine, joined the
Board in 2017;
•
F. William McNabb III, former Chairman of The Vanguard Group, Inc., joined the Board in 2018;
•
•
.
John H. Noseworthy, M.D., former Chief Executive Officer and President of Mayo Clinic, joined the Board
in 2019;
Sir Andrew P. Witty relinquished his position on our Board in 2018 in anticipation of his appointment as
Chief Executive Officer of Optum and Executive Vice President of UnitedHealth Group later the same year;
and
Kenneth I. Shine, M.D., retired from the UnitedHealth Group Board of Directors in 2018 after nearly ten
years of exceptional service as an independent director.
We have for several years maintained an active "Evergreen" director candidate pipeline which reflects our
continuing commitment to diversity in life, cultural and business experience among director nominees. The
Nominating Committee has an outside firm on retainer to assist in identifying and evaluating director candidates.
The Nominating Committee will also consider recommendations submitted by shareholders for director candidates.
Recommendations should be directed to the Secretary to the Board of Directors. None of the Company's
shareholders recommended candidates for the Board of Directors in connection with the 2019 Annual Meeting.
Prior to the appointment of each of the new independent directors in 2017, 2018 and 2019, the Nominating
Committee considered a wide slate of potential candidates, including qualified women and minority candidates.
Each eventual nominee was selected due to his or her overall skills and experience.
8
Board of
Directors
Timothy P. Flynn, former Chairman of KPMG International, joined the Board in 2017;
2
Executive
Compensation
Annual
Other
4 Audit
5
Meeting
Information
Nominating Advisory Committee
The Board of Directors formed the Nominating Advisory Committee in 2006 to provide the Nominating Committee
with additional input from shareholders and others regarding desirable characteristics of director candidates and the
composition of the Board of Directors. The key features of the skills matrix are also discussed with members of our
Nominating Advisory Committee and their feedback is considered by the Nominating Committee when it updates
the skills matrix. The Nominating Committee considers, but is not bound by, input provided by the Nominating
Advisory Committee. The Nominating Advisory Committee currently includes four individuals affiliated with
long-term shareholders of the Company and one individual who is a member of the medical community. Members
of the Nominating Advisory Committee do not receive any compensation from the Company for serving on the
Nominating Advisory Committee. The Nominating Advisory Committee met once in 2018. A description of the
Nominating Advisory Committee, including a description of how the members of the committee are nominated and
selected, can be found on our website at www.unitedhealthgroup.com/about/corporate-governance.
Shareholder Director Candidates for Inclusion in our Proxy Statement (Proxy Access)
Our Bylaws provide a shareholder or group of shareholders (of up to 20) who have owned at least 3% of our
common stock for at least three years the ability to include in our proxy statement shareholder-nominated director
candidates for up to 20% of the Board. To be eligible to use this right, the shareholder(s) and the candidate(s)
must satisfy the requirements specified in our Bylaws. Our Bylaws are available at
www.unitedhealthgroup.com/about/corporate-governance. For the 2020 Annual Meeting, director nominations
submitted under these Bylaw provisions must be received at our principal executive offices, directed to the
Secretary to the Board of Directors, no earlier than November 21, 2019 and no later than December 21, 2019.
Shareholder Nominations of Director Candidates at an Annual Meeting
Our shareholders may also nominate candidates for election to the Board of Directors from the floor of our Annual
Meeting of Shareholders, instead of including the director candidate in our proxy statement, only by submitting timely
written notice to the Secretary to the Board in accordance with our Bylaws. The notice must include the information
required by our Bylaws, which are available at www.unitedhealthgroup.com/about/corporate-governance. For the 2020
Annual Meeting, this notice must be received at our principal executive offices, directed to the Secretary to the Board
of Directors, no earlier than February 4, 2020 and no later than March 5, 2020.
2019 Director Nominees
Our Certificate of Incorporation and Bylaws provide that each member of our Board of Directors is elected annually
by a majority of votes cast if the election is uncontested. The Board of Directors has nominated the eleven
directors set forth below for election by the shareholders at the 2019 Annual Meeting. All of the director nominees
were elected by our shareholders at the 2018 Annual Meeting except for Dr. Noseworthy, who was appointed
unanimously by the Board in February 2019. The Company and the Nominating Committee were familiar with
Dr. Noseworthy and had considered him as a potential Board candidate upon his availability following retirement
from the Mayo Clinic. Following Dr. Shine's retirement from the Board, the Nominating Committee was particularly
interested in strengthening the depth of clinical expertise on the Board. All of the nominees have informed the
Board they are willing to serve as directors if elected. If any nominee should become unable to serve as a director
for any reason, the persons named as proxies will elect a replacement.
Corporate
Governance
9
•
Update on Recent Changes in Board Membership
Processes
Clinical Practice
Political/Health Care
Policy/Regulatory
Capital Markets
.
•
Our Nominating Committee also strives to maintain a balance of tenure on the Board. Long-serving directors bring
valuable experience with our Company and familiarity with the successes and challenges the enterprise has faced
over the years, while newer directors contribute fresh perspectives and innovative ideas. Tenure of the eleven
director nominees is as follows:
Number of Director Nominees
5
5
1
7
10- 5 Years
Recent changes to the Board of Directors include:
6-10 Years
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Annual
Other
4 Audit
5
Meeting
Information
Board Diversity
UnitedHealth Group embraces and encourages a culture of diversity and inclusion. Valuing diversity makes good
business sense and helps to ensure our future success, because the customers, clients and consumers we serve
are as diverse as the thousands of communities where we live and work across all 50 states in the U.S. and 130
other nations. UnitedHealth Group's commitment to diversity and inclusion empowers our employees to contribute
their best work, collaborating to be the preeminent health and well-being business and community partner of
choice.
While our Board has not adopted a formal definition of diversity, and does not establish specific goals with respect
to diversity, the Board's diversity is a consideration in the director nomination process and is assessed annually
when the Board evaluates overall effectiveness.
For this year's election, the Board has nominated eleven individuals; all are incumbent nominees who collectively
bring tremendous diversity to the Board. Each nominee is a strategic thinker and has varying, specialized
experience in the areas relevant to the Company and its businesses. Moreover, their collective experience covers a
wide range of geographies and industries, including health care, insurance, consumer products, technology and
financial services, and roles in academia, corporate governance and government. The eleven director nominees
range in age from 56 to 78; three of the eleven director nominees are women; two are African American; and one
is a citizen of New Zealand.
More Than 10 Years
Board of
Directors
2
Corporate
Governance
2019
12
63
2008
David S. Wichmann
56
2017
Gail R. Wilensky, Ph.D.
75
1993
The director nominees, if elected, will serve until the 2020 Annual Meeting or until their successors are elected and
qualified. Following is a brief biographical description of each director nominee. A table listing the areas of
expertise in the skills matrix held by each director and which, in part, led the Board to conclude each respective
director should continue to serve as a member of the Board, is included on page 7.
William C. Ballard, Jr.
Director since 1993
Mr. Ballard served as Of Counsel to Bingham Greenebaum Doll LLP (formerly Greenebaum Doll & McDonald
PLLC), a law firm in Louisville, Kentucky, from 1992 until 2008. In 1992, Mr. Ballard retired from Humana, Inc., a
health and well being company, after serving with Humana in various roles for 22 years, including as the Chief
Financial Officer ("CFO") and a director. In the past five years, he also served as a director of Welltower, Inc.
(formerly Health Care REIT, Inc.).
67
Richard T. Burke
Mr. Burke is Lead Independent Director of the Board of Directors of UnitedHealth Group and has served in that
capacity since September 2017. Mr. Burke served as Chairman of the Board from 2006 to August 2017, has been a
member of our Board since 1977, and was Chief Executive Officer of UnitedHealthcare, Inc., our predecessor
corporation, until 1988. From 1995 until 2001, Mr. Burke was the owner, Chief Executive Officer and Governor of the
Phoenix Coyotes, a National Hockey League team. Mr. Burke serves as a director of Meritage Homes Corporation.
Timothy P. Flynn
Director since 2017
Mr. Flynn was Chairman of KPMG International (“KPMG"), a global professional services organization that provides
audit, tax and advisory services, from 2007 until his retirement in October 2011. From 2005 until 2010, he served
as Chairman and, from 2005 to 2008, as CEO of KPMG LLP in the U.S., the largest individual member firm of
KPMG. Prior to serving as Chairman and CEO of KPMG LLP, Mr. Flynn was Vice Chairman, Audit and Risk
Advisory Services, with operating responsibility for Audit, Risk Advisory and Financial Advisory Services practices.
He previously served as a trustee of the Financial Accounting Standards Board, a member of the World Economic
Forum's International Business Council, and a director of the International Integrated Reporting Council. Mr. Flynn
serves as a director of Alcoa Corporation, JPMorgan Chase & Co. and Walmart Inc.
10
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Annual
4 Audit
5
6
Meeting
Other
Information
Director since 1977
John H. Noseworthy, M.D.
2017
57
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
The Board of Directors recommends that you vote FOR the election of each of the nominees. Executed
proxies will be voted FOR the election of each nominee unless you specify otherwise.
Name
William C. Ballard, Jr.
Richard T. Burke
Age
Director Since
78
1993
75
Valerie C. Montgomery Rice, M.D.
2018
61
F. William McNabb III
2007
67
Technology/Business
Michele J. Hooper
66
2017
62
Stephen J. Hemsley
Timothy P. Flynn
1977
2000
Complex Organizations
Glenn M. Renwick
...: .
Election of eleven directors
FOR
1
Election of Directors
2
Advisory Approval of the
FOR
Company's Executive
Compensation (a
"Say-on-Pay" vote)
Reasons for Recommendation
The Board and Nominating Committee believe the
eleven Board candidates possess the experience,
skills, attributes and diversity to effectively monitor
performance, provide oversight and advise
management on the Company's strategy.
Board Recommendation
For Each Candidate
FOR
1
Our executive compensation program is designed to
attract and retain highly qualified executives and to
maintain a strong link between pay and the
achievement of enterprise-wide goals. We emphasize
and reward teamwork and collaboration among
executive officers, which we believe fosters Company
growth and performance, optimizes the use of
enterprise-wide capabilities, drives efficiencies and
integrates products and services for the benefit of our
customers and other stakeholders.
Page 6
Page 68
2
Advisory Approval of
Executive Compensation
3
Ratification of Independent
Registered Public
Board Recommendation
FOR
FOR
Accounting Firm
Based on the Audit Committee's assessment of
Deloitte & Touche's qualifications and performance, it
believes their retention for fiscal year 2019 is in the
best interests of the Company.
Page 72
3
More
Information
Proposal
Board
Recommendation
Voting Matters and Vote Recommendations
Director since 1993
Experience with Large
Gail R. Wilensky, Ph.D.
Mr. Wichmann is Chief Executive Officer of UnitedHealth Group and a member of the Board of Directors, having
served in that capacity since September 2017. Mr. Wichmann previously served as President of UnitedHealth
Group from November 2014 to August 2017. Mr. Wichmann also served as Chief Financial Officer of UnitedHealth
Group from January 2011 to June 2016. From April 2008 to November 2014, Mr. Wichmann served as Executive
Vice President of UnitedHealth Group and President of UnitedHealth Group Operations. Mr. Wichmann serves as a
director of Tennant Company.
Director since 2017
Mr. Renwick has been Chairman of the Board of Fiserv, Inc. since May 2017, and has been a director of Fiserv
since 2001. Mr. Renwick served as Chairman of the Board of Directors of The Progressive Corporation, an auto
insurance holding company, from November 2013 to May 2018, as Executive Chairman of Progressive from July
2016 to June 2017, and as President and CEO from 2001 to 2016. Before being named President and CEO in
2001, Mr. Renwick served as CEO-Insurance Operations and Business Technology Process Leader at Progressive
from 1998 to 2000. Prior to that, he led Progressive's Consumer Marketing group and served as President of
various divisions within Progressive. Mr. Renwick joined Progressive in 1986 as Auto Product Manager for Florida.
David S. Wichmann
Director since 2008
Glenn M. Renwick
Dr. Noseworthy is the former Chief Executive Officer and President of Mayo Clinic, a world renowned, non-profit
health care organization. He retired at the end of 2018 after a 28 year career at Mayo Clinic, recognized by U.S.
News and World Report as best in its honor roll of America's top providers of care for patients with serious and
complex problems. Mayo Clinic cares for patients from every state and 143 countries worldwide. Dr. Noseworthy
joined Mayo Clinic in 1990 and has served in various capacities since that time, including chairman of Mayo
Clinic's internal Board of Governors, member of the Board of Trustees, Professor of Neurology at Mayo Clinic
College of Medicine & Science, chair of Mayo's Department of Neurology, medical director of the Department of
Development and Vice Chair of the Mayo Clinic Rochester Executive Board. Dr. Noseworthy also served as
editor-in-chief of Neurology, the official journal of the American Academy of Neurology, from 2007 to 2009.
Dr. Noseworthy was a Health Governor of the World Economic Forum from 2012 to 2018 and serves as a director
of Merck & Co.
Director since 2019
John H. Noseworthy, M.D.
Other
Information
Meeting
6
5
Annual
Executive
Compensation
Mr. Hemsley is Executive Chairman of the Board of UnitedHealth Group and has served in that capacity since
September 2017. Mr. Hemsley previously served as Chief Executive Officer from 2006 to August 2017. He has
been a member of the Board of Directors since 2000. Mr. Hemsley joined the Company in 1997 as Senior
Executive Vice President and became Chief Operating Officer in 1998. Mr. Hemsley served as President and Chief
Operating Officer from 1999 to 2006 and as President and Chief Executive Officer from 2006 to November 2014.
Mr. Hemsley serves as a director of Cargill, Inc.
Michele J. Hooper
Director since 2007
Ms. Hooper is President and CEO of The Directors' Council, a private company she co-founded in 2003 that works
with corporate boards to increase their independence, effectiveness and diversity. She was President and CEO of
Voyager Expanded Learning, a developer and provider of learning programs and teacher training for public
schools, from 1999 until 2000. Prior to that, she was President and CEO of Stadtlander Drug Company, Inc., a
provider of disease-specific pharmaceutical care, from 1998 until Stadtlander was acquired in 1999. Ms. Hooper is
a nationally recognized corporate governance expert. Ms. Hooper serves as a director of PPG Industries, Inc. and
United Continental Holdings, Inc.
F. William McNabb III
Director since 2018
Ratification of Independent
Registered Public Accounting Firm
Mr. McNabb served as Chairman of The Vanguard Group, Inc. from 2008 until his retirement in 2018 and served
as CEO from 2008 to 2017. He joined Vanguard in 1986. In 2010, he became Chairman of the Board of Directors
and the Board of Trustees of the Vanguard group of investment companies. Earlier in his career, Mr. McNabb led
each of Vanguard's client facing business divisions. Mr. McNabb serves as the Vice-Chairman of the Investment
Company Institute's Board of Governors and served as Chairman from 2013 to 2016. Mr. McNabb is Chairman of
the Board of the Zoological Society of Philadelphia and serves on the Wharton Leadership Advisory Board and the
Dartmouth Athletic Advisory Board. He is also a board member of CECP: The CEO Force for Good.
Director since 2017
Dr. Montgomery Rice is President and Dean of the Morehouse School of Medicine, a medical school in Atlanta,
Georgia, and has served in that capacity since 2014. Dr. Montgomery Rice served as the Executive Vice President
and Dean from 2011 to 2014. Morehouse School of Medicine is among the nation's leading educators of primary
care physicians and was recently recognized as the top institution among U.S. medical schools for their social
mission. Prior to joining Morehouse School of Medicine, she served as dean of the School of Medicine and Senior
Vice President of health affairs at Meharry Medical College from March 2006 to June 2009, and as director of the
Center for Women's Health Research, one of the nation's first research centers devoted to studying diseases that
disproportionately impact women of color, from 2005 to 2011. Dr. Montgomery Rice also serves as a Council
Member of the National Institute of Health and National Center for Advancing Translational Science.
Dr. Montgomery Rice previously served on the National Institute of Health's Minority Health and Health Disparities
and Office of Research on Women's Health advisory councils and the Association of American Medical Colleges
Council of Deans' administrative board. Dr. Montgomery Rice is a member of the National Academy of Medicine
and is a renowned infertility specialist and women's health researcher.
11
Board of
Directors
2
Corporate
Governance
Valerie C. Montgomery Rice, M.D.
Board Recommendation
4 Audit
4
•
•
⋅
Risk oversight ability with respect to the particular skills of the individual director;
Understanding of and experience with complex public companies or like organizations; and
Ability to work collegially and collaboratively with other directors and management.
Each of our independent director nominees has satisfied all the core director criteria set forth in the skills matrix.
Messrs. Hemsley and Wichmann are not independent directors because Mr. Hemsley serves as Executive
Chairman of the Board and Mr. Wichmann is Chief Executive Officer.
CO
6
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Annual
Standing and reputation in the individual's field;
Other
5
6
Meeting
Information
In addition, the skills matrix provides a number of substantive areas of expertise that the Board as a whole should
represent. The following table includes a list of these areas and indicates the director nominees with expertise in
each area.
Finance
Health Care Industry
Direct Consumer Markets
Social Media/Marketing
Diversity
Ballard Burke Flynn Hemsley Hooper McNabb Montgomery Noseworthy Renwick Wichmann Wilensky
•
FOR
Rice
4 Audit
•
Corporate Governance
•
AGAINST
High integrity and ethical standards;
Shareholder Proposal
Regarding Amendment to
Proxy Access Bylaw
The Board does not believe the proposal is in the
best interests of the Company or our shareholders
and is unnecessary given our current corporate
governance practices and strong Board accountability.
Page 73
4
Shareholder Proposal Regarding
Amendment to Proxy Access Bylaw
AGAINST
5
Board of
Directors
Corporate
2
Governance
Executive
Compensation
Annual
Board Recommendation
•
4 Audit
Service on no more than three other public company boards; except our Chief Executive Officer may serve
on no more than one other public company board;
The skills matrix has two sections a list of core criteria every member of the Board should meet and a list of
skills and attributes to be represented collectively by the Board. The core director criteria are:
We believe that an effective Board consists of a diverse group of individuals who bring a variety of complementary
skills and a range of personal and business experience to their positions on the Board. The Nominating Committee
developed and maintains a skills matrix to assist in considering the appropriate balance of experience, skills and
attributes required of a director and to be represented on the Board as a whole. The skills matrix is consistent with
the Company's long-term strategic plan and is regularly reviewed and updated by the Nominating Committee. The
Nominating Committee evaluates Board candidates against the skills matrix on an annual basis to determine
whether to recommend candidates for initial election to the Board and whether to recommend currently serving
directors for reelection to the Board.
Criteria for Nomination to the Board
Director Nomination Process
-
-
5
Meeting
Other
Information
Independence under the Company's Standards for Director Independence and New York Stock Exchange
("NYSE") listing requirements, subject to waiver by the Nominating Committee;
BOARD OF DIRECTORS
Proposal 1 Election of Directors
43,874 43,804
43,863
43,790
81,387
81,450 81,421
81,268
Kenneth I. Shine, M.D.
43,790
43,874 43,804 43,863
Glenn M. Renwick*
Michele J. Hooper
Andrew P. Witty
43,790
43,790
F. William McNabb III
43,874 43,804 44,132
35,186
* Includes the value of DSUs issued upon conversion of annual cash retainers as described in footnote 1 above of
$125,000 for Mr. Flynn, $78,820 for Mr. McNabb and $150,000 for Mr. Renwick.
As of December 31, 2018, our non-employee directors held outstanding DSU awards as follows:
Name
William C. Ballard, Jr.
Richard T. Burke
Valerie C. Montgomery Rice, M.D.
Timothy P. Flynn
Gail R. Wilensky, Ph.D.
75,079
January 2, April 2, July 2, October 1,
2018
($)
F. William McNabb III*
4 Audit
5
Valerie C. Montgomery Rice, M.D.
6
Meeting
Information
The aggregate grant date fair values of the stock awards granted in 2018, computed in accordance with FASB ASC
Topic 718 based on the closing price of our common stock on the grant date, are as follows:
2018
Name
William C. Ballard, Jr.
Richard T. Burke
Timothy P. Flynn*
($)
2018
($)
2018
($)
43,790
43,874 43,804 43,863
43,790
43,874 43,804 43,863
Michele J. Hooper
75,194 75,151 75,234 75,079
43,790 43,874 43,804 43,863
Rodger A. Lawson
43,790
43,874 30,935
39,313 75,234
Glenn M. Renwick
✓
Deferred
Stock Units
Corporate Governance Documents
Certificate of Incorporation
✓
Bylaws
✓
Principles of Governance
Board of Directors Committee Charters
✓
Standards for Director Independence
Code of Conduct: Our Principles of Ethics & Integrity
Related-Person Transactions Approval Policy
Board of Directors Communication Policy
Political Contributions Policy
✓
Corporate Environmental Policy
You can access these documents at www.unitedhealthgroup.com/about/corporate-governance to learn more about
our corporate governance practices. We will also provide copies of these documents without charge upon written
request to the Company's Secretary to the Board of Directors. Our key corporate governance practices are
highlighted below.
Board Structure and Shareholder Rights
•
•
•
All members of our Board of Directors are elected annually by our shareholders.
Our Certificate of Incorporation provides, in an uncontested election, each director must be elected by a
majority vote. To address a provision in Delaware law that allows a director who has not been re-elected to
remain in office until a successor is elected and qualified, we have a policy requiring any director who does
not receive a greater number of votes "for" than "against❞ his or her election in an uncontested election to
tender his or her resignation from the Board of Directors following certification of the shareholder vote.
Our Bylaws provide eligible shareholders the right to include shareholder director nominees representing up
to 20% of the Board in our proxy statement.
Other
Each share of stock is entitled to one vote and our Certificate of Incorporation and Bylaws do not have any
supermajority shareholder approval provisions.
UnitedHealth Group is committed to high standards of corporate governance and ethical business conduct.
Important documents reflecting this commitment are listed below.
Overview
CORPORATE GOVERNANCE
Information
23,191
23,191
2,484
29,858
770
891
44,179
6,351
Gail R. Wilensky, Ph.D.
21,419
(4) The Company did not grant stock option awards to directors in 2018. As of December 31, 2018, our non-employee
directors held outstanding (and unexercised) stock option awards as follows: Mr. Ballard - 10,000; Mr. Burke — - 15,000;
and Dr. Wilensky - 10,860.
(5) The Director Deferral Plan does not credit above-market earnings or preferential earnings to the amounts deferred. There
are no measuring investments tied to Company stock performance. The measuring investments are a predetermined
collection of unaffiliated mutual funds identified by the Company.
Kenneth I. Shine, M.D.
(6) In 2018, the Company matched $15,000 in charitable contributions made by the following directors to charitable
organizations selected by the directors pursuant to the Company's Board Matching Program: Messrs. Ballard, Burke,
Flynn, Lawson, Renwick and Witty; and Drs. Montgomery Rice, Shine and Wilensky, and $14,884 in charitable
contributions made by Ms. Hooper. In 2018, the Company also made $3,000 contributions to charitable organizations
selected by the following directors: Messrs. Ballard, Burke, Flynn, Lawson, Renwick and Witty; Ms. Hooper; and
Drs. Shine, Montgomery Rice and Wilensky. In 2018, the Company also paid $12,654, $9,189, $6,892, $4,350, $490 and
$490 in health care premiums on behalf of Messrs. Burke, Renwick, Flynn, Lawson, Ballard and Ms. Hooper, respectively.
Board of
Directors
Corporate
2
3
Governance
Executive
Compensation
Annual
Other
4 Audit
5
Meeting
17
Annual
($)(2)
Corporate
Governance
Corporate
Governance
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
The following table provides summary information for the year ended December 31, 2018, relating to compensation
paid to or accrued by us on behalf of our non-employee directors who served in this capacity during 2018.
2018 Director Compensation Table
Change in Pension
Value and
Non-Qualified
Fees Earned
or Paid in
Cash
Name(1)
Stock Option
Awards Awards
($)(3) ($)(4)
Deferred
Compensation
Earnings
All Other
Compensation
Total
($)(5)
($)(6)
($)
William C. Ballard, Jr.
131,484
Directors
175,331
2
Board of
.
Board of
1
2
Directors
Corporate
Governance
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
•
for cash deferrals, an immediate lump sum upon the completion of his or her service on the Board of
Directors; or
pre-selected amounts to be distributed on pre-selected dates while the director remains a member of the
Board of Directors.
The Director Deferral Plan does not provide for matching contributions by the Company.
Other Compensation
We reimburse directors for any out-of-pocket expenses incurred in connection with service as a director. We also
provide health care coverage to directors if the director is not eligible for subsidized coverage under another group
health care benefit program. Health care coverage is provided generally on the same terms and conditions as
current employees. Upon retirement from the Board of Directors, directors may continue to obtain health care
coverage under benefit continuation coverage, and after the lapse of such coverage, under the Company's
post-employment medical plan for up to a total of 96 months if they are otherwise eligible.
The Company maintains a program through which it will match up to $15,000 of charitable donations made by
each director for each calendar year. The directors do not receive any financial benefit from this program because
the charitable income tax deductions accrue solely to the Company. Donations under the program may not be
made to family trusts, partnerships or similar organizations.
Our corporate aircraft use policy prohibits personal use of corporate aircraft by any independent director. However,
because there is essentially no incremental cost to the Company, the policy permits a director's family member to
accompany the director on a business flight on Company aircraft provided a seat is available.
15
1
18,490
325,395
Richard T. Burke
27,189
352,715
Kenneth I. Shine, M.D.
125,000 175,331
18,000
318,421
Gail R. Wilensky, Ph.D.
145,000 175,600
18,000
338,690
Andrew P. Witty
56,250
78,976
18,000
153,226
(1) Messrs. Hemsley and Wichmann are employee directors and do not receive additional compensation for serving as
directors. Dr. Noseworthy joined the Board on February 12, 2019 and is not included in the table. Mr. McNabb joined the
Board on February 13, 2018, and compensation was prorated from that date. Dr. Shine retired from the Board of
Directors, effective December 31, 2018. Mr. Lawson did not stand for re-election at the 2018 Annual Meeting of
Shareholders. For Mr. Witty, the amounts reported reflect compensation earned in connection with his service as a director
through March 13, 2018. Compensation paid in connection with Mr. Witty's service as Chief Executive Officer of Optum,
which commenced on July 1, 2018, is reported in the Summary Compensation Table and additional tabular disclosures, as
appropriate.
(2) Mr. Flynn converted his $125,000 cash compensation into 530 DSUs, Mr. McNabb converted his $78,820 cash
compensation into 320 DSUs and Mr. Renwick converted his $150,000 cash compensation into 635 DSUs.
(3) The amounts reported reflect the aggregate grant date fair value of the stock awards granted in 2018 computed in
accordance with FASB ASC Topic 718, based on the closing price of our common stock on the grant date. For a
description of the assumptions used in computing the aggregate grant date fair value, see Note 11 to the Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. For
each director, the amounts reported include the aggregate grant date fair value of the annual equity award of DSUS
granted in quarterly installments. The amounts reflect the value of fractional shares issued with the quarterly installments
as we round equity grants up to the nearest whole share. For Messrs. Flynn, McNabb and Renwick, we combined the
cash compensation they elected to convert into DSUs on a quarterly basis and the value of the quarterly DSU grant prior
to determining the number of DSUs to be granted each quarter. For 2018, Dr. Shine elected that all of his, and
Dr. Wilensky elected that a portion of her, annual DSU awards be granted in shares of common stock.
16
Board of
1
2
Directors
325,526
Glenn M. Renwick
318,421
18,000
200,000
175,331
30,654
406,075
Timothy P. Flynn
300,658
24,892
325,550
Michele J. Hooper
145,000
175,331
Executive
Compensation
18,374
Rodger A. Lawson
97,990
118,599
22,350
238,610
F. William McNabb III
189,626
189,626
Valerie C. Montgomery Rice, M.D.
125,000
175,331
338,795
We have an Executive Chairman of the Board and a Lead Independent Director.
Executive
Compensation
Board of
Directors
where appropriate, supporting the Company in interactions with shareholders and regulators in consultation
with the Chief Executive Officer and Chairman; and
interviewing, along with the Chair of the Nominating and Corporate Governance Committee, all Board
candidates and making director candidate recommendations to the Nominating and Corporate Governance
Committee.
22
Board of
Directors
Corporate
2
3
Governance
Executive
Compensation
Annual
meeting periodically with individual Independent Directors to discuss Board and committee performance,
effectiveness and composition;
Other
5
Meeting
Information
Risk Oversight
Enterprise-Wide Risk Oversight
Our Board of Directors oversees management's enterprise-wide risk management activities. Risk management
activities include assessing and taking actions necessary to manage risk incurred in connection with the long-term
strategic direction and operation of our business. Each director on our Board is required to have risk oversight
ability for each skill and attribute the director possesses that is reflected in the collective skills section of our
director skills matrix described in "Proposal 1 Election of Directors Director Nomination Process Criteria for
Nomination to the Board" above. Collectively, our Board of Directors uses its committees to assist in its risk
oversight function as follows:
•
•
•
The Audit Committee oversees management's internal controls and compliance activities. The Audit
Committee also oversees management's processes to identify and quantify material risks facing the
Company, including risks disclosed in the Company's Annual Report on Form 10-K. The enterprise risk
management function assists the Company in identifying and assessing the Company's material risks. The
Company's General Auditor, who reports to the Audit Committee, assists the Company in evaluating risk
management controls and methodologies. The Audit Committee receives periodic reports on the enterprise
risk management function. The Audit Committee also receives periodic reports on the Company's cyber
security efforts. In connection with its risk oversight role, the Audit Committee regularly meets privately with
representatives from the Company's independent registered public accounting firm and the Company's
CFO, General Auditor and Chief Legal Officer;
4 Audit
The Compensation Committee oversees risk associated with our compensation practices and plans;
communicating to the Chairman any decisions reached, suggestions, views or concerns expressed by
Independent Directors in executive sessions or outside of Board meetings;
leading the Board's annual goal setting and evaluation process for the Chairman;
Our Principles of Governance outline the specific duties of the Lead Independent Director, including:
•
•
⋅
•
•
•
•
•
•
assisting the Chair of the Nominating and Corporate Governance Committee in reviewing and reporting on
the results of the Board and committee performance self-evaluations;
•
•
serving as the principal liaison between the Independent Directors and the Chairman;
presiding at all meetings of the Board at which the Chairman is not present and at executive sessions of
the Board's Independent Directors;
calling meetings of the Independent Directors as appropriate and, in coordination with the Chairman, all
members of the Board;
facilitating discussion and open dialogue among the Independent Directors during Board meetings,
executive sessions and outside of Board meetings;
serving as an ex officio member of each Board committee of which the Lead Independent Director is not a
member and working with the Board committee chairs on the performance of their designated roles and
responsibilities;
working with the Chairman to approve the agendas and meeting schedules for Board meetings;
working with the Chairman on the appropriateness (including quality and quantity) and timeliness of
information provided to the Board;
meeting individually with the Chairman after each regularly scheduled Board meeting;
coordinating the preparation of agendas and materials for executive sessions of the Board's Independent
Directors, if any;
•
The Nominating Committee oversees Board processes and corporate governance-related risk; and
The Public Policy Committee oversees risk associated with the public policy arena, including health care
reform and modernization activities, political contributions, government relations, community and charitable
activities and corporate social responsibility.
Our Board of Directors maintains overall responsibility for oversight of the work of its various committees by
receiving regular reports from the Committee Chairs regarding their work. In addition, discussions about the
Company's strategic plan, consolidated business results, capital structure, merger and acquisition-related activities
and other business discussed with the Board of Directors include a discussion of the risks associated with the
particular item under consideration.
William C. Ballard, Jr.
Audit
Compensation
Nominating
Å
Public Policy
Richard T. Burke*
Stephen J. Hemsley
Michele J. Hooper
F. William McNabb III
Valerie C. Montgomery Rice, M.D.
Director
John H. Noseworthy, M.D.
David S. Wichmann
Gail R. Wilensky, Ph.D.
Chairperson Member
Financial Expert
Do
Do
61 61
Mr. Burke is the Lead Independent Director and an ex-officio member of the Compensation Committee and
Public Policy Committee. As an ex-officio member, Mr. Burke has a standing invitation to attend each
committee meeting, but does not count for quorum purposes or vote on committee matters.
24
18
Glenn M. Renwick
*
The following table identifies the members of each committee as of April 9, 2019:
The Board of Directors has established four standing committees: Audit, Compensation, Nominating and Public
Policy. These committees help the Board fulfill its responsibilities and assist the Board in making informed
decisions. Each committee operates under a written charter, and evaluates its charter and conducts a committee
performance evaluation annually.
Enterprise-Wide Incentive Compensation Risk Assessment
Our Compensation Committee requested that management conduct an annual risk assessment of the Company's
enterprise-wide compensation programs. The risk assessment reviewed both cash incentive compensation plans
and individual cash incentive awards paid in 2018 for the presence of potential design elements that could motivate
employees to incur excessive risk. The review included the ratio and level of incentive to fixed compensation, the
amount of manager discretion, the level of compensation expense relative to the business units' revenues, and the
presence of other design features that serve to mitigate excessive risk-taking, such as the Company's clawback
policy, stock ownership and retention guidelines, multiple performance measures and similar features.
23
23
Board of
1
2
Directors
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
After considering the results of the risk assessment, management concluded that the level of risk associated with
the Company's enterprise-wide compensation programs is not reasonably likely to have a material adverse effect
on the Company. The results of the risk assessment were reviewed with the Compensation Committee at its
February 2019 meeting. Please see "Compensation Discussion and Analysis" for a discussion of compensation
design elements intended to mitigate excessive risk-taking by our executive officers.
The Compensation Committee also receives an annual report on the Company's compliance with its equity award
program controls.
Board Meetings and Annual Meeting Attendance
Directors are expected to attend Board meetings, meetings of committees on which they serve and the Annual
Meeting of Shareholders. All then-current directors attended the 2018 Annual Meeting. During the year ended
December 31, 2018, the Board of Directors held twelve meetings. All then-current directors attended at least 75%
of the meetings of the Board and any Board committees of which they were members in 2018.
Board Committees
In connection with the CEO succession that took place in 2017, our Board created the position of Executive
Chairman. The Board unanimously selected Mr. Hemsley to serve as our Executive Chairman due to his vision for
the Company's future and his understanding of the Company and its evolving competitive environment. Given that
Mr. Hemsley is not an independent director under applicable NYSE rules, the Board determined to continue the
strong voice of independent directors and created the role of Lead Independent Director. Mr. Burke was appointed
to serve as Lead Independent Director.
Information
Timothy P. Flynn
6
•
•
Our Board of Directors has developed a CEO succession plan with input from our CEO and reviews the
plan annually. The CEO succession plan has two components: one addressing an emergency or
unanticipated loss of our CEO and one addressing longer-term succession. Material features of this plan
include identification of Board members to lead the succession process, identification and development of
internal candidates and identification of external resources necessary to ensure a successful transition.
We maintain stock ownership and retention guidelines for directors and executive officers. See
"Compensation Discussion and Analysis - Elements of Our Compensation Program Other
Compensation Practices Executive Stock Ownership Guidelines and Stock Retention Policy," "Director
Compensation. Equity-Based Compensation" and "Director Compensation Stock Ownership and
Retention Guidelines" for further information.
-
-
-
-
We have a related-person transactions approval policy regarding the review, vote and ratification by our
Nominating Committee on all proposed related-person transactions. See "Certain Relationships and
Transactions."
We have a clawback policy that entitles the Board of Directors to seek reimbursement from our senior
executives if they are involved in fraud or misconduct that causes a material restatement or in the event of
a senior executive's violation of non-compete, non-solicit or confidentiality provisions. See “Compensation
Discussion and Analysis Elements of Our Compensation Program Other Compensation Practices —
-
•
Potential Impact on Compensation from Executive Misconduct/Compensation Clawbacks."
We have an environmental policy that outlines our focus on minimizing our impact on the environment and
creating a Company culture that heightens our employees' awareness of the importance of preserving the
environment and conserving energy and natural resources.
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Board of
1
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Corporate
Governance
3
Executive
Compensation
We have a political contributions policy that is overseen by our Public Policy Strategies and Responsibility
Committee (the "Public Policy Committee”). The Company's political contributions and public advocacy efforts
and the contributions of our federal and state political action committees are disclosed on our website.
Annual
•
Guidelines and Board Policies
2
Meeting
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
Information
•
Board and Board Committee Composition and Performance
•
All members of our Audit Committee are "audit committee financial experts" as defined by the Securities
and Exchange Commission ("SEC").
A non-management director may not serve on more than three other public company boards of directors,
and our CEO may not serve on more than one other public company board of directors.
•
Our directors are required to offer their resignations upon a change in their primary careers.
⋅
•
Our Board of Directors and each Board committee regularly conduct executive sessions of non-management
directors. Our Lead Independent Director presides over each executive session of non-management
directors. Committee Chairs preside over executive sessions of their respective committees.
Our Board of Directors and Board committees have the authority to retain independent advisors.
Our Board of Directors and Board committees conduct performance reviews annually.
•
4 Audit
Meeting
Meeting
Our Board of Directors has adopted the Company's Standards for Director Independence, which are available on
our website at www.unitedhealthgroup.com/about/corporate-governance. The Standards for Director Independence
requirements exceed the independence standards set by the NYSE.
Our Board of Directors has determined that William C. Ballard, Jr., Richard T. Burke, Timothy P. Flynn,
Michele J. Hooper, F. William McNabb III, Valerie C. Montgomery Rice, M.D., John H. Noseworthy, M.D.,
Glenn M. Renwick and Gail R. Wilensky, Ph.D. are each "independent” under the NYSE rules and the Company's
Standards for Director Independence, and have no material relationships with the Company that would prevent the
directors from being considered independent. Stephen J. Hemsley, Executive Chairman of the Board, and
David S. Wichmann, CEO, are not independent directors.
In determining independence, the Board of Directors considered, among other factors, the business relationships
between the Company and our directors and nominees, their immediate family members (as defined by the NYSE)
and their affiliated companies. The Board of Directors considered whether any director or any nominee was a
director, partner, significant shareholder or executive officer of an organization that has a relationship with the
Company, and also considered charitable contributions that the Company or its affiliates made to organizations with
which such directors or nominees are or have been associated. In particular, the Board of Directors evaluated the
following relationships and determined that such relationships were in the normal course of business and did not
impair the directors' ability to exercise independent judgment:
•
•
Mr. Burke is an owner of Rainy Partners, LLC. Rainy Partners is a customer of the Company and paid the
Company premiums for health insurance of approximately $398,600 in 2018. These premiums were
determined on the same terms and conditions as premiums for other comparable customers.
Dr. Montgomery Rice is President and Dean of Morehouse School of Medicine. In 2018, Morehouse School
of Medicine paid the Company approximately $175,600 for claims software and medical records review
services. The Company paid Morehouse School of Medicine approximately $910,000 for services as a
network care provider in 2018. Total moneys paid by the Company and the United Health Foundation to
Morehouse School of Medicine during 2018 were substantially less than 1% of Morehouse School of
Medicine's total revenues for 2018. Dr. Montgomery Rice was not directly involved in these relationships.
The Board of Directors also considered relationships between the Company and organizations on which our
non-employee directors or their immediate family members serve only as directors and determined that such
relationships did not impair the directors' exercise of independent judgment.
Board Leadership Structure
Our Board of Directors believes having independent Board leadership is an important component of our
governance structure. As such, our Bylaws require the Company to have either an independent Chairman of the
Board or a Lead Independent Director. Our current Board of Directors' leadership structure also separates the
positions of CEO and Chairman of the Board. The Board believes this separation is appropriate for the Company at
this time because it allows for a division of responsibilities and a sharing of ideas between individuals having
different perspectives.
Director Independence
21
Board of
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2
Directors
3
Annual
Other
5
5
4 Audit
24
Information
Corporate
Governance
5
•
Meeting
Other
Our insider trading policy prohibits all directors, executive officers and employees from engaging in short
sales and hedging transactions relating to our common stock, and requires advance approval of the
Compensation Committee of any pledging of common stock by directors, executive officers and other
members of management.
Our Board of Directors believes that effective Board-shareholder communication strengthens the Board of
Directors' role as an active, informed and engaged fiduciary, so we have a communication policy that
outlines how shareholders and other interested parties may communicate with the Board of Directors. See
"Corporate Governance Communication with the Board of Directors."
Information
A Nominating Advisory Committee comprised of representatives from the shareholder and medical
communities provides input into the composition of our Board of Directors.
Principles of Governance
Our Certificate of Incorporation and Bylaws, together with Delaware law and NYSE and SEC rules, govern the
Company. Our Board has also adopted "Principles of Governance," which set forth many of our practices, policies
and procedures in corporate governance. The policies and practices covered in our Principles of Governance
include shareholder rights and proxy voting; structure, composition and performance of the Board of Directors;
stock ownership and retention requirements; Board of Directors operation; individual director responsibilities; and
Board committees. Our Principles of Governance are reviewed at least annually by our Nominating Committee and
are revised as necessary.
Code of Conduct: Our Principles of Ethics & Integrity
The Code of Conduct: Our Principles of Ethics & Integrity document is posted on our website and covers our
principles and policies related to business conduct, conflicts of interest, public disclosure, legal compliance, reporting
and accountability, corporate opportunities, confidentiality, fair dealing and protection and proper use of Company
assets. Any waiver of the Code of Conduct for the Company's executive officers, senior financial officers or directors
may be made only by the Board of Directors or a committee of the Board. We will publish any amendments to the
Code of Conduct and waivers of the Code of Conduct for an executive officer or director on our website.
Compliance and Ethics
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20
We strongly and broadly encourage employees to raise ethics and compliance concerns, including concerns about
accounting, internal controls or auditing matters. We offer several channels for employees and third parties to
report ethics and compliance concerns or incidents, including by telephone or online, and individuals may choose
to remain anonymous in jurisdictions where anonymous reporting is permissible. We prohibit retaliatory action
against any individual who in good faith raises concerns or questions regarding ethics and compliance matters or
reports suspected violations. We train all employees annually and periodically advise them regarding the means by
which they may report possible ethics or compliance issues and their affirmative responsibility to report any
possible issues. In our 2018 employee survey, 96% of employees said they knew what to do if they believed
unethical behavior or misconduct occurred in their work area.
Annual
Executive
Compensation
4 Audit
Corporate
Governance
3
2
Board of
Directors
20
Other
.
•
This screening process resulted in the 54 companies set forth under "Peer Group and Managed Care Companies"
below. As compared to the peer group, the Company is:
Information
Other
Meeting
•
3
4 Audit
Annual
Executive
Compensation
Corporate
Governance
Directors
2
1
31
Board of
5
At the 97th percentile on a revenue basis;
Target total compensation of our named executive officers as a group in 2018, consisting of base salary, target
annual cash incentive award, target long-term cash incentive award and the grant date fair value of equity awards
(including performance shares at target) was between the 50th and the 75th percentiles of the market data for our
peer group.
At the 78th percentile on a market capitalization basis;
Executive
Compensation
3
Add major companies located near UnitedHealth Group's headquarters and primary operating locations to
reflect relevant geographic markets for talent.
Corporate
Governance
2
Board of
Directors
1
32
32
The Compensation Committee has the responsibility to approve and monitor all compensation for our executive
officers. Management recommends appropriate enterprise-wide financial and non-financial performance goals for
use in incentive compensation. Our Executive Chairman and CEO assist the Compensation Committee by
evaluating the performance of the executive officers who report directly to them and recommending compensation
levels for these executive officers.
Role of Management and CEO in Determining Executive Compensation
The companies included in the 2018 peer group and the four managed care companies are listed at the end of this
Compensation Discussion and Analysis.
At the first quarter Compensation Committee meeting, the Compensation Committee determines pay
opportunities for each officer using the market competitiveness assessment from the previous fourth quarter
as a reference point. In addition, the Compensation Committee takes into consideration the Company's
performance against previously established performance goals, each officer's individual performance,
internal equity, the Executive Chairman and CEO's recommendations and other relevant business
performance that may not be adequately captured by the Company and individual officer goals.
At the fourth quarter Compensation Committee meeting, Pay Governance presents an annual review of the
market competitiveness of the Company's executive compensation program for the Company's executive
officers. The review compares the compensation opportunities provided to the Company's executive officers
to peer group companies on a position-by-position basis and on an aggregate basis.
•
•
The Compensation Committee also considers market data from the four largest publicly traded managed care
companies with which we compete for business. However, the Compensation Committee does not use this group
as a primary reference point for benchmarking compensation practices because the Company is substantially
larger, more complex and more diverse than these companies, and because we believe that the Company
competes primarily for talent and capital with other successful large companies across a broader group of sectors.
Once the process is concluded and peer group companies are selected, the Compensation Committee generally
uses the market data as follows:
At the 84th percentile in number of employees.
At the 77th percentile in earnings from operations; and
•
Limit the list to the largest companies by revenue and equity market capitalization to avoid companies of
significantly smaller scope; and
Executive
Compensation
•
2
Board of
Directors
1
50
30
The Compensation Committee oversees the Company's policies and philosophy related to total compensation for
executive officers. The Compensation Committee reviews and approves the compensation for the named executive
officers based on its own evaluation, input from our Executive Chairman and CEO (for all executive officers except
themselves), internal pay equity considerations, the tenure, role and performance of each named executive officer,
input from its independent consultant and market data.
Role of the Compensation Committee
Determination of Total Compensation
Corporate
Governance
Provide standard benefits. We provide standard employee benefits and generally do not have
"executive-only" benefits or perquisites.
Enhance the long-term value of the business. Our pay system is weighted toward long-term compensation
to promote long-term shareholder value creation and avoid excessive risk-taking.
Pay-for-performance. Most of the total compensation of our executive officers is at risk and only earned
based on achievement of enterprise-wide goals.
•
⋅
•
Our Compensation Committee uses the following principles to implement our compensation philosophy and achieve
our executive compensation program objectives:
Annual
Compensation Program Principles
Reward long-term growth and focus management on sustained success and shareholder value creation.
Compensation of our executive officers is heavily weighted toward equity and we require significant stock
ownership by our management team. This encourages sustained performance and positive shareholder
returns.
3
Annual
Other
•
Technology
Health Care
Insurance
Pharma/Biotech/Life Sciences
All U.S. publicly traded companies in the following industries as the starting point:
•
The Compensation Committee uses the following methodology, which formulates a peer group focused on the
industries reflected in the prior career experiences of approximately 250 of the Company's senior leaders:
At the request of the Compensation Committee, Pay Governance conducts an annual review of the Company's
compensation peer group. This review ensures that the peer group companies remain appropriate from a business
and talent perspective and occurs at the second quarter Compensation Committee meeting, because recent
financial and compensation data are generally available at that time.
In general, the Compensation Committee's goal is to achieve total compensation for the named executive officers
as a group that falls within a range of the 50th to 75th percentiles of the market data for our peer group (as
discussed below), if paid at target. The Compensation Committee believes this range is an appropriate reflection of
the Company's relative size, complexity and consistently strong performance over the past several years. The
following briefly summarizes the processes followed by the Compensation Committee to select competitive
compensation benchmark data and how the Compensation Committee uses these data.
The Compensation Committee believes total compensation for the named executive officers should be heavily
weighted toward long-term performance-based compensation, but it does not target a specific mix of annual and
long-term compensation or cash and equity compensation and does not formulaically set compensation targets.
Competitive Positioning
The Compensation Committee retains independent compensation consultant, Jon Weinstein of Pay Governance LLC,
to advise the Compensation Committee on executive and director compensation matters, assess total compensation
program levels and program elements for executive officers and evaluate competitive compensation trends. Pay
Governance does not provide any other services to the Company and does not perform any work for management.
The Compensation Committee has assessed the independence of Mr. Weinstein and of Pay Governance, specifically
considering, in accordance with SEC rules, whether Mr. Weinstein and Pay Governance had any relationships with
the Company, our officers or our Board members that would impair their independence. Based on this evaluation, the
Compensation Committee concluded that Mr. Weinstein's and Pay Governance's work for the Compensation
Committee does not raise any conflict of interest.
The Compensation Committee's Use of an Independent Compensation Consultant
In addition, in making compensation decisions, the Compensation Committee considers the results of the
Company's annual shareholder advisory votes approving the Company's executive compensation. More than 95%
of the votes cast have been in favor of the Company's executive compensation at each of our annual meetings,
beginning with our inaugural vote in 2011. The Compensation Committee believes these shareholder votes reflect
strong support for the Company's executive compensation program.
Information
Meeting
6
5
4 Audit
Financial Services
Professional Services
Other
6
5
Annual cash
incentive award
17%
Non-qualified
stock options
Base salary
19%
9%
stock units
19%
Restricted
19%
stock options
19%
Other NEOS Compensation Mix
CEO Compensation Mix
As reflected in the charts below, the mix of total target compensation granted in 2018 to our named executive
officers was heavily weighted towards performance-based and long-term incentive compensation, with long-term
incentive awards making up approximately 75% of total target compensation for our named executive officers in
aggregate.
Information
Meeting
5
4 Audit
Non-qualified
Other
37%
shares
Foster an entrepreneurial spirit with innovative thinking and action that leverages the ingenuity of our
employees.
=4
34
Sir Andrew was selected to be Optum's CEO because of his experience leading a complex, multinational business
organization, global perspective and outstanding accomplishments in health care worldwide, where he has
distinguished himself as an internationally recognized business leader and drove some of the largest and most
impactful decisions and innovations in health care around the globe. During his nine-year tenure as GSK's CEO
(from 2008 to 2017), Sir Andrew led the delivery of substantial portfolio change and growth across GSK's three
business units while remaining disciplined on costs and advancing the progression of the company's pipeline of
innovative products. Sir Andrew led a number of ground breaking corporate transactions. Alongside acquisitions,
the creation of important joint ventures in the fields of HIV, Vaccines and Consumer Health allowed GSK to
strengthen leading positions in important fields. He also led GSK in the adoption of an equitable pricing strategy to
make much needed medicines and vaccines more affordable to people in the world's poorest countries. Sir
Andrew's deep experience with the use of data and analytics and new technologies to improve outcomes, better
serve consumers, lower costs and drive value across the health care system further qualified him as a unique
candidate for the Optum CEO role.
On March 13, 2018, the Company announced that, effective July 1, 2018, Sir Andrew Witty would replace
Larry Renfro as Chief Executive Officer of Optum. Sir Andrew is the former Chief Executive Officer of
GlaxoSmithKline plc. (GSK), a Fortune Global 500 company and one of the largest pharmaceutical companies in
the world. In light of this appointment, Sir Andrew stepped down from the UnitedHealth Group Board of Directors
on March 13, 2018.
Appointment of Sir Andrew Witty as Chief Executive Officer of Optum
Excludes new hire grant made to Mr. Witty in
connection with his appointment as CEO, Optum.
Long-term Incentives
Performance
75%
37%
incentive award
Annual cash
15%
10%
Base salary
Restricted
stock units*
Long-term Incentives
75%
Performance
shares
Annual
Executive
Compensation
Corporate
Governance
•
•
To motivate and retain executive
officers and align their interests with
shareholders through the use of:
To encourage and reward executive
officers for achieving annual
corporate performance goals and
individual performance results
To provide a base level of cash
compensation for executive officers
based on role, scope of
responsibilities and experience
Objective
Employee benefits
Equity awards
Performance shares to
encourage sustained
Annual cash incentive awards
Compensation Element
The compensation program for our named executive officers consists of the following elements:
Overview
Elements of our Compensation Program
When approving compensation decisions, the Compensation Committee reviews tally sheet information for each of
our executive officers. These tally sheets are prepared by management and quantify the elements of each
executive officer's total compensation. The tally sheets include a summary of all equity awards previously granted
to each executive officer, the gain realized from past vesting or exercise of equity awards, and the projected value
of accumulated equity awards based upon then current stock price scenarios. This is done to analyze the
compensation each executive officer has accumulated to date and to fully understand the amount the executive
officer could potentially accumulate in the future.
Use of Tally Sheets and Wealth Accumulation Analysis
Information
Meeting
Base salary
performance and growth and
potentially assist executives in
building ownership in the
Directors
2
1
Board of
33
33
Annual indirect compensation, not
variable
Long-term performance
compensation, variable
Annual performance compensation,
variable
Annual compensation, not variable
Type of Compensation
constitutes the smallest part of total
remuneration
To promote the health, well-being
and financial security of employees,
including executive officers;
encourage sustained stock price
appreciation
Non-qualified stock options to
ownership positions
officers and build stock
RSUS to retain executive
Company
4 Audit
•
•
•
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
Information
2
46
26
Each of the Public Policy Committee members is an independent director under the NYSE listing standards.
Independence:
The Public Policy Strategies and Responsibility Committee (the "Public Policy Committee”) is responsible for
assisting the Board of Directors in fulfilling its responsibilities relating to the Company's public policy, health care
reform and modernization activities, political contributions, government relations, community and charitable
activities and corporate social responsibility. The Public Policy Committee is also responsible for overseeing the
risks associated with these activities.
Meetings Held in 2018: 4
Gail R. Wilensky, Ph.D. (Chair) and Valerie C. Montgomery Rice, M.D.
Primary Responsibilities:
Committee Members:
Board of
Directors
Public Policy Strategies and Responsibility Committee
Communication with the Board of Directors
The Secretary to the Board of Directors will not forward to the directors communications received which are of a
personal nature or not related to the duties and responsibilities of the Board of Directors, including, without
limitation, junk mail, mass mailings, business solicitations, routine customer service complaints, new product or
service suggestions and opinion surveys. The Secretary to the Board of Directors will forward such complaints and
suggestions received to the appropriate members of the Company's management.
2
Board of
Directors
27
27
The policy, including information on how to contact the Board of Directors, may be found in the corporate
governance section of our website, www.unitedhealthgroup.com/about/corporate-governance.
General Board oversight, including accounting, internal controls, auditing and other related matters.
•
Corporate governance; and
The Board of Directors values the input and insights of our shareholders and other interested parties and believes
effective communication strengthens the Board of Directors' role as an active, informed and engaged fiduciary. The
Board of Directors has adopted a Board of Directors Communication Policy to facilitate communication between
shareholders and other interested parties and the Board. Under this policy, the Board of Directors has designated
the Company's Secretary to the Board of Directors as its agent to receive and review communications.
•
Executive compensation;
CEO succession planning process;
•
Board succession planning process;
•
Board composition;
•
Appropriate matters to raise in communications to the Board include:
Use of capital;
Each of the Nominating Committee members is an independent director under the NYSE listing standards.
Independence:
The Nominating and Corporate Governance Committee's (the "Nominating Committee”) duties include identifying
and nominating individuals to be proposed as nominees for election as directors at each Annual Meeting or to fill
Board vacancies, conducting the Board evaluation process, evaluating the categorical standards which the Board
of Directors uses to determine director independence, and monitoring and evaluating corporate governance. The
Nominating Committee also oversees Board processes and corporate governance-related risk.
3
Governance
Executive
Compensation
4 Audit
5
Annual
Meeting
6
Other
Information
2
Audit Committee
Committee Members:
Meetings Held in 2018: 5
Committee Members:
Compensation and Human Resources Committee
Each of the Audit Committee members is an independent director under the NYSE listing standards and the
SEC rules. The Board of Directors has determined that Messrs. Renwick and McNabb and Ms. Hooper are
"audit committee financial experts" as defined by the SEC rules.
Independence:
The Audit Committee has responsibility for the selection and retention of the independent registered public
accounting firm and oversees financial reporting, internal controls and public disclosure. The Audit Committee
reviews and assesses the effectiveness of the Company's policies, procedures and resource commitments in the
areas of compliance, ethics, privacy and cyber security, by interacting with personnel responsible for these
functions. The Audit Committee also oversees management's processes to identify and quantify material risks
facing the Company. The Audit Committee establishes procedures concerning the receipt, retention and
treatment of complaints regarding accounting, internal accounting controls and auditing matters. The Audit
Committee operates as a direct line of communication between the Board of Directors and our independent
registered public accounting firm, as well as our internal audit, compliance and legal personnel.
Glenn M. Renwick (Chair), Michele J. Hooper and F. William McNabb III
Primary Responsibilities:
Meetings Held in 2018: 9
Corporate
Board of
Directors
William C. Ballard, Jr. (Chair), Richard T. Burke, Timothy P. Flynn and Gail R. Wilensky, Ph.D.
Primary Responsibilities:
Meetings Held in 2018: 3
Michele J. Hooper (Chair), William C. Ballard, Jr. and Richard T. Burke
Primary Responsibilities:
Committee Members:
Nominating and Corporate Governance Committee
Other
Information
6
Annual
Meeting
5
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
25
25
Each of the Compensation Committee members is an independent director under the NYSE listing standards
and the SEC rules, a non-employee director under the SEC rules and an outside director under the Internal
Revenue Code of 1986 (the "Internal Revenue Code").
Independence:
The Compensation and Human Resources Committee (the "Compensation Committee”) is responsible for
overseeing our policies and practices related to total compensation for executive officers, the administration of
our incentive and equity-based plans and the risk associated with our compensation practices and plans. The
Compensation Committee also establishes employment arrangements with our CEO and other executive officers,
conducts an annual performance review of the CEO, and reviews and monitors director compensation programs
and the Company's stock ownership guidelines.
Corporate
Governance
Reward performance that supports the Company's values.
Executive
Compensation
Other
Long-term cash incentive award of $890,600 for the 2016-2018 performance period, which represents
above target performance by the Company against pre-set 2016-2018 long-term incentive plan
performance goals (this cash plan has been discontinued);
•
•
Annual cash incentive award of $4.5 million, which represents 173% of his target opportunity;
•
Base salary of $1.3 million;
⋅
As discussed in detail below and reflected in the 2018 Summary Compensation Table, our CEO, Mr. Wichmann,
received the following compensation for 2018:
A performance-based restricted stock unit opportunity ("performance shares") with a target grant date fair
value of $5.55 million, restricted stock units ("RSUS") with a grant date fair value of $2.775 million, and
non-qualified stock options with a grant date fair value of $2.775 million; and
The direct retention by the Compensation Committee of its independent compensation consultant, Pay
Governance LLC, which performs no other consulting or other services for the Company.
Prohibition on repricing of stock options and stock appreciation rights without shareholder approval.
Prohibition on hedging transactions and advance approval of the Compensation Committee required for
pledging transactions.
Each of our executive officers and directors were in compliance with our stock ownership guidelines as of
April 9, 2019. Mr. Wichmann, our CEO, is required to own shares equal to eight times his base salary by
the fifth anniversary of his appointment as CEO. As of April 9, 2019, Mr. Wichmann owned shares equal to
169 times his base salary.
A stock retention policy that generally requires executive officers to hold, for at least one year, one-third of
the net shares acquired upon vesting or exercise of any equity award.
A compensation clawback policy that entitles the Board of Directors to seek reimbursement from our senior
executives if they are involved in fraud or misconduct that causes a material restatement, or in the event of
a senior executive's violation of non-compete, non-solicit or confidentiality provisions.
No excise tax gross-ups and generally no executive-only perquisites such as company cars, security
systems or financial planning.
Double-trigger accelerated vesting of equity awards, requiring both a change in control and a qualifying
employment termination, which is our only change in control consideration.
Performance-based compensation arrangements, including performance-based equity awards that use a
balanced set of performance measures, with different metrics used for annual and long-term incentive
plans.
Compensation Committee consisting entirely of independent Board members.
Annual advisory shareholder vote to approve the Company's executive compensation.
•
Company matching contributions of $178,875 made under the Company's 401(k) plan and Executive
Savings Plan.
29
Reward performance that emphasizes teamwork and close collaboration among executive officers while
also recognizing individual performance.
Reward performance that advances our mission of helping people live healthier lives and helping to make
the health system work better for everyone.
Align the economic interests of our executive officers with those of our shareholders.
•
•
We seek to attract and retain highly qualified executives and establish a strong pay-for-performance alignment by
linking senior management compensation to enterprise and individual performance goals. The primary objectives of
our executive compensation program are to:
Our Compensation Program Philosophy and Objectives
Compensation Discussion and Analysis
29
Information
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
Meeting
•
•
•
Cumulative shareholder return for UnitedHealth Group, which is defined as the increase in stock price,
together with dividends reinvested when paid was 122% over the 2016-2018 time period and 258% over
the 2014-2018 time period. Cumulative shareholder return for the S&P 500 Index was 30% over the
2016-2018 time period and 50% over the 2014-2018 time period;
Return on equity was consistent with the prior year at 24.4% in 2018;
Diluted earnings per share increased 14% to $12.19 per share from $10.72 in 2017. Adjusted earnings per
share increased 28% to $12.88 per share from $10.07 per share in 2017;
Operating earnings increased 14% year-over-year to $17.3 billion; net earnings to UnitedHealth Group
common shareholders increased to $12 billion; and cash flows from operations grew 16% year-over-year to
$15.7 billion;
•
•
•
Revenues increased 12% to $226.2 billion from $201.2 billion in 2017;
Our annual cash dividend rate increased to $3.60 per share, paid quarterly, representing a 20% increase
over the annual cash dividend rate of $3.00 per share paid quarterly since the second quarter of 2017;
UnitedHealth Group was the top ranked company in the insurance and managed care sector on Fortune's
2019 "World's Most Admired Companies" list, based on 2018 results. This is the ninth consecutive year
UnitedHealth Group has ranked No. 1 overall in its sector. The Company ranked No. 1 on all nine key
attributes of reputation - innovation, people management, use of corporate assets, social responsibility,
quality of management, financial soundness, long-term investment, quality of products and services and
global competitiveness. The Company was rated No. 1 in innovation for the tenth consecutive year.
•
In determining 2018 executive compensation, the Compensation Committee considered the Company's strong
growth, operating performance and financial results, all of which were achieved in an uncertain environment, as
well as individual executive performance. Some of our key business results for 2018 were:
UnitedHealth Group's compensation program is designed to attract and retain highly qualified executives and to
maintain a strong link between pay and the achievement of enterprise-wide goals. We emphasize and reward
teamwork and collaboration among executive officers, which we believe fosters Company growth and performance,
optimizes the use of enterprise-wide capabilities, drives efficiencies and integrates products and services for the
benefit of our customers and other stakeholders.
Executive Summary
EXECUTIVE COMPENSATION
Information
Meeting
5
4 Audit
•
-
UnitedHealth Group was named to both the Dow Jones Sustainability World and North America Indices for
the 20th consecutive year; and
UnitedHealth Group was included among the 2018 Best Employers for Diversity by Forbes.
•
.
•
We endeavor to maintain strong governance standards in the oversight of our executive compensation programs,
including the following policies and practices that were in effect during 2018:
The Compensation Committee believes total compensation for the executive officers listed in the 2018 Summary
Compensation Table (the “named executive officers" or "NEOs") should be heavily weighted toward long-term
performance-based compensation. In 2018, long-term compensation represented approximately 75% of the total
compensation granted to our named executive officers. The elements of compensation for our named executive
officers were unchanged from 2017.
Information
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
1
28
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for
a reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
1
Annual
Corporate
Governance
(#)
The Company has a policy of entering into employment agreements with each of our named executive officers.
These employment agreements are described in greater detail in "Executive Employment Agreements."
Other
4 Audit
5
6
Meeting
Information
In determining the 2018 annual cash incentive award amounts for the named executive officers, the Compensation
Committee took into account the Company's performance against the 2018 annual performance goals set forth in
the table above, business results described under "Context for the 2018 Annual Cash Incentive Plan Performance
Goals," including each executive officer's role in achieving those results, and a qualitative assessment of individual
performance and accomplishments. Individual factors considered are as follows:
•
⋅
Mr. Wichmann's individual performance evaluation was conducted by Mr. Hemsley with input from the
independent members of the Board of Directors. Mr. Wichmann's 2018 performance evaluation reflected
exceptional performance in the following areas: strategic focus; vision and values; corporate performance,
Board relations; leadership and organization effectiveness; corporate reputation and government relations;
and overall performance.
Mr. Rex's individual performance considerations included exceptional performance as Chief Financial
Officer and additional enterprise responsibilities as part of the Office of the Chief Executive; oversight of all
finance, audit and financial compliance functions across the enterprise and responsibility for treasury,
long-term capital allocation and financial planning, mergers and acquisitions and venture and private equity
investment activity; and high regard by the Company's investors.
Annual
Mr. Witty's individual performance considerations included his strategic vision for Optum, commitment to
the Company's mission and culture, the strong operational performance of Optum in 2018 as described
above, including strong execution and engagement of Optum leaders and its employee base.
The Compensation Committee did not make specific assessments of, quantify or otherwise assign relative
weightings to the factors listed above as it reached its decisions with respect to any of the named executive
officers. See the 2018 Summary Compensation Table and other related compensation tables below for details
regarding 2018 total compensation for the named executive officers.
Long-Term Incentive Compensation
Long-term incentive compensation, consisting solely of equity awards in 2018, represents the largest portion of
executive officer compensation. The combination of long-term incentives we employ provides a compelling
performance-based compensation opportunity, aids in aligning and retaining the senior management team and
accelerates the advancement of business unit capabilities across the enterprise.
The Compensation Committee determined that long-term equity-based compensation for 2018 should include
grants of performance shares, RSUs and non-qualified stock options to achieve balance and effectiveness in our
equity-based compensation and to align the interests of our executive officers and our shareholders. The mix of
equity-based compensation granted in February 2018 was as follows, based on the grant date fair value of the total
award: 50% performance shares, 25% RSUs and 25% non-qualified stock options. Performance share grants were
selected to ensure a strong pay-for-performance alignment of the Company's compensation program with drivers of
shareholder value. RSU grants were selected because they are full value shares with time vesting and, as such,
provide added retention value. Non-qualified stock options were selected because they have value only if the
Company's stock price increases and, as such, provide incentives for sustained long-term stock price appreciation.
39
1
Board of
Directors
Corporate
2
Governance
Executive
Compensation
Mr. Nelson's individual performance considerations included progress in increasing the amount of medical
spend covered under value-based arrangements, commitment to the Company's mission and culture,
inconsistent operating performance of UnitedHealthcare, including the business results described above
that met or exceeded some, but not all, of the targets set, and expansion into to new specialty business
lines.
Annual
Executive
Compensation
Directors
200%
2,600,000
4,500,000
173%
John F. Rex
150%
1,500,000
2,500,000
44
Andrew P. Witty
200%
Corporate
Governance
2,200,000
100%
Steven H. Nelson
200%
2,000,000
2,000,000
100%
38
88
Board of
1
2
2,200,000
David S. Wichmann
4 Audit
Meeting
Commercial risk-based health insurance growth from expansion into exchanges and growth in existing
markets, leveraging enhanced products, services and distribution. Commercial fee-based health insurance
enrollment growth in all years;
Continued funding pressure in government businesses;
An expectation that medical cost trends would be consistent with historical levels and that there would not
be net favorable or unfavorable development in previously reported medical cost payable estimates;
•
Delivery of more effective and comprehensive clinical management;
•
.
•
•
•
Medicaid, Medicare Advantage, Medicare Supplement, Part D and Global enrollment growth over the
three-year period;
Continued growth and enhancement of the quality and operations of our government businesses to
compensate for continued expected funding pressures;
Development and expansion of the Optum Care Delivery platform and capabilities;
Ongoing improvements to our consolidated operating cost ratio on a comparable business mix basis; and
Effective cross-enterprise collaboration among various business units for the benefit of customers and our
overall reputation and performance.
40
40
Board of
1
2
Directors
Corporate
Governance
Executive
Compensation
Continued growth and alignment of the Optum businesses, including growth in technology-enabled services
and specialty networks products and services, driving distinctive revenue, margin and earnings
performance;
5
_
•
Long-Term Awards
Other
Information
2016-2018 Long-Term Goals and Context
The long-term program creates financial incentives for achieving or exceeding three-year financial goals for the
enterprise as follows:
2016-2018
Performance Measure
Actual
Threshold
Target
Maximum 2016-2018
Weight Performance Performance Performance Performance
Cumulative Adjusted Earnings Per Share
Return on Equity
50%
$25.16
$26.55
Modest US economic growth with a gradual increase in interest rates, and a more rapidly growing economy
in Brazil, with a stable Brazilian Real - U.S. Dollar exchange rate;
$28.48
50%
18.5%
20.5%
22.5%
20.5%
The performance measures and goals for the 2016-2018 performance period were established during the first
quarter of 2016 based on the Company's long-term business plan. The first year of the long-term business plan
was based on the Company's 2016 business plan. Subsequent years were based on assumptions and growth
initiatives developed by the Company's business units and reviewed by the Board of Directors.
Key assumptions and elements of the 2016-2018 long-term business plan were:
•
•
•
•
$28.49
Annual
(% of Target)
($)
$226.2 billion
$17.3 billion
$15.7 billion
Operations*
Stewardship:
•
•
.
Net Promoter Score
Employee Engagement
Employee Teamwork
1/3
1 point above
2017 results for
NPS; 1 point
below 2017
results for
employee
engagement and;
at 2017 results for
teamwork;
4 points above
2017 results for
NPS; at 2017
results for
employee
$19.9 billion
$17.8 billion
engagement and;
1 point above
2017 results for
teamwork
engagement and;
2 points above
2017 results for
teamwork
Slightly below
target for net
promoter score;
at target for
employee
engagement; and
at threshold for
teamwork
The Company's annual incentive plan allows for adjustments to the Company's reported results for the impact
of changes in accounting principles, extraordinary items and unusual or non-recurring gains or losses,
including significant differences from the assumptions contained in the financial plan upon which the incentive
targets were established. Adjustments to reported results are intended to better reflect executives' line of
sight/ability to affect payouts, align award payments with growth of the Company's business, avoid artificial
inflation or deflation of awards due to unusual or non-recurring items in the applicable period and emphasize
the Company's preference for long-term and sustainable growth. No adjustments have been made to the
Company's reported results for 2018.
Context for the 2018 Annual Cash Incentive Plan Performance Goals
The 2018 financial performance measures at target level represented year-over-year growth in revenues of
$26.6 billion, or 13.2%; year-over-year growth in operating income of $2.1 billion, or 13.6%; and year-over-year
increase in operating cash flows of $1.9 billion or 14.0%. These targets included expected financial results from the
acquisition of Empresas Banmedica in January 2018, the impact of the return of the Health Insurance Industry Tax,
the impact of the Tax Cuts and Jobs Act enacted on December 22, 2017, and the view that there would be a
continued challenging business environment in 2018.
The 2018 non-financial performance measures were based on survey data results and, at target levels,
represented levels at or above 2017 performance in all categories. These measures were viewed to be important to
longer-term financial success, customer satisfaction and employee welfare that might not be immediately reflected
in annual financial results. The Compensation Committee was of the view that the breadth of financial and
non-financial performance measures for the 2018 annual cash incentive award would motivate executive officers to
achieve results that contribute to value creation for our shareholders on a long-term basis and avoid excessive
risks.
36
46
Board of
6 points above
2017 results for
NPS; 1 point
above 2017
results for
employee
1
$17.3 billion
$15.5 billion
Cash Flows from
Executive
Annual
4 Audit
5
Compensation
Meeting
Other
Information
The following table sets forth the performance measures and goals established for 2018, as well as actual 2018
performance results:
2018 Performance
Threshold
Measure
$13.2 billion
Weight
Target
Performance
Maximum
Performance
Actual 2018
Performance
Revenue*
1/3
$216.4 billion
$227.8 billion
$239.2 billion
Operating Income*
1/3
$14.7 billion
Performance
($)
2
Corporate
Governance
37
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
34
Information
At the beginning of each year, the Compensation Committee approves an "annual cash incentive target
opportunity" for each executive officer as a percentage of the executive officer's base salary. In February 2018, the
Compensation Committee approved an increase in the annual cash incentive target opportunity for Messrs. Rex
and Nelson to 150% and 200%, respectively. This increase reflected strong performance and aligned their incentive
opportunities to market data for leaders in their positions.
The target opportunities established for the named executive officers are intended to increase collaboration,
teamwork and accountability across the enterprise, to recognize the skills and versatility of each executive officer
and to reflect relative contributions to the success of the overall enterprise. At the end of the fiscal year, the
Compensation Committee reviews the Company's performance against the goals set at the beginning of the year
and determines annual cash incentive awards. The Compensation Committee has the discretion to increase or
decrease the awards made in view of actual performance, individual contributions and overall business and market
conditions.
The Compensation Committee evaluated the Company's 2018 performance against the performance goals, overall
business results, economic conditions and individual performance objectives, and exercised its discretion to adjust
the 2018 annual cash incentive awards such that they represented between 100% and 173% of the targets set for
named executive officers except Mr. Hemsley who did not participate in any annual incentive opportunity. When
Mr. Hemsley was appointed executive chair, the Compensation Committee determined to deliver all of
Mr. Hemsley's incentive compensation in equity to foster a long-term strategic orientation, consistent with the
specifications of his role. In exercising this discretion, the Compensation Committee considered the dollar amounts
of the awards in addition to the percentage of target paid. The target percentages for annual cash incentive awards
to our named executive officers and the actual 2018 annual cash incentive awards paid are set forth in the table
below. An explanation of how the individual amounts were determined follows the table.
2018 Annual Cash Incentive Awards
Target
Percentage
Target
Award Value
Actual
Award Paid
Paid
Award
Name
(% of Salary)
While the Company uses defined performance measures and weightings to determine an overall funding level for
the Company's bonus pool, individual annual cash incentive awards are not purely formulaic. In determining the
amount of the actual annual incentive award to be paid, the Compensation Committee considers the CEO's
recommendations for executive officers, the business performance underlying each of the performance measures,
macroeconomic factors disproportionately impacting business performance, individual executive performance,
market positioning, teamwork and related matters. The Compensation Committee retains discretion to pay an
annual incentive award that is higher or lower than the performance level achieved based on these considerations
if threshold performance is achieved on any performance measure. However, the overall pool cannot be exceeded.
Determination of 2018 Annual Cash Incentive Award Opportunities
Directors
Non-financial performance measures were at target levels for Employee Engagement, slightly below target for Net
Promoter Score (NPS) and at threshold for Teamwork. NPS improved significantly year-over-year and the
Company's current employee engagement and teamwork scores were within the top quartile of companies as
measured by the external vendor who calculates this measure. Diluted earnings per share increased 14% and
adjusted earnings per share increased 28% in 2018. The Company's total shareholder return in 2018 was 15%,
and was 119% from 2016-2018, reflecting continued strong fundamental performance.
With respect to these initiatives, the Company met enrollment targets across all lines with the exception of
Medicaid and Medicare Supplement businesses, adding a total of 2.4 million new members in health benefits
(excluding the planned TRICARE exit), and improved net promoter scores in many, but not all, of its 35
businesses. UnitedHealthcare demonstrated excellence in its Medicare plans by sustaining the percentage of
members in 4+ Star rated Medicare plans in the 80% range. Optum exceeded its revenue growth target and
achieved double digit percentage revenue growth at its OptumHealth and OptumInsight businesses and continued
strong growth at OptumRx of over 9%. Optum also exceeded earnings growth projections, consumers served
growth and adjusted scripts growth targets. In addition, our contracts with value-based elements totaled $74 billion
in annual spending, including $18 billion through risk-transfer agreements. The consolidated operating cost ratio
decreased to 14.1% excluding the impact of the Health Insurance Industry Tax and the Company achieved or
made substantial progress on all other initiatives listed above.
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
At the beginning of 2018, the Compensation Committee believed that achievement of the annual incentive goals
required substantial performance on a broad range of initiatives contained in the 2018 business plan. These
initiatives included the following:
•
.
Revenues for 2018 grew 12.5%, slightly below target, while operating income was at target. Cash flows from
operations for 2018 were above target due to an improved working capital position.
•
•
•
•
•
Grow enrollment in UnitedHealthcare medical benefit plans by approximately 2.2 million to 2.9 million
people (excluding the planned TRICARE exit);
Continue to enhance the quality and operations of our government benefit businesses to compensate for
continued expected funding pressures;
Continue to innovate in commercial benefit products, services and distribution;
Deliver more effective and comprehensive clinical management, and continue expanding the proportion of
our spending with value-based elements in our network;
Enhance customer service and increase the Company's net promoter score across all business platforms;
Execute on Optum's growth and alignment initiatives, with major focus areas including care delivery,
technology-enabled services and pharmacy care services; and
Further improve our consolidated operating cost ratio after considering the impact of the return of the
Health Insurance Industry Tax and changes in business mix.
Directors
Other
167%
5
11,246
22,492
16,869
150%
Steven H. Nelson
53
14,844 29,688
22,266
150%
42
42
1
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Annual
Other
4 Audit
5
Meeting
Information
Equity Awards
40
150%
44,531
29,687 59,374
Board of
1
2
Paid
Threshold Target Maximum
Shares
Shares
Shares
Actual
Shares Paid
Award
(% of
Name
Equity Award Practices
Stephen J. Hemsley
John F. Rex
(#)
(#)
(#)
Target)
151
42,057
84,114
63,086
150%
107
David S. Wichmann
The Compensation Committee's equity award policy requires that all grants of equity be made at set times. We do
not have a specific program, plan or practice to time equity compensation awards to named executive officers in
coordination with our release of material information.
The Company does not pay dividend equivalents on performance shares granted to employees. Unvested shares
of RSUs receive dividend equivalents, which are subject to the same terms as the RSUs and will be forfeited if the
underlying RSUs do not vest. The determination to pay dividend equivalents on RSUs was made after considering
market practices.
The aggregate number of shares subject to equity awards made in 2018 for all employees was approximately 1%
of the Company's shares outstanding at the end of 2018.
7,446
39,781
The grant date fair values and terms of these equity awards are discussed in the 2018 Grants of Plan-Based
Awards table.
43
1
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Annual
14,892
Other
5
Meeting
4 Audit
Other Compensation
Supplemental Retirement Benefits
In 2006, the accrued value of the benefit payable under Mr. Hemsley's individual supplemental executive retirement
plan agreement (the "SERP") was frozen based on his then-current age and average base salary and converted
into a lump sum cash benefit of $10,703,229. On June 7, 2016, the Company amended Mr. Hemsley's SERP to
convert the $10,703,229 cash benefit into deferred stock units ("DSUs") to further align Mr. Hemsley's interests
with those of shareholders, allow Mr. Hemsley to earn a return on the SERP balance that will be tied to the
Company's stock price performance, and provide the opportunity for Mr. Hemsley to receive deferred dividend
equivalents on the SERP balance. Pursuant to the amended SERP, the number of DSUs issued was based on the
amount of the cash benefit divided by the average closing price of the Company's common stock over the
preceding five trading days from the date of conversion of the cash balance. Mr. Hemsley is eligible to receive
dividend equivalents in the form of additional DSUs, which are paid at the same rate and at the same time that
dividends are paid to the Company's shareholders. During 2018, Mr. Hemsley received dividend equivalents in the
form of an additional 1,110 DSUs that were added to the SERP balance. Upon termination of Mr. Hemsley's
employment for any reason, the DSUs held in the SERP will be converted into shares of common stock and will be
paid six months and one day after his termination.
Benefits
In addition to generally available benefits, our executive officers are eligible to receive supplemental long-term
disability coverage equal to 60% of base salary, and all of our named executive officers, other than Mr. Hemsley,
receive supplemental group term life insurance coverage of $2 million. Executive officers are also eligible to
participate in our non-qualified Executive Savings Plan. See the 2018 Non-Qualified Deferred Compensation table
for additional information regarding contributions, earnings and distributions for each named executive officer under
the Executive Savings Plan. Our Executive Savings Plan does not provide for guaranteed or above-market interest.
Perquisites
We do not provide perquisites such as excise tax gross-ups, company automobiles, security services, private jet
services, financial planning services or club memberships to our executive officers. We have agreed to provide
Mr. Witty with tax equalization payments to ensure that, as a U.S. non-resident, his overall tax obligation is the
same as if he were taxed exclusively in the United Kingdom where he resides, including assistance in tax return
preparation due to the complexity of multi-jurisdictional filing requirements. We prohibit personal use of corporate
aircraft by any executive officer unless the Company is reimbursed for the full incremental cost to the Company of
such use. Because there is essentially no incremental cost to the Company, we permit an executive officer's family
member to accompany the executive officer on a business flight on Company aircraft provided a seat is available.
Employment Agreements and Post-Employment Payments and Benefits
4 Audit
555
47,096
17,183
Equity Awards
2018
In February 2018, the Compensation Committee granted the following target number of performance shares, RSUs
and stock options to our named executive officers:
Target Number
of Performance
Shares
Annual
Stock Option
Award
Name
Stephen J. Hemsley
David S. Wichmann
John F. Rex
Andrew P. Witty
Steven H. Nelson
8,592
Annual
RSU
Award
(#)
(#)
19,856
9,928
53,042
24,489
12,245
65,418
11,031
5,516
29,468
(#)
35
Information
11%
Meeting
Other
Information
For the 2016-2018 performance period, the target opportunity for each participating executive officer was 50% of
average base salary, and the maximum cash incentive award that an executive officer could earn was set by the
Compensation Committee to be equal to two times the applicable long-term cash incentive target opportunity. In
choosing this target opportunity, the Compensation Committee believed it was important to provide the same
relative target opportunity to all of the named executive officers to increase collaboration, teamwork and
accountability across the enterprise and to recognize the skills and versatility of each executive officer.
The target percentages for long-term cash incentive awards to our named executive officers and the actual
long-term cash incentive awards paid for the 2016-2018 performance period are set forth in the table below:
Long-Term Cash Incentive Award
Target
Percentage
Threshold
(% of 3-Year
Award
Target
Award
5
Maximum
Actual
Award
Paid
Award
Average
Value
Value
Value
Paid
Name
Base Salary)
($)
Award
($)
4 Audit
Executive
Compensation
Annual cash incentive awards may be paid I our Company meets or exceeds annual performance goals
established for the year as determined by the Compensation Committee. In establishing the performance measures
for the 2018 annual cash incentive awards, the Compensation Committee sought to align broadly the compensation
of our executive officers with key elements of the Company's 2018 business plan. Development of the Company's
2018 business plan was a robust process that involved input from all of the Company's business units and was
reviewed with the Company's Board of Directors in the fourth quarter of 2017 and the first quarter of 2018. These
performance goals are based on enterprise-wide metrics because the Compensation Committee believes that the
named executive officers share responsibility to support the goals and performance of the Company as key
members of the Company's leadership team.
6
Meeting
Information
To achieve maximum performance for both the long-term cash incentive plan and the performance share plan, the
Company would have had to achieve cumulative three-year adjusted earnings per share ("AEPS") performance of
$28.48 and an average return on equity ("ROE") of 22.5%. These maximum performance levels corresponded to a
compound annual growth rate in AEPS of 18.1% over the three-year period. For long-term compensation purposes
(see adjustments described below), the Company generated cumulative AEPS of $28.49, which was above
maximum performance levels, and accompanying ROE of 20.5%, which was at target levels. This represented a
compound annual AEPS growth rate of 18.8% over the three-year performance period.
•
•
.
•
Continued relatively favorable medical cost trend experience over the three-year period;
Significant losses from several state Medicaid managed care contracts;
Annual
A number of acquisitions, including Surgical Care Affiliates, Inc. in 2017 and Empresas Banmedica in 2018;
Challenging Brazilian economy and significant devaluation of the Brazilian Real against the U.S. Dollar; and
Greater than anticipated downward rate pressure in Medicare Advantage payment rates received from the
federal government in 2017.
Excluded from 2018 results was the income tax benefit as a result of the Tax Cuts and Jobs Act enacted
on December 22, 2017, which lowered the federal statutory income tax rate to 21%.
Excluded from 2016 and 2017 results was the income tax benefit from adoption of Accounting Standards
Update 2016-09, which modifies several aspects of the accounting for share-based payment awards,
including income tax consequences.
Since these two events were outside of the control of management, resulting in a net benefit to management, they
were excluded from final results.
2016-2018 Long-Term Cash Incentive Awards
The Long-Term Cash Incentive program has been phased out and the 2016-2018 performance period is the last
cycle of the Long-Term Cash Incentive Award program. No new participants were added to the Long-Term Cash
Incentive program after 2016. At the beginning of each three-year performance period, the Compensation
Committee approved a "long-term cash incentive target opportunity” for each participating executive officer as a
percentage of the executive officer's average base salary over the performance period. At the end of the
performance period, the Compensation Committee reviewed the Company's achievement of the performance goals
set at the beginning of the performance period and determined long-term cash incentive awards based on such
performance. In determining these awards, the Compensation Committee can use discretion to increase or
decrease the actual awards in view of actual performance and individual contributions, but did not exercise such
discretion for these awards.
41
Board of
1
2
Directors
Corporate
Governance
Similar to the annual incentive plan, the Company's long-term incentive plan allows for adjustments to the
Company's reported results in determining long-term incentive plan awards, namely adjustments that account for
the impact of changes in accounting principles, extraordinary items and unusual or non-recurring gains or losses.
Two adjustments were made in measuring 2016-2018 performance, which resulted in lowering the payouts to the
named executive officers:
($)
Factors that positively or negatively influenced our results subsequent to the approval of the long-term business
plan in early 2016 included:
(% of
Target)
John F. Rex
Andrew P. Witty
Steven H. Nelson
Annual Cash Incentive Awards
2018 Annual Incentive Plan Performance Goals
Increase From
2018 Base Salary 2017 Base Salary
($)
2018 to 2017
($)
(%)
1,000,000
David S. Wichmann
1,000,000
1,300,000
1,300,000
0%
1,000,000
850,000
18%
1,100,000
900,000
N/A
1,000,000
($)
0%
Stephen J. Hemsley
N/A
The Compensation Committee generally determines base salary levels for our named executive officers early in the
fiscal year. On February 18, 2018, the Compensation Committee approved an increase in the base salary for
Messrs. Rex and Nelson to $1,000,000. This increase reflected strong performance and aligned these executives'
salaries to market data.
Name
50%
David S. Wichmann
50%
2,136
584,423 1,168,846 876,700 150%
593,718 1,187,436 890,600 150%
The primary factors considered by the Compensation Committee in the determination of the long-term cash
incentive award amounts were achievement of the 2016-2018 AEPS and ROE goals between target and maximum
performance levels. Because the Long-Term Cash Incentive Award program is being phased out, with no new
participants added after 2016, Messrs. Rex, Witty and Nelson did not participate in the program.
2016-2018 Performance Share Awards
The use of performance shares as a component of the overall equity awards granted was based upon the
Compensation Committee's desire to encourage superior performance and build executive ownership; consideration
of competitive market data; the value of utilizing a balanced system to facilitate prudent decision-making and
mitigate risk; and past conversations with shareholders about the desirability of this type of equity award as a
central component of a pay-for-performance program. The actual shares that were earned for the 2016-2018
performance period were above target due to the Company's strong ROE and earnings growth performance and
are set forth in the table below as well as reflected in the 2018 Option Exercises and Stock Vested table:
Long-Term Performance Shares
1
Board of
Directors
2,102
Corporate
Governance
Base Salary
2
Annual Compensation
Sir Andrew's compensation is generally targeted at the 60th percentile of peer group companies. As part of his
employment, he received an employment agreement with terms similar to those provided to our other named
executive officers. In addition, Sir Andrew received a new hire equity award consisting of restricted stock units with
five-year ratable vesting and a grant date fair value of $10 million. The vesting terms of this new hire award are
one year longer than the Company's typical vesting provisions. In designing Sir Andrew's compensation package,
the Compensation Committee considered Sir Andrew's compensation while serving as GSK's CEO, current market
data and equity-based alternatives to attract and retain Sir Andrew over the long-term. The Compensation
Committee also agreed to provide Sir Andrew with tax equalization payments to ensure that, as a U.S.
non-resident, his overall tax obligation is the same as if he were taxed exclusively in the United Kingdom where he
resides, including assistance in tax return preparation due to the complexity of multi-jurisdictional filing
requirements. The Compensation Committee believes Sir Andrew's employment terms and compensation are
appropriate due to his experience as the CEO of one of the world's largest companies and in light of his unique
skill set as discussed above, and were necessary to encourage Sir Andrew to join the Company. The elements of
Sir Andrew's compensation and the terms of his employment agreement are discussed in more detail below in the
applicable sections of this CD&A.
Other
Information
Stephen J. Hemsley
5
4 Audit
Annual
Executive
Compensation
Meeting
Annual
Annual
Other
4 Audit
5
Meeting
Information
Compensation Committee Report
The Compensation Committee has reviewed and discussed the above Compensation Discussion and Analysis with
management. Based on its review and discussions, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in the proxy statement and incorporated by
reference into the Company's Annual Report on Form 10-K for the year ended December 31, 2018. This report
was provided by the following independent directors who comprise the Compensation Committee:
William C. Ballard, Jr. (Chair)
Other
Gail R. Wilensky, Ph.D.
Timothy P. Flynn
Compensation Committee Interlocks and Insider Participation
During fiscal 2018, Messrs. Ballard, Burke, Flynn, Witty and Dr. Wilensky served on the Compensation Committee.
Mr. Witty stepped down from the Board on March 13, 2018. None of these persons had ever been an officer or
employee of the Company or any of its subsidiaries while serving on the Compensation Committee. Furthermore,
during 2018, none of these persons served as a member of the compensation committee (or other board
committee performing equivalent functions) or as a director of another entity where an executive officer of such
entity served on our Compensation Committee or Board.
48
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Executive
Compensation
Richard T. Burke
48
The Allstate Corporation
2
JPMorgan Chase & Co.
MasterCard Incorporated
McKesson Corporation
Medtronic plc
Merck & Co. Inc.
MetLife, Inc.
Microsoft Corporation
Morgan Stanley
Oracle Corporation
Pfizer Inc.
Corporate
Governance
Procter & Gamble Co.
Target Corp.
The Goldman Sachs Group, Inc.
The Travelers Companies, Inc.
U.S. Bancorp
United Parcel Service, Inc.
Visa, Inc.
Walgreens Boots Alliance, Inc.
Wells Fargo & Company
47
CIGNA Corp.
Humana Inc.
1
Board of
Directors
Prudential Financial, Inc.
4 Audit
CEO
Meeting
Executive Vice President
and CEO, Optum (7)
2016 1,300,000
2018 1,300,000
2017 1,162,308
2016 1,100,000
2018 976,923
2017 842,308
2016 721,923
2018
613,462
6,750,246 2,250,042
8,325,219 2,775,462 5,745,600
7,012,640 2,337,015 4,908,500
876,700
281,015
194,510
11,352,513
Andrew P. Witty
230,853
18,454,153
148,398
137,358
15,843,911
8,325,394 2,775,032 5,390,600
316,330
18,107,356
8,325,566 2,775,328
Johnson & Johnson
4,909,800
170,481
5
Executive Vice President and CFO
David S. Wichmann
Information
2018 Summary Compensation Table*
The following table provides certain summary information for the years ended December 31, 2018, 2017 and 2016
relating to compensation paid or granted to, or accrued by us on behalf of our named executive officers.
Non-Equity
Salary
Bonus
Name and Principal Position
Stephen J. Hemsley
Year ($)(1)
2018 1,000,000
($)
John F. Rex
Stock
Awards
($)(2)
Awards
Compensation
($)(3)
($)(4)
Change in
Pension Value
and
Non-Qualified
Deferred
Incentive Plan Compensation
Earnings
($)(5)
All Other
Compensation
($)(6)
Total
($)
Executive Chairman
2017 1,206,538
Option
Humana Inc.
Our annual cash bonus program includes a variety of financial and non-financial measures that require
substantial performance on a broad range of initiatives;
Gilead Sciences Inc.
Transactions in Company Securities; Prohibition on Hedging and Short Sales
In general, SEC rules prohibit uncovered short sales of our common stock by our executive officers, including the
named executive officers. Accordingly, our insider trading policy prohibits short sales of our common stock by all
employees and directors. Our insider trading policy prohibits hedging transactions by all directors, executive officers
and employees and requires advance approval of the Compensation Committee of any pledging of common stock
by directors, executive officers and other members of management. In 2018, no executive officer or director sought
or received advance approval from the Compensation Committee regarding pledging transactions, and no executive
officer had any pledges outstanding.
445
Board of
1
2
Directors
Corporate
Governance
Executive
Compensation
Annual
The Board has established a stock retention policy for executive officers that are subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which includes our named executive officers.
Under this policy, Section 16 officers are generally required to retain for at least one year one-third of the net
shares acquired upon the vesting or exercise of any equity awards.
4 Audit
Meeting
Other
Information
Potential Impact on Compensation from Executive Misconduct/Compensation Clawbacks
If the Board of Directors determines that an executive officer has engaged in fraud or misconduct, the Board of
Directors may take a range of actions to remedy the misconduct, prevent its recurrence and impose such discipline
as would be appropriate, including, without limit: (i) terminating employment and (ii) initiating legal action against
the executive officer. In addition, with respect to our senior executives, including our named executive officers, if
the fraud or misconduct causes, in whole or in part, a material restatement of the Company's financial statements,
action may include (a) seeking reimbursement of the entire amount of cash incentive compensation awarded to the
executive officer, if the executive officer would have received a lower (or no) cash incentive award if calculated
based on the restated financial results; (b) canceling all outstanding vested and unvested equity awards subject to
the clawback policy and requiring the executive officer to return to the Company all gains from equity awards
realized during the 12-month period following the filing of the incorrect financial statements; and (c) seeking
reimbursement of the entire amount of any bonus paid.
Consideration of Risk in Named Executive Officer Compensation
Our compensation programs are balanced, focused on long-term pay-for-performance, allow for discretion and are
overseen by an independent Compensation Committee. The Compensation Committee believes that the design of
the compensation program for our executive officers does not encourage excessive or unnecessary risk-taking, as
illustrated by the following list of features:
•
•
•
•
5
Our equity awards are delivered through a balanced mix of performance shares, RSUs and stock options
to encourage sustained performance over time;
Stock options and stock appreciation rights ("SARS") do not count towards satisfying the ownership requirements
under the guidelines, regardless of their vesting status, and performance shares do not count towards satisfying the
ownership requirements until they are vested. Time-based RSUs and restricted stock awards are counted toward
the satisfaction of the ownership requirements. The Compensation Committee periodically reviews compliance with
the ownership requirements. As of April 9, 2019, all of our named executive officers were in compliance with the
ownership requirements, including Mr. Wichmann, who owned shares with a value equal to 169 times his base
salary.
for executive officers who are direct reports of the CEO, three times base salary; and
216,974
1
Board of
Directors
Corporate
2
Governance
Executive
Compensation
Annual
Other
4 Audit
for other executive officers who are not direct reports of the CEO, two times base salary.
5
Information
Other Compensation Practices
Executive Stock Ownership Guidelines and Stock Retention Policy
The Compensation Committee believes that executive stock ownership aligns management's interests with those of
shareholders and fosters a long-term outlook, while also mitigating compensation risk. Under our stock ownership
guidelines, each executive officer must beneficially own at least the following amounts of the Company's common
stock within five years of the executive officer's election or appointment as an executive officer:
•
for the Executive Chairman, eight times base salary;
•
for the CEO, eight times base salary;
•
•
Meeting
Hewlett-Packard Company
We have stock ownership guidelines for our executive officers;
We have a clawback policy that entitles the Board of Directors to seek reimbursement from any executive
involved in fraud or misconduct causing a restatement of financials, or violation of certain employment
agreement provisions, including any non-compete, non-solicit or confidentiality provisions. The executive
would be required to reimburse the Company the entire amount of a bonus paid, not just the amount that
would not have been earned had the executive received a lower award based on the restated earnings.
Aetna Inc.
American Express Company
American International Group, Inc.
Ameriprise Financial, Inc.
AmerisourceBergen Corporation
Amgen Inc.
Anthem Inc.
Bank of America Corporation
Berkshire Hathaway Inc.
Best Buy Co., Inc.
Biogen Inc.
Bristol-Myers Squibb Company
Cardinal Health, Inc.
Accenture, plc
Cargill, Incorporated
CIGNA Corp.
Citigroup, Inc.
CVS Health Corporation
Eli Lilly and Company
Express Scripts Holding Company
FedEx Corporation
General Electric Company
General Mills, Inc.
HCA Healthcare
International Business Machines Corp.
Cisco Systems, Inc.
We generally require executive officers to hold, for at least one year, one-third of the net shares acquired
upon vesting or exercise of any equity award granted; and
AbbVie Inc.
3M Company
In addition, our Compensation Committee retains discretion to adjust compensation for quality of performance,
adherence to Company values and other factors.
As discussed in "Enterprise-Wide Incentive Compensation Risk Assessment," a compensation risk assessment is
performed annually and the results are reviewed with the Compensation Committee.
46
46
1
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Annual
Abbott Laboratories
Other
5
Meeting
Information
Accounting and Tax Considerations
Internal Revenue Code Section 162(m)(6) addresses the tax deductibility of compensation paid by health insurance
providers, including the Company. Section 162(m)(6) provides an annual tax deduction limit of $500,000 per person
per year for compensation that we pay to any of our employees, directors, officers and any other individuals who
provide services to or on behalf of the Company. Any outstanding stock options and SARS that were granted prior
to 2010 are not subject to the tax deduction limitation. While the Committee considers the impact of
Section 162(m)(6), it believes that shareholder interests are best served by not restricting the Committee's
discretion and flexibility in crafting the executive compensation program, even if non-deductible compensation
expenses could result. The Committee also considers the accounting consequences of its compensation decisions.
Peer Group and Managed Care Companies
Peer Group
Managed Care Companies
Aetna Inc.
Anthem Inc.
4 Audit
17,389,976
110,744
4,950,066 1,649,664
11,031
26
2/13/2018
1,350,000 1,500,000 3,000,000 ----
Stock Option Award(4)
RSU Award(4)
Performance Share Award (3)(4)
Annual Cash Incentive Award (2)
John F. Rex
2,775,032
226.64
65,418
2,775,207
12,245
5,550,187
2/13/2018
2/13/2018
lg| |
22,062
6/5/2018
Stock Option Award (3)
6/5/2018
RSU Award (5)
6/5/2018
RSU Award (3)
6/5/2018
24,489 48,978
Performance Share Award (3)(4)
Annual Cash Incentive Award (2)
Andrew P. Witty
1,250,033
226.64
1,250,146
= 5,516 29,468
2,500,066
1,980,000 2,200,000 4,400,000
| |༢|
2/13/2018
Stock Option Award (3)
Stephen J. Hemsley
($)(1)
or Option
Awards
Fair Value
of Stock
Grant Date
($/Sh)
Awards
Performance Share Award (3)(4)
Options
(#)
or Units
Underlying
of Stock
of Shares
or Grant
Price of
Option
Exercise
All Other
Option
Awards:
Number of
Securities
(#)
40
46
4,500,164
2/13/2018
RSU Award(3)
2/13/2018
Performance Share Award (3)(4)
2,340,000 2,600,000 5,200,000
Annual Cash Incentive Award (2)
David S. Wichmann
19,856 39,712
2,250,042
53,042
2,250,082
2/13/2018
Stock Option Award (3)
--- - 9,928
2/13/2018
RSU Award (3)
226.64
| ¦ | | |
17,183 34,366
|ཧིཾ།
Except as provided in footnote 4 to the
Messrs. Hemsley, Wichmann, and Nelson.
Outstanding Equity Awards at 2018 Fiscal Year-End table with respect to
Unvested award will vest in full if, within two years of a change in
control, an executive terminates employment for Good Reason or is
terminated without Cause (i.e., "double trigger" vesting), as these
terms are defined in the award agreement.
Unvested award will vest in full upon death or disability.
Unless the executive officer is retirement-eligible, award is subject
to earlier termination upon certain events related to termination of
employment.
If the executive officer is retirement-eligible, upon retirement, the
number of performance shares that are earned at the end of the
performance period based on actual performance, if any, will vest
as if the executive officer had been continuously employed
throughout the entire performance period, provided the executive
officer had served for at least one year of the performance period.
Upon death, disability or termination of employment for Good
Reason or other than for Cause (as these terms are defined in the
award agreement), the executive officer will receive at the end of
the applicable performance period, a pro rata number of
performance shares that are earned, if any, based on the number
of full months employed plus, if applicable, the number of months
for any severance period.
a change in control, an executive terminates employment for Good
Reason or is terminated without Cause (i.e., “double trigger"
vesting). The number of performance awards that vest will be
dependent upon the performance vesting criteria that have been
satisfied.
53
Unvested performance share awards will vest if, within two years of
•
.
(4-year ratable vesting)
Stock Option Award
and
(4-year ratable vesting*)
RSU Award
Termination Provisions
Award Type and Vesting Terms
Performance Share Award (3-year
performance period with cliff
vesting)
53
1
☐
54
54
(5) Represents a grant made to Mr. Witty in connection with his appointment as Chief Executive Officer, Optum.
These RSUs vest ratably over 5 years. Compensation paid in connection with Mr. Witty's service as a
director, from the beginning of the fiscal year through March 13, 2018, is reported in the Director
Compensation Table.
(4) Amounts represent the estimated future number of performance shares that may be earned under our 2011
Stock Incentive Plan at each of the threshold, target and maximum levels. The performance share award will
be paid out in shares of Company common stock. The number of performance shares that the executive
officer will receive will be determined at the conclusion of the 2018-2020 performance period and will be
dependent upon the Company's achievement of a cumulative AEPS measure and an average ROE measure
approved by the Compensation Committee. The Compensation Committee has the discretion to reduce the
number of performance shares an executive officer is entitled to receive. The estimated threshold award
represents the number of performance shares that may be awarded if threshold performance is achieved on
one of the performance measures.
Information
Meeting
Board of
6
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
Directors
2
5
All Other
Stock
Awards:
Number
*
executive officer equal two times each executive officer's target amount. In order for any amount to be paid,
the Company must achieve approved performance measures of (i) revenue, (ii) operating income, (iii) cash
flow, (iv) net promoter score, (v) employee engagement and (vi) employee teamwork. The estimated threshold
award represents the amount that may be paid if threshold performance is achieved on each of the
performance measures. Once threshold performance is achieved, the Compensation Committee has the
discretion to pay an award. The actual annual cash incentive amounts earned in connection with the 2018
awards are reported in the 2018 Summary Compensation Table.
39,781
1,687,561
3,375,123
14,892
1.8000 20000 4000 34 14 892 259704 740
2/13/2018
2/13/2018
2/13/2018
1,800,000 2,000,000 4,000,000
226.64
Stock Option Award (3)
Steven H. Nelson
2,100,011
244.43
47,096
10,000,120
2,100,143
4,200,041
Annual Cash Incentive Award(2)
Performance Share Award (3)(4)
RSU Award (3)
(3) Amounts represent grants under the 2011 Stock Incentive Plan with the terms set forth below. In addition, the
RSUs are eligible to receive dividend equivalents, which are subject to the same terms as the RSUs and will
be forfeited if the underlying RSUs do not vest. No dividend equivalents are paid on performance shares.
1,687,510
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation
program necessary for an understanding of the information disclosed in this table.
Information
Meeting
6
5
4 Audit
Other
Annual
*
Executive
Compensation
2
Board of
Directors
1
52
52
(2) Amounts represent estimated payouts of annual cash incentive awards granted under our Executive Incentive
Plan in 2018. The Executive Incentive Plan permits a maximum annual bonus pool for executive officers equal
to 2% of the Company's net income (as defined in the plan) and no executive officer may receive more than
25% of such annual bonus pool. The Compensation Committee has generally limited annual cash incentive
payouts to not more than two times the target amount, and the maximum amounts shown for each named
(1) The actual value to be realized by a named executive officer depends upon the appreciation in value of the
Company's stock and the length of time the award is held. No value will be realized with respect to any stock
option award if the Company's stock price does not increase following the grant date. For a description of the
assumptions used in computing grant date fair value for stock option awards pursuant to FASB ASC
Topic 718, see Note 11 to the Consolidated Financial Statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2018. The grant date fair value of each RSU award and
targeted grant date value of each performance share award were computed in accordance with FASB ASC
Topic 718 based on the closing stock price on the grant date. Under the 2011 Stock Incentive Plan, all equity-
based compensation awards are subject to one year minimum vesting and exercisability requirements, subject
to an exception for a limited number of shares not to exceed 5%.
Corporate
Governance
Estimated Future Payouts
Under Equity Incentive
Plan Awards
Threshold Target Maximum
(#) (#) (#)
2/13/2018
Grant
Date
$ 2,250,082
$ 2,775,207
$ 1,250,146
Restricted
Stock Units
Performance Shares
Steven H. Nelson
John F. Rex
Andrew P. Witty
Stephen J. Hemsley
David S. Wichmann
Name
(2) The amounts reported in this column reflect the aggregate grant date fair value of the RSUs and performance
shares (at target) granted in 2018, 2017 and 2016 and are computed in accordance with FASB ASC Topic
718, based on the closing stock price on the grant date. The grant date fair value of RSUs granted in 2018
and the grant date fair value of performance shares granted in 2018 if target performance and maximum
performance is achieved are as follows:
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
$12,100,263
$ 1,687,561
Target
$4,500,164
$5,550,187
$2,500,066
$4,200,041
$3,375,123
Maximum
$ 9,000,328
$11,100,374
$270,000
$150,000
$2,200,000
$2,000,000
$2,500,000
$4,500,000
Amount of Annual
Cash Incentive
Award Deferred
Total Amount of
Annual Cash
Incentive Award
Steven H. Nelson
Andrew P. Witty
Directors
John F. Rex
Name
(4) Amounts reported include both annual and long-term cash incentive awards to our named executive officers
under our 2008 Executive Incentive Plan. The 2018 annual incentive awards, including amounts deferred by
the named executive officers, were the following:
The amounts reported in this column for 2018 reflect the aggregate grant date fair value of stock options
granted in 2018 computed in accordance with FASB ASC Topic 718. For a description of the assumptions
used in computing the aggregate grant date fair value, see Note 11 to the Consolidated Financial Statements
included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
Company's stock and the length of time the award is held. No value will be realized with respect to any award
if the Company's stock price does not increase following the award's grant date or if the executive officer does
not satisfy the vesting criteria.
See the 2018 Grants of Plan-Based Awards table for more information on stock awards granted in 2018.
(3) The actual value to be realized by a named executive officer depends upon the performance of the
$ 6,750,246
$ 8,400,082
$ 5,000,132
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
Threshold Target Maximum
($)
($)
($)
2
1
Board of
2017 857,692
2018 984,615
and CEO, UnitedHealthcare
Executive Vice President
Steven H. Nelson
21,232,550
18,773
16,300,304 2,100,011 2,200,000
5,062,684 1,687,510 2,000,000
3,150,092 1,050,190 2,500,000
7,185,223
7,930,845
88,205
8,587,912
2,500,000
3,750,212 1,250,033
3,750,131 1,250,201 2,000,000
3,125,283 1,875,049 1,400,000
12,316,446
142,216
4,474,500
62,968
The long-term cash incentive awards for the 2016-2018 incentive period under our 2008 Executive Incentive
Plan, including amounts deferred by the named executive officers, are set forth below. Because the long-term
cash incentive award program is being phased out, with no new participants added after 2016, Messrs. Rex,
Witty and Nelson did not participate in the program.
28,215
=
49
49
Steven H. Nelson
Andrew P. Witty
$58,615
John F. Rex
$78,000
David S. Wichmann
9,763,024
$60,000
Deferred
Name
Amount
December 31, 2018, 2017 and 2016. Amounts reported for 2018 include the following amounts deferred by
the named executive officers under our Executive Savings Plan. Mr. Witty was ineligible to participate in the
Executive Savings Plan during his tenure as a director from the beginning of the fiscal year through
March 13, 2018.
(1) Amounts reported reflect the base salary earned by named executive officers in the years ended
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation
program necessary for an understanding of the information disclosed in this table. Please see "Executive
Employment Agreements" below for a description of the material terms of each named executive officer's
employment agreement.
7,580,444
22,470
Stephen J. Hemsley
Name
Stephen J. Hemsley
David S. Wichmann
Period
2016-2018
2016-2018
$125,000
$12,455
$12,455
$ 89,308
$ 8,981
2018
John F. Rex
$166,500
Stephen J. Hemsley
David S. Wichmann
2018
David S. Wichmann
$180,000
$12,375
2018
Stephen J. Hemsley
and Tax
Equalization
Employment
Onboarding
Hart-Scott-
Rodino
Filing Fee
Andrew P. Witty
2018
$15,588
Steven H. Nelson
Name
The following table presents information regarding each grant of an award under our compensation plans made
during 2018 to our named executive officers for fiscal year 2018.
Other
Information
2018 Grants of Plan-Based Awards*
Meeting
5
4 Audit
Annual
Insurance
Premiums
Executive
Compensation
2
Board of
Directors
51
(7) Mr. Witty became CEO of Optum, effective July 1, 2018. Compensation paid in connection with Mr. Witty's
service as a director, from the beginning of the fiscal year through March 13, 2018, is reported in the Director
Compensation Table.
As permitted by SEC rules, we have omitted perquisites and other personal benefits that we provided to
certain named executive officers in 2018 if the aggregate amount of such compensation to each of such
named executive officers was less than $10,000. The Company provides each of Messrs. Wichmann, Rex,
Witty and Nelson a $2 million face value term life insurance policy. The value of Company stock owned by
Mr. Wichmann exceeded limits set forth in the Hart-Scott-Rodino (HSR) regulations and he was required to
make an HSR filing in 2018 in order to maintain and increase his stock ownership levels in the Company. Due
to Mr. Wichmann's position as CEO and a director of the Company, he is not able to rely on the passive
investor exemption contained in the HSR regulations. Pursuant to a policy approved by the Compensation
Committee, the Company made the payment of the $125,000 HSR filing fee on Mr. Wichmann's behalf. This
amount was imputed as income to Mr. Wichmann, and Mr. Wichmann did not receive any tax gross-up on this
amount. The employment onboarding payments for Mr. Witty were made to assist him in finding temporary
housing in the United States as part of the commencement of his employment with the Company. Mr. Witty is
also provided with tax equalization pursuant to the Company's tax equalization policy to ensure that as a U.S.
non-resident, his overall tax obligation is the same as if he were taxed exclusively in the United Kingdom
where he resides. This policy also provides assistance in preparation of tax returns due to the complexity of
multi-jurisdictional filing requirements.
$15,840
$12,375
2018
Corporate
Governance
Contributions
Under Executive
Savings Plan
$12,375
Year
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
(5) Named executive officers participate in our Executive Savings Plan, which is a non-qualified deferred
compensation plan. The Executive Savings Plan does not credit above-market earnings or preferential
earnings to the amounts deferred, and accordingly, no non-qualified deferred compensation earnings have
been reported. Under the Executive Savings Plan, there are no measuring investments tied to Company stock
performance. The measuring investments are a predetermined collection of unaffiliated mutual funds identified
by the Company.
Corporate
Governance
2
1
Board of
$53,436
Amount of
Long-Term Cash
Incentive Award
Deferred
$876,700
$890,600
Total Amount of
Long-Term Cash
Incentive Award
50
Contributions
Under 401(k)
Savings Plan
As described in the Compensation Discussion and Analysis section of the 2017 proxy statement, on
June 7, 2016, the Company amended Mr. Hemsley's SERP to convert the cash benefit into DSUs. The DSUS
held in the SERP are eligible to receive dividend equivalents in the form of additional DSUs, which are paid at
the same rate and at the same time that dividends are paid to the Company's shareholders. The amounts
reported in the table reflect the value of dividend equivalents granted.
Directors
Company Matching
Name
(6) All other compensation includes the following:
Company Matching
2/9/2018
$225.69
3,794
2/12/2014 2/12/2018
John F. Rex
$ 263,056
$260.61
1,009
8/15/2018
8/15/2017
$ 856,281
$216.46
2,370
2/8/2018
$ 731,272
$220.96
3,310
2/9/2016
$ 512,946
2/10/2015
1,383
$ 797,400
$220.96
$ 305,611
2/9/2016
2/9/2018
1,451
$220.96
$ 320,708
2/10/2018
6/7/2016
2,354
$248.98
$ 586,182
$ 428,250
2/8/2017
2/8/2018
1,978
$216.46
6/7/2018
$220.96
Option Awards
Number of
Shares
Acquired on
Exercise
(#)
2/10/2018
Stock Awards
Number of
Shares
Acquired on
Value
Realized on
Exercise
169,683
Steven H. Nelson
Andrew P. Witty (6)
John F. Rex
David S. Wichmann
Stephen J. Hemsley
Name
The following table presents information regarding the exercise of stock options during fiscal year 2018 by our
named executive officers and vesting of restricted stock awards held by our named executive officers for fiscal year
2018.
2018 Option Exercises and Stock Vested
(6) Vest 20% annually over a five-year period beginning on the first anniversary of the grant date.
(5) Vest 100% at the end of the three-year performance period. The number of performance shares that the
executive officer will receive is dependent upon the achievement of a cumulative EPS measure and an
average ROE measure approved by the Compensation Committee. The number of performance shares
reported above for grants made in 2018 and 2017 is at the target number established by the Compensation
Committee because we currently believe that is the probable outcome of the performance conditions based on
the Company's performance through December 31, 2018.
(4) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date, other than for
retirement eligible executive officers. A portion of a retirement eligible executive officer's award that otherwise
would have vested on the next specified vesting date is cancelled to pay applicable FICA taxes owed by the
executive officer. The cancellation occurs in the year of grant if the executive officer is retirement eligible
during that year or in the first year the executive officer becomes retirement eligible. The remainder of the
award vests proportionally over the remaining vesting period. Messrs. Hemsley, Wichmann and Nelson are
retirement eligible. These RSUs are eligible to and did receive dividend equivalents converted into additional
shares; accordingly, the number of shares shown has been rounded up to the nearest whole share. For more
information on RSUs cancelled in 2018, please see the 2018 Option Exercises and Stock Vested table.
Other
Information
Vesting
Meeting
($)(1)
42,897,559(2)
(1) Computed by determining the market value per share of the shares acquired based on the difference
between: (a) the per share market value of our common stock at exercise, defined as the closing price on the
date of exercise, or the weighted average selling price if same-day sales occurred, and (b) the exercise price
of the stock options.
7,402,019(3)(4)(5)
6,699,437(3)(4)
30,555
-
6,087,629(2)
38,249
Steven H. Nelson
14,459,960(3)(4)(5)
20,656,413(3)(4)(5)
($)
Value
Realized on
Vesting
27,830
59,439
85,279
(#)
5
4 Audit
Annual
2/10/2015
39,781(3)
27,444(3)
20,872(3)
2/9/2016
2/8/2017
2/13/2018
Steven H. Nelson
4,280,629
17,183(5)
8,681(4) 2,162,611
6/5/2018
6/5/2018
6/5/2018
349,515
1,403(4)
2/10/2015
733,160
2,943(4)
8,594(3)
226.64 2/13/2028
160.31 2/8/2027
111.16 2/9/2026
108.97 2/10/2025
2/13/2018
2/13/2018
2/8/2017
41,336 (6) 10,297,624
7,222(4) 1,799,145
Executive
Compensation
Corporate
Governance
Directors
2
1
Board of
55
99
(2) Based on the per share closing market price of our common stock on December 31, 2018 of $249.12.
(3) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date.
3,883(4) 967,333
1,891(4) 471,086
3,263,472
13,100(5)
2/8/2017
2/9/2016
2/10/2015
5,056(4) 1,259,551
3,709,895
14,892(5)
(1) The expiration date shown is the latest date that stock options/SARs may be exercised. Stock options/SARS
may terminate earlier in certain circumstances, such as in connection with the named executive officer's
termination of employment.
3,609
56
Board of
Directors
2/10/2018
2/10/2015
$1,605,287
Value Realized
on Vesting
$225.69
7,113
2/12/2018
2/12/2014
Stephen J. Hemsley
Market Price
at Vesting
on Vesting
Number of
Shares Acquired
Vesting
Date
Date of
Award
Name
5,624
(3) Reflects the vesting of a portion of the RSUs granted. The value realized on vesting was computed based on
the following:
$220.96
2/9/2016
2/10/2015
$ 919,615
$225.69
4,075
2/12/2014 2/12/2018
David S. Wichmann
778,201
$
$216.46
3,595
2/8/2017 2/8/2018
$1,199,120
$220.96
5,427
2/9/2018
$1,242,603
$160.31
$270.82
$270.72
Other
Information
Number of
Options
Exercised
Date
Exercise
Date of
Award
Steven H. Nelson
Stephen J. Hemsley
Name
(2) The value was computed as described in footnote 1 above and was based on the following:
Meeting
5
4 Audit
Annual
Executive
Compensation
Corporate
Governance
2
Market Price Exercise
at Exercise
Price
2/23/2009 11/30/2018
169,683
$111.16
10,436
9,148
9/7/2018
9/7/2018
2/9/2016
2/8/2017
$108.97
$270.80
8,594
1
9/7/2018
$ 70.24
$270.88
10,071
9/7/2018
2/12/2014
$ 29.74
$282.55
2/10/2015
2/12/2014
20,459,928(1)
3,258
Non-Solicitation, Non-Competition and Confidentiality Provisions
As defined in the employment agreement, "Good Reason" generally means (a) an assignment of duties
inconsistent with his position or duties or other diminution of duties, (b) a relocation of primary work location by
more than 25 miles, (c) failure by the Board of Directors to nominate Mr. Hemsley to serve on the Board of
Directors, (d) the Company's failure to pay or provide Mr. Hemsley's base salary, incentive compensation or other
benefits, or (e) any other material breach of Mr. Hemsley's employment agreement that is not remedied.
As defined in the employment agreement, “Cause" generally means (a) willful and continued failure to perform his
duties after written notice and a failure to remedy the deficiency, (b) a violation of the Company's Code of Conduct
that is materially detrimental to the Company and is not remedied after written notice, (c) engaging in fraud,
material dishonesty or gross misconduct in connection with the Company's business, (d) conviction of a felony, or
(e) willful and material breach of the employment agreement that is not remedied after written notice.
Material Definitions
If Mr. Hemsley's employment is terminated by the Company for Cause, by Mr. Hemsley without Good Reason or
because of his retirement or upon expiration of the term of the employment agreement, he will not be entitled to
any further compensation from the Company other than earned but unpaid salary and benefits.
Information
Other
Meeting
5
4 Audit
Annual
Executive
Compensation
Corporate
Governance
Directors
2
Pursuant to the employment agreement, Mr. Hemsley is subject to provisions prohibiting his solicitation of the
Company's employees and customers or competing with the Company during the term of the employment
agreement and the longer of two years following termination or the period that severance payments are made to
him under the employment agreement. In addition, he is prohibited at all times from disclosing confidential
information related to the Company.
1
David S. Wichmann
Summary of Compensation Components
If Mr. Wichmann's employment is terminated by the Company without Cause, or by Mr. Wichmann for Good
Reason, the Company will provide Mr. Wichmann with outplacement services and will pay Mr. Wichmann
severance compensation equal to the sum of (a) 200% of his annualized base salary as of his termination date,
(b) 200% of the average of his last two calendar year bonuses, excluding any equity awards and any special or
one-time bonus or incentive compensation payments, and (c) $12,000 to offset the costs of benefit continuation
coverage. The severance compensation will be payable over a 24-month period.
Termination Provisions
Information
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
1
61
Under his employment agreement, any adjustments to Mr. Wichmann's base salary are at the sole discretion of the
Compensation Committee and ultimately the independent members of the Board of Directors. Mr. Wichmann's
employment agreement does not set any minimum or target level for any bonus or other incentive compensation.
All bonus and incentive compensation awards are solely at the discretion of the Compensation Committee.
Mr. Wichmann is eligible to participate in the Company's generally available employee benefit programs. In
addition, the Company provides Mr. Wichmann with a $2 million term life insurance policy and additional long-term
disability coverage, which covers 60% of eligible base salary subject to the terms of the policy.
On December 1, 2006, the Company entered into an employment agreement with Mr. Wichmann. On August 16, 2017,
the employment agreement was amended to reflect Mr. Wichmann serving as CEO.
Board of
60
If Mr. Hemsley's employment is terminated because of his death or permanent disability, the Company will pay him
or his beneficiaries a lump sum in an amount equal to two years total compensation of base salary plus the
average bonus for the last two calendar years, excluding any special or one-time bonus or incentive compensation
payments.
Other
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
1
59
59
(5) Under our Executive Savings Plan, unless an employee in the plan elects to receive distributions during the
term of his or her employment with the Company, benefits will be paid no earlier than at the beginning of the
year following the employee's termination. However, upon a showing of severe financial hardship, an employee
may be allowed to access funds in his or her deferred compensation account earlier. Benefits can be received
either as a lump sum payment, in five or ten annual installments, in pre-selected amounts and on pre-selected
dates or a combination thereof. An employee may change his or her election with respect to the timing and
form of distribution for such deferrals under certain conditions. However, for deferrals relating to services
performed on or after January 1, 2004, employees may not accelerate the timing of the distributions.
(4) Amounts deferred are credited with earnings from measuring investments selected by the employee from a
predetermined collection of unaffiliated mutual funds identified by the Company. The Executive Savings Plan
does not credit above market earnings or preferential earnings to amounts deferred. The returns on the mutual
funds available to employees during 2018 ranged from -14.91% to 1.75%, with a median return of -6.18%
for the year ended December 31, 2018. Employees may change their selection of measuring investments on a
daily basis.
(2) Named executive officers are eligible to participate in our Executive Savings Plan, which is a non-qualified
deferred compensation plan. Under the plan, employees may generally defer up to 80% of their eligible annual
base salary (100% prior to January 1, 2007) and up to 100% of their annual and long-term cash incentive
awards. Amounts deferred, including Company credits, are credited to a bookkeeping account maintained for
each participant, and are distributable pursuant to an election made by the participant as to time and form of
payment that is made prior to the time of deferral. The Company maintains a Rabbi Trust for the plan. The
Company's practice is to set aside amounts in the Rabbi Trust to be used to pay for all benefits under the
plan, but the Company is under no obligation to do so except in the event of a change in control.
(3) For the first 6% of the employee's base salary and annual incentive award deferrals under our Executive
Savings Plan, the Company provides a matching credit of up to 50% of amounts deferred at the time of each
deferral. This matching credit does not apply to deferrals of long-term cash incentive awards or other special
incentive awards.
(1) All amounts in these columns have been reported as compensation in the 2018 Summary Compensation
Table.
Steven H. Nelson
Andrew P. Witty
4 Audit
5
6
Meeting
If Mr. Hemsley's employment is terminated by the Company without Cause, other than upon expiration of the term
of the employment agreement, or by Mr. Hemsley for Good Reason, the Company will pay Mr. Hemsley a lump
sum in an amount equal to his annual base salary for 12 months.
-
Upon termination of Mr. Hemsley's employment for any reason, he is entitled to a supplemental retirement benefit,
payable in common stock upon settlement of DSUS, which will be paid six months and one day after his
termination. See "Compensation Discussion and Analysis - Other Compensation Supplemental Retirement
Benefits" and "2018 Pension Benefits" for more information.
Termination Provisions
Under his employment agreement, any increases to Mr. Hemsley's base salary are at the sole discretion of the
Compensation Committee and ultimately the independent members of the Board of Directors. Mr. Hemsley's
employment agreement does not set any minimum or target level for any bonus or other incentive compensation.
All bonus and incentive compensation awards are solely at the discretion of the Compensation Committee.
Mr. Hemsley is eligible to participate in the Company's generally available employee benefit programs.
Summary of Compensation Components
On November 7, 2006, the Board of Directors entered into an employment agreement with Mr. Hemsley. On
December 14, 2010, the employment agreement was amended to extend the employment period to December 1, 2014.
The employment agreement extends automatically for additional one-year periods after December 1, 2014, unless
sooner terminated in accordance with its terms. During the period of his employment, the Board of Directors will
nominate Mr. Hemsley for election to the Board of Directors by the shareholders of the Company.
If Mr. Wichmann's employment is terminated because of his death or disability, by the Company for Cause, or by
Mr. Wichmann without Good Reason, he will not be entitled to any further compensation from the Company other
than earned but unpaid salary and benefits.
Stephen J. Hemsley
Executive Employment Agreements
$8,685,064
$3,257,315
$ 412,280
Amount
Previously
Reported
Stephen J. Hemsley
David S. Wichmann
John F. Rex
Andrew P. Witty
Steven H. Nelson
Name
(6) This column includes the amounts shown in columns (b) and (c) as well as the following amounts reported in
the summary compensation table for prior years:
Information
We have entered into an employment agreement with each of the named executive officers. The following is a
summary of the material terms of those agreements.
994,602
Material Definitions
Mr. Wichmann with written notice of Cause within 120 days of discovery, and Mr. Wichmann will have 60 days to
remedy the conduct, if the conduct is reasonably capable of being remedied.
Term
Applicable definitions for the employment agreements follow.
Information
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
1
63
Each employment agreement and each executive officer's employment may be terminated (a) by mutual agreement
(b) by the Company with or without Cause, (c) by the executive officer and (d) upon the executive officer's death or
disability that renders him incapable of performing the essential functions of his job, with or without reasonable
accommodation. Each executive officer may also terminate his employment agreement and employment at any
time for Good Reason. If the executive officer's employment is terminated by the Company without Cause or by the
executive officer for Good Reason, the Company will provide the executive officer with outplacement services
consistent with those provided to similarly situated executives and pay the executive officer severance
compensation equal to the sum of (a) 200% of his annualized base salary as of his termination date, (b) 200% of
the average of his last two calendar year bonuses, or if termination occurs within two years from the start of
employment with the Company, 200% of his target incentive, excluding any equity awards and any special or
one-time bonus or incentive compensation payments, and (c) $12,000 to offset the costs of benefit continuation
coverage. The severance compensation will be payable over a 24-month period. In addition, if the Company
terminates Mr. Rex's employment without Cause or if Mr. Rex terminates employment for Good Reason, Mr. Rex
has the option to remain employed in an advisory capacity for one year (at his then-current annual base salary and
target bonus) following notification of termination.
Cause
Termination Provisions and Material Definitions
Means:
Good Reason
64
Pursuant to their respective employment agreements, each executive officer is subject to provisions prohibiting his
solicitation of the Company's employees or competing with the Company during the term of the employment
agreement and for two years following termination for any reason. In addition, each executive officer is prohibited at
all times from disclosing confidential information related to the Company.
Non-Solicitation, Non-Competition and Confidentiality Provisions
For Messrs. Rex and Nelson, "Good Reason" also exists if the Company changes either executive officer's reporting
relationship, and for Mr. Rex, “Good Reason" also exists if the Company makes a change so that he no longer serves as
both CFO and a member of the Office of the CEO of the Company.
Makes changes that substantially diminish the executive officer's duties or responsibilities.*
The executive officer must give the Company written notice of the circumstances constituting
Good Reason within 120 days of becoming aware of the circumstances, and the Company will
I have 60 days to remedy the circumstances.
Moves the executive officer's primary work location more than 50 miles; or
Reduces the executive officer's base salary or long- or short-term target bonus percentage
other than in connection with a general reduction affecting a group of similarly situated
employees;
Exists if the Company:
The Company must provide the executive officer with written notice of Cause within 120 days
of discovery, and the executive officer will have 60 days to remedy the conduct, if the conduct
is reasonably capable of being remedied.
Material breach of the employment agreement.
Conviction of any felony, commission of any criminal, fraudulent or dishonest act, or any
conduct that is materially detrimental to the Company's interests; or
A material violation of, or failure to act upon known or suspected violations of, the
Company's Code of Conduct;
Material failure to follow the Company's reasonable direction or to perform any duties
reasonably required on material matters;
•
•
Definition
(3) Annual benefit covers 60% of eligible base salary in the event of a qualifying long-term disability, subject to
the terms of the policy.
(2) Benefit provided at the Company's expense.
(1) Any adjustments to base salary, actual bonuses payable and stock-based awards are at the discretion of the
Compensation Committee.
5
4 Audit
Executive
Compensation
Governance
2
Corporate
Board of
Directors
1
62
62
Messrs. Rex, Witty and Nelson have entered into employment agreements with the Company. Under those
agreements, each reports to the CEO of the Company. The table below and the narrative that follows summarize
the material terms of their respective employment agreements.
John F. Rex, Andrew P. Witty and Steven H. Nelson
Pursuant to the employment agreement, Mr. Wichmann is subject to provisions prohibiting his solicitation of the
Company's employees and customers or competing with the Company during the term of the employment
agreement and for two years following termination of his employment for any reason. In addition, he is prohibited at
all times from disclosing confidential information related to the Company.
Non-Solicitation, Non-Competition and Confidentiality Provisions
As defined in the employment agreement, “Good Reason" exists if the Company (a) reduces Mr. Wichmann's base
salary or long- or short-term target bonus percentage other than in connection with a general reduction affecting a
group of similarly situated employees, (b) moves Mr. Wichmann's primary work location more than 50 miles,
(c) makes changes that substantially diminish Mr. Wichmann's duties or responsibilities, or (d) changes
Mr. Wichmann's reporting relationship.
Annual
Meeting
Other
Information
Summary of Compensation Components
✓
✓
✓
✓
✓
Generally available employee benefit programs
One-time sign-on / promotion equity award and / or bonus
As defined in the employment agreement, "Cause” means (a) material failure to follow the Company's reasonable
direction, or to perform any duties reasonably required on material matters; (b) material violation of, or failure to act
upon or report known or suspected violations of, the Company's Code of Conduct; (c) conviction of any felony,
commission of any criminal, fraudulent or dishonest act, or any conduct that is materially detrimental to the
Company's interests, or (d) material breach of the employment agreement. The Company must provide
Long-term disability policy (2)(3)
Stock-based awards (1)
Participation in incentive compensation plans (1)
Base salary(1)
Compensation Component
Steven H. Nelson
Andrew P. Witty
John F. Rex
$2 million term life insurance policy (2)
2/12/2018
(81,393)
178,615
Shares
Acquired
on Vesting
Number of
12/14/2018
12/14/2018
12/14/2018
2/13/2018
2/13/2018
2/13/2018
Vesting
Date
Date of
Award
(5) Reflects the cancellation on December 14, 2018 of RSUs for the payment of FICA tax liability. The value
realized was computed based on a closing stock price of $265.02 on December 14, 2018.
$ 5,546,906
$249.12
22,266
12/31/2018
2/9/2016
Steven H. Nelson
$ 4,202,405
$249.12
Market Price
at Vesting
16,869
Value Realized
on Vesting
$265.02
2
Board of
Directors
40
57
(6) For information regarding DSUs held by Mr. Witty in connection with this service as a director, please see the
Director Compensation Table.
$ 86,414
$115,218
$142,108
326
536
435
Steven H. Nelson
David S. Wichmann
Stephen J. Hemsley
Name
$265.02
$265.02
12/31/2018
2/9/2016
John F. Rex
(4) Also reflects the performance shares earned for the 2016-2018 performance period that ended on
December 31, 2018 because performance targets were met. The value shown as realized on
$ 293,830
$ 365,240
$ 374,245
$220.96
$220.96
$216.46
1,653
1,357
2/8/2018
2/8/2017
2/9/2018
2/9/2016
1,694
2/10/2018
2/10/2015
$ 735,384
$225.69
December 31, 2018 is based on the number of shares earned for the 2016-2018 performance period using
the per share closing market price of our common stock on December 31, 2018, although shares were not
issued until the Compensation Committee certified the performance results on February 26, 2019:
Name
Date of
Award
Performance
Period
$15,715,984
$11,093,563
$249.12
44,531
12/31/2018
2/9/2016
David S. Wichmann
$249.12
Corporate
Governance
63,086
2/9/2016
Stephen J. Hemsley
Value Realized
on Vesting
Market Price
at End of
Performance
Period
on Vesting
Completion Date
Number of
Shares Acquired
12/31/2018
89,308
Executive
Compensation
Other
Registrant
Contributions
($)(1)(2)
in Last FY
Executive
Contributions
John F. Rex
David S. Wichmann
Stephen J. Hemsley
Name (a)
The following table presents information as of the end of 2018 regarding the non-qualified deferred compensation
arrangements for our named executive officers for fiscal year 2018.
2018 Non-Qualified Deferred Compensation
Information
Meeting
5
4 Audit
Other
in Last FY
($)(1)(3)
Annual
Aggregate
Balance at
(b)
7,765,073
(373,466)
166,500
372,588
14,463,891
(683,465)
180,000
360,000
(e)
($)(5)
Last FYE
Distributions
Aggregate
Withdrawals/
Aggregate
Earnings
in Last FY
($)(4)
(d)
(c)
($)(6)
(f)
Executive
Compensation
Corporate
Governance
2
Payments
Present
Value of
Number of
Years
Credited
Retirement Pay
Supplemental Executive
Individual Agreement for
Plan Name
Stephen J. Hemsley
Name
The following table presents information regarding the present value of accumulated benefits payable under our
non-qualified defined-benefit pension plans covering our named executive officers for fiscal year 2018.
2018 Pension Benefits
Information
Meeting
5
4 Audit
Service
Accumulated
During Last
Fiscal Year
(#)
Board of
Directors
59
58
(1) In 2006, the amount of Mr. Hemsley's supplemental retirement benefit was frozen based on his age and
average base salary at the time and converted into a lump sum of $10,703,229. On June 7, 2016, the
Company amended Mr. Hemsley's SERP to convert the $10,703,229 cash benefit into a number of DSUS
based on the average closing price of the Company's common stock over the preceding five trading days
from the date of conversion ($135.846), which resulted in 78,789 DSUs issued on June 7, 2016. The DSUS
held in the SERP are eligible to receive dividend equivalents in the form of additional DSUs, which are paid at
the same rate and at the same time that dividends are paid to the Company's shareholders. During 2018,
Mr. Hemsley received dividend equivalents equal to 1,110 DSUs, which were added to the SERP. As of
December 31, 2018, the amount of the benefit to which Mr. Hemsley is entitled is 82,129 DSUs, which had a
value of $20,459,928 as of December 31, 2018. The SERP balance will be paid six months and one day after
termination of his employment for any reason.
N/A
N/A
N/A
Annual
N/A
Andrew P. Witty
John F. Rex
David S. Wichmann
2/9/2016
(1)
($)
Benefit ($)
Steven H. Nelson
4,759(4) 1,185,562
2/8/2017
108.97 2/10/2025
70.24 2/12/2024
57.38 2/6/2023
56.04 6/5/2022
244.43 6/5/2028
2/10/2015
59,135(3)
59,135
2/9/2016
4,946,527
19,856(5)
2/13/2018
2/8/2027
77,758
160.31
24,176
2/8/2017
Vested ($)(2)
Have Not
Plan
Awards:
Market
Value of
Unearned
Shares or
Units That
Incentive
Equity
Plan
Awards:
Number of
Unearned
Shares or
Units That
Have Not
Vested (#)
72,530(3)
25,920(3)
2/12/2014
83,918
David S. Wichmann
1,420,233
5,701 (4)
2/10/2015
2/6/2023
2/9/2020
2,741,316
11,004(4)
2/9/2016
8,624,784
34,621(5)
2/8/2017
3,328,492
13,361(4)
2/8/2017
2/9/2026
111.16
108.97 2/10/2025
70.24 2/12/2024
57.38
33.00
2/9/2010 114,036
99,312
2/6/2013
Equity
Incentive
Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)(2)
2,398,776
9,629(4)
Date of
Underlying
Underlying
Securities
Number of
Number of
Securities
Stock Awards
Option/SAR Awards
The following table presents information regarding outstanding equity awards held at the end of fiscal year 2018 by
our named executive officers.
Outstanding Equity Awards at 2018 Fiscal Year-End
Meeting
5
4 Audit
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
6/7/2016
Unexercised
2/13/2018
Unexercised
Options/
2/13/2018
2/13/2028
226.64
53,042(3)
2/13/2018
Stephen J. Hemsley
That
Have Not
Vested (#)
Stock
Award
Grant Date
SAR
Expiration
Date(1)
Number
of
Shares or
Units of
Stock
Option/
Option/
SAR
Exercise/
Grant
Price ($)
Exercisable Unexercisable
Grant
Name
SARS (#)
SARS (#)
SAR
Options/
Option/
65,418(3)
Other
Information
7,507
5,592(4) 1,393,079
2/13/2018
2/13/2018
2/8/2017
2/8/2027
6/7/2026
136.94
28,208(3)
28,208
6/7/2016
160.31
11,031(5)
32,671(3)
2/8/2017
2/13/2028
226.64
29,468(3)
2/13/2018
John F. Rex
2/23/2019
29.74
10,890
2,748,043
6,019(4) 1,499,453
2/9/2016
8/15/2017
47,096(3)
6/5/2018
Andrew P. Witty
80,000
6/5/2012
2/6/2013
44,757
2/12/2014
6,376(3)
19,128
2/10/2015
3,885,026
15,595(5)
2/8/2017
2/9/2026
111.16
15,812(3)
15,811
113,122
2/23/2009
52,972
2/10/2015
2/9/2026
111.16
41,743(3)
41,742
2/9/2016
928,470
3,727 (4)
8/15/2017
6,100,700
24,489(5)
2/13/2018
2,958,798
11,877(4)
2/13/2018
47,798(3)
15,932
2/8/2017
7,767(4) 1,934,915
4,024(4) 1,002,459
22,524(3)
8/15/2017
9,731(5)
226.64 2/13/2028
194.50 8/15/2027
160.31 2/8/2027
2/10/2015
2,424,187
33.00
76,024
57.38
59,587
2/6/2013
5,683,922
2/9/2016
22,816(5)
2/9/2010
8,804(4) 2,193,252
54,888
2/8/2017
18,297(3)
2/12/2014
2/6/2023
2/9/2020
108.97
70.24 2/12/2024
2/10/2025
2/8/2017
50,351
Corporate
Governance
Year
$22,619,000
3,154,000
2018
$19,465,000
Audit-Related Fees (1)
Fee Category
Audit Fees
Disclosure of Fees Paid to Independent Registered Public
Accounting Firm
Other
Information
Meeting
4 Audit
Annual
Executive
Compensation
2
2017
$21,077,000
Aggregate fees billed to the Company for the fiscal years ended December 31, 2018 and 2017, represent fees
billed by the Company's principal independent registered public accounting firm, Deloitte & Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates, which includes Deloitte Consulting
(collectively, "Deloitte & Touche"). The Audit Committee pre-approved the audit and non-audit services provided in
the years ended December 31, 2018 and 2017, by Deloitte & Touche, as reflected in the table below.
5
$24,800,000
Total Audit and Audit-Related Fees
The Audit Committee has adopted a Policy for Approval of Independent Auditor Services (the "Policy") outlining the
scope of services Deloitte & Touche may provide to the Company. The Policy sets forth guidelines and procedures
the Company must follow when retaining Deloitte & Touche to perform audit, audit-related, tax and other services.
The Policy also specifies certain non-audit services that may not be performed by Deloitte & Touche under any
circumstances. Pursuant to these guidelines, the Audit Committee approves fee thresholds annually for each of
these categories, and services within these thresholds are deemed pre-approved. The Audit Committee has
delegated authority to the Chair of the Audit Committee to pre-approve permitted audit and non-audit services
between regularly scheduled quarterly Audit Committee meetings, provided that such pre-approvals are presented
to the Audit Committee at its next scheduled meeting. All fees reported above were approved pursuant to the
Policy. The services provided by our independent registered public accounting firm and related fees are discussed
with the Audit Committee, and the Policy is evaluated and updated periodically by the Audit Committee.
Audit and Non-Audit Services Approval Policy
Board of
Directors
The Audit Committee has reviewed the nature of non-audit services provided by Deloitte & Touche and has
concluded these services are compatible with maintaining the firm's ability to serve as our independent registered
public accounting firm.
Audit Committee's Consideration of Independence of Independent
Registered Public Accounting Firm
(3) All Other Fees include consulting fees and fees relating to communications training for international employees.
(2) Tax Fees include tax compliance, planning and support services. In 2018 and 2017 approximately $499,000
and $285,000, respectively, of Tax Fees were related to international tax services, approximately $771,000 and
$1,787,000, respectively, of Tax Fees were for business model operating design services and audit support
and approximately $280,000 and $194,000, respectively, of Tax Fees were related to tax compliance (review
and preparation of corporate and expatriate tax returns, review of the tax treatment for certain expenses and
claims for refunds).
(1) Audit-Related Fees for 2018 and 2017 include benefit plan and other required audits, an audit of one of our
subsidiaries, certain AICPA agreed-upon procedures and due diligence services.
$27,168,000
102,000
2,266,000
$24,259,000
90,000
1,550,000
Total
All Other Fees (3)
Tax Fees (2)
3,723,000
70
69
F. William McNabb III
The Audit Committee of our Board of Directors is comprised of three non-employee directors, all of whom are audit
committee financial experts, as defined by the SEC. The Board of Directors has determined all of the members of
the Audit Committee are independent within the meaning of the listing standards of the NYSE, the rules of the SEC
and the Company's Standards for Director Independence. The Audit Committee operates under a written charter
adopted by the Board of Directors accessible in the corporate governance section of our website at
www.unitedhealthgroup.com/about/corporate-governance.
Audit Committee Report
AUDIT
Other
Information
Meeting
5
4 Audit
The Audit Committee has responsibility for selecting and evaluating the independent registered public accounting
firm, which reports directly to the Audit Committee, overseeing the performance of the Company's internal audit
function, and assisting the Board of Directors in its oversight of enterprise risk management including privacy and
data security. Management has primary responsibility for the Company's consolidated financial statements and the
overall reporting process, for maintaining adequate internal control over financial reporting and, with the assistance
of the Company's internal auditors, for assessing the effectiveness of the Company's internal control over financial
reporting. Deloitte & Touche LLP ("Deloitte") has served as the Company's independent registered public
accounting firm since 2002.
Annual
Governance
2
Corporate
Board of
Directors
98
71
68
Executive
Compensation
While it is not the duty of the Audit Committee to plan or conduct audits, the Audit Committee engages with the
Company's independent registered public accounting firm and the internal auditors regarding the overall scope and
plans for their respective audits. The Company's independent registered public accounting firm is responsible for
performing an independent audit of the Company's consolidated financial statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States), expressing an opinion as to the
conformity of the consolidated financial statements with generally accepted accounting principles in the United
States of America, and auditing management's assessment of the effectiveness of internal control over financial
reporting. The Audit Committee's responsibility is to monitor and oversee these processes. The Audit Committee
also oversees management's processes to identify and quantify material risks facing the Company, including risks
disclosed in the Company's Annual Report on Form 10-K. The Audit Committee meets regularly with the internal
auditors and independent registered public accounting firm, with and without management present, to discuss the
results of their examinations, the evaluation of the Company's internal control over financial reporting and the
overall quality of the Company's accounting and reporting.
The Audit Committee has adopted a Policy for Approval of Independent Auditor Services (the "Policy”) outlining the
scope of services the independent registered public accounting firm may provide to the Company. The Policy sets
forth guidelines and procedures the Company must follow when retaining the independent registered public
accounting firm to perform audit, audit-related, tax and other services. The Policy also specifies certain non-audit
services that may not be performed by the independent registered public accounting firm under any circumstances.
Pursuant to these guidelines, the Audit Committee approves fee thresholds annually for each of these categories,
and services within these thresholds are deemed pre-approved.
Board of
Michele J. Hooper
Glenn M. Renwick, Chair
Members of the Audit Committee
Based upon the Audit Committee's review of the financial statements, independent discussions with management
and Deloitte, and the Audit Committee's review of the representation of management and the report of the
independent registered public accounting firm to the Audit Committee, and subject to the limitations of the Audit
Committee's role, the Audit Committee recommended to the Board of Directors that the audited consolidated
financial statements for the years ended December 31, 2018, December 31, 2017, and December 31, 2016, be
included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with
the SEC.
The Audit Committee discussed with Deloitte matters required to be discussed by Auditing Standard No. 1301,
"Communications with Audit Committees" issued by the Public Company Accounting Oversight Board and
Rule 2-07 of Regulation S-X. Deloitte provided to the Audit Committee the written disclosures and the letter
required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte's
communications with the Audit Committee concerning independence, and the Audit Committee discussed with
Deloitte the accounting firm's independence. In considering the independence of Deloitte, the Audit Committee took
into consideration whether the provision of non-audit services is compatible with maintaining the independence of
Deloitte. In connection with its selection of Deloitte as the Company's independent registered public accounting firm
for the year ending December 31, 2019, the Audit Committee conducted a performance evaluation of Deloitte's
services.
Management represented to the Audit Committee that the Company's consolidated financial statements were
prepared in accordance with generally accepted accounting principles. The Audit Committee has reviewed and
discussed with management and Deloitte in separate sessions the Company's consolidated financial statements for
the years ended December 31, 2018, December 31, 2017, and December 31, 2016, management's annual report
on the Company's internal control over financial reporting and Deloitte's attestation. The Audit Committee discussed
with management and Deloitte the process used to support certifications by the Company's CEO and CFO as
required by the SEC and the Sarbanes-Oxley Act of 2002 to accompany the Company's periodic filings with the
SEC and the process used to support management's annual report on the Company's internal controls over
financial reporting.
Information
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
Directors
2
1
10
Board of
Directors
New York Attorney General request for information on policies of pharmacy benefit managers and insurers related
to prescribing opioid medications.
Corporate
Governance
Class Action of alleged overcharged co-payment amounts of prescription drugs. May 2018 Insulin: Proposed Class
Action suit filed by patients over high prices.
Information
Other
Meeting
Annual
4 Audit
Executive
Compensation
March 2018
Corporate
Governance
2
1
Board of
73
DOJ joined whistleblower lawsuits over alleged overcharging of Medicare Advantage Program.
August 2018
November 2018
Now is a good time to adopt this proposal given these critical issues that deserve strict oversight and the
avoidance of reoccurrences:
Directors
EpiPen: Purported Class Action over inflated EpiPen prices.
January 2018
This proposal would put shareholders in a better position to ask for Board refreshment. For instance the following
directors had excessively long-tenure which was made worse by elevating these directors to very important roles.
Long tenure can seriously erode director independence at shareholder expense.
Richard Burke
Gail Wilensky
For these reasons, the Board of Directors recommends you vote FOR approval of the compensation of the
named executive officers, as disclosed in this proxy statement. Executed proxies will be voted FOR
approval of the compensation of the named executive officers unless you specify otherwise.
74
Our decision to adopt proxy access was informed by discussions with our shareholders and other corporate
governance experts. After carefully considering the range of viewpoints and market practices, we adopted an
appropriate, balanced and effective proxy access framework that provides meaningful proxy access rights to
shareholders, while mitigating the possibility for misuse. The 20 shareholder aggregation limit we adopted has been
adopted by almost all U.S. listed companies implementing proxy access (approximately 93% as of
December 31, 2018), and has been recognized by the Council of Institutional Investors as a market standard.
The Company's proxy access bylaw permits a shareholder, or group of up to 20 shareholders, owning at least 3%
of the Company's outstanding shares of common stock continuously for at least three years, to nominate and
include in the Company's annual meeting proxy materials director nominees constituting up to 20% of the Board,
subject to requirements specified in the Company's bylaws.
In February 2016, the Board of Directors adopted a proxy access bylaw which provides the Company's
shareholders a useful and balanced proxy access process while safeguarding the interests of all of our
shareholders.
Background
We have carefully considered this proposal and have concluded that it is not necessary or in the best interests of
the Company or its shareholders.
reasons:
The Board of Directors unanimously recommends a vote AGAINST the foregoing proposal for the following
Board of Directors' Recommendation
The majority of the nomination committee had an average tenure of 33-years.
Two members of the executive pay committee each had 25-years tenure.
18-years Insider Chairman
25-years
41-years Lead Director
25-years
Stephen Hemsley
William Ballard
Supporting Statement
2
to qualify as one of the aggregation participants. Plus it is easy for our management to reject potential aggregating
shareholders because management simply needs to find one item lacking from a list of requirements.
Under current provisions, even if the 20 largest public pension funds were able to aggregate their shares, they
would not meet the 3% criteria for a continuous 3-years at most companies examined by the Council of Institutional
Investors. Additionally many of the largest investors of major companies are routinely passive investors who would
be unlikely to be part of the proxy access shareholder aggregation process. Our company has a strict 20
participant limit for shareholder proxy access.
72
The Board of Directors recommends you vote FOR ratification of the appointment of Deloitte as our
independent registered public accounting firm for the year ending December 31, 2019. Executed proxies
will be voted FOR ratification of this appointment unless you specify otherwise.
Representatives of Deloitte are expected to be present at the meeting, will have an opportunity to make a
statement and will be available to respond to questions from shareholders.
The Board of Directors has proposed that shareholders ratify the appointment of Deloitte at the Annual Meeting. If
shareholders do not ratify the appointment of Deloitte, the Audit Committee will reconsider the appointment but is
not obligated to appoint another independent registered public accounting firm. The Audit Committee evaluates, at
least every three years, whether to rotate our independent registered public accounting firm.
Based on its most recent evaluation of Deloitte, the members of the Audit Committee believe the continued
retention of Deloitte as the Company's independent registered public accounting firm is in the best interest of the
Company and its shareholders. Among the factors considered by the Committee in reaching this recommendation
were the following: the quality and efficiency of Deloitte's historical and recent audit plans and performance;
Deloitte's capabilities and expertise in handling the breadth and complexity of the Company's U.S. and global
operations; external data on audit quality and performance, including recent Public Company Accounting Oversight
Board (PCAOB) reports on Deloitte; the appropriateness of Deloitte's fees for audit and non-audit services;
Deloitte's independence and objectivity; and the quality and candor of Deloitte's communications with management
and the Audit Committee.
The Audit Committee is directly responsible for the appointment, evaluation, compensation, retention and oversight
of the independent registered public accounting firm retained to audit the Company's financial statements. The
Audit Committee has appointed Deloitte & Touche LLP ("Deloitte") as our independent registered public accounting
firm for the year ending December 31, 2019. Deloitte has been retained as our independent registered public
accounting firm since 2002. The Audit Committee is responsible for approving audit fees associated with the
retention of Deloitte. In order to assure continuing auditor independence, the Audit Committee periodically
considers whether there should be a rotation of our independent registered public accounting firm. Further, as part
of the Audit Committee's assessment of Deloitte and in conjunction with the mandated rotation of the audit firm's
lead engagement partner, in November 2015, the Audit Committee interviewed candidates to become Deloitte's
new lead engagement partner and following those interviews, selected the individual who became the new lead
engagement partner in 2017.
Proposal 3
Accounting Firm
Board of
Directors
Ratification of Independent Registered Public
Information
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
-
2
Corporate
Governance
Executive
Compensation
No limitation shall be placed on the number of stockholders that can aggregate their shares to achieve the 3% of
common stock required to nominate directors under our Company's proxy access provisions.
RESOLVED: Stockholders ask the board of directors to amend its proxy access bylaw provisions and any
associated documents, to include the following change:
Amendment to Proxy Access Bylaw
-
Shareholder Proposal
We have been informed that John Chevedden intends to introduce the proposal set forth below at the Annual
Meeting. In accordance with SEC rules, the text of the proposal is printed verbatim from the submission. The
Company will provide to shareholders the address and reported holdings of the Company's common stock for the
proposal sponsor promptly upon receiving an oral or written request. The Board of Directors has recommended a
vote against this proposal for the reasons set forth following the proposal.
to Proxy Access Bylaw
Shareholder Proposal Regarding Amendment
—
Proposal 4
ANNUAL MEETING
Information
Meeting
Other
Annual
50
4 Audit
Under this proposal it is likely that the number of shareholders who participate in the aggregation process would
still be a modest number due to the rigorous rules our company adopted for a shareholder to make an application
In addition to our annual advisory vote to approve the Company's executive compensation, we are committed to
ongoing engagement with our shareholders on executive compensation and corporate governance issues. These
engagement efforts take place throughout the year where appropriate through meetings, telephone calls and
correspondence involving our senior management, directors and representatives of our shareholders.
31%
2-5 years
As discussed in the Compensation Discussion and Analysis, the Board of Directors believes that our executive
compensation program attracts and retains highly qualified executives while linking executive compensation directly
to Company-wide performance and long-term shareholder interests. In deciding how to vote on this proposal, the
Board of Directors asks you to consider the key points with regard to our executive compensation program included
in the Compensation Discussion and Analysis and in the “Executive Summary" section on pages 28-29 of this
proxy statement.
600,000
18,469,874
18,469,874
19,102,186
Acceleration of Equity (2)
2,000,000
Insurance Benefits
3,000,000 3,000,000 3,000,000
21,596,828
Annual Cash Incentive (1)
Cash Payments
John F. Rex
37,706,074 43,695,661 38,495,661
38,926,074
49,107,661
Total(3)
31,726,074 38,495,661 38,495,661
5,412,000
Total (3)
24,514,186
23,469,874 22,069,874 3,000,000 21,596,828
Insurance Benefits
5,712,000
Cash Payments
Steven H. Nelson
4,400,000 16,961,762
16,961,762
4,400,000
4,400,000 4,400,000
2,000,000 660,000
14,108,092 14,108,092
20,508,092 19,168,092
16,203,432
Total (3)
9,591,432
Acceleration of Equity (2)
Insurance Benefits
Annual Cash Incentive (1)
6,612,000
Cash Payments
Andrew P. Witty
780,000
Annual Cash Incentive (1)
2,000,000
31,726,074
Acceleration of Equity (2)
Disability Retirement
($)
($)
Death
($)
Change
For Good Reason
or Not For Cause
($)
Name
The following table describes the potential payments to named executive officers upon termination of employment
or a change in control of the Company as of December 31, 2018. Amounts are calculated based on the benefits
available to the named executive officers under existing plans and arrangements, including each of their
employment agreements described under "Executive Employment Agreements."
Potential Payments Upon Termination or Change in Control
In Control
($)
This advisory proposal, commonly referred to as a "Say-on-Pay” proposal, is not binding on the Board of Directors.
Although the voting results are not binding, the Board and the Compensation Committee will review and consider
them when evaluating our executive compensation program. More than 95% of the votes cast were in favor of our
executive compensation program at each of our annual meetings since our inaugural vote in 2011.
5
4 Audit
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
Meeting
Stephen J. Hemsley
Cash Payments
1,000,000
=
Insurance Benefits
5,200,000 5,200,000
5,200,000
Annual Cash Incentive (1)
10,612,000
Cash Payments
David S. Wichmann
20,459,928 20,459,928
20,459,928 20,459,928
420,000
36,712,225 36,712,225 42,884,671 42,884,671
68,172,153 68,592,153 63,344,599 63,344,599
20,459,928
42,884,671
64,344,599
Total(3)
Acceleration of Equity (2)
Insurance Benefits
DSUS in the SERP
Annual Cash Incentive (1)
11,000,000 11,000,000
38,495,661
Acceleration of Equity (2)
Other
Information
18,886,001
24,598,001
19%
67
20
States
United
69%
Pacific
16%
Less than
Asia -
15%
Americas
(Non-U.S.)
By Tenure
By Geography
Other
2%
A summary of our workforce population is provided in the charts below:
We have a broad and diverse workforce with approximately 60% of the people represented in three key talent
pillars (85,000 clinicians, 45,000 customer-facing employees and 30,000 information and computer technologists).
Our median employee (one of our customer-facing employees) is a non-exempt, full-time employee who works
within our operations function as a senior claims representative in the United States.
14%
1 year
10+ years
14%
1-2 years
The Compensation Discussion and Analysis, compensation tables and related narrative disclosures appear on
pages 28-67 of this proxy statement.
Total(3)
"Resolved, that the shareholders approve, on an advisory basis, the compensation of the named executive
officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC,
including the Compensation Discussion and Analysis, the compensation tables and the related narrative
disclosures."
The Board of Directors recognizes the significant interest of shareholders in executive compensation matters. As
required by Section 14A of the Exchange Act, we are seeking shareholders' views on our executive compensation
philosophy and practices through an advisory vote on the following resolution at the Annual Meeting:
Proposal 2 — Advisory Approval of the Company's
Executive Compensation
Information
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
Corporate
Governance
2
Board of
Directors
5-10 years
20%
We consistently applied total direct compensation as the measure to determine the median employee in our global
employee population as of October 1, 2018. That workforce population consisted of 272,625 global full-time,
part-time, temporary and seasonal employees employed on that date. 85,332 of those employees were located
outside the United States and we then applied the de minimis exemption to exclude 11,530 employees in the
Philippines (4.2% of our global employee population).
Information
-
6
4 Audit
Annual
Executive
Compensation
3
Corporate
Governance
Directors
2
5
1
65
(1) Represents the maximum amount the Compensation Committee may in its discretion determine, but is not required,
to pay the executive officer (or the executive officer's estate, if applicable) based upon a prorated portion of the
award that the executive officer would have received but for his death, disability or retirement, calculated at the
achievement of the maximum performance target, as more fully described in footnote 2 to the 2018 Grants of
Plan-Based Awards table. For the purposes of this table, the potential amounts have not been prorated because the
table assumes a death, disability or retirement as of December 31, 2018.
4,000,000 4,000,000
2,000,000 600,000
15,325,080 15,325,080
21,325,080
22,886,001 18,886,001
4,000,000
18,886,001 18,886,001
Meeting
Board of
Meeting
19,925,080
(2) Represents the (i) unvested RSUs multiplied by the closing stock price on December 31, 2018 ($249.12),
(ii) intrinsic value of the unvested stock options, which is calculated based on the difference between the closing
price of our stock on December 31, 2018 ($249.12) and the exercise or grant price of the unvested stock options as
of that date, and (iii) the number of performance shares earned if target performance is achieved multiplied by the
closing stock price on December 31, 2018 ($249.12). If maximum performance is achieved for the performance
shares, the amounts for Acceleration of Equity would be (a) for "For Good Reason or Not for Cause," $56,455,981
for Mr. Hemsley; $52,704,470 for Mr. Wichmann; $25,735,255 for Mr. Rex; $13,872,061 for Mr. Witty; and
$25,859,368 for Mr. Nelson; (b) for "Death" and "Disability," $44,111,089 for Mr. Hemsley; $39,165,296 for
Mr. Wichmann; $21,975,989 for Mr. Rex; $15,535,051 for Mr. Witty; and $18,737,525 for Mr. Nelson; (c) for
"Retirement," $56,455,981 for Mr. Hemsley; $52,704,470 for Mr. Wichmann; and $25,859,368 for Mr. Nelson; and
(d) for "Change in Control," $56,455,981 for Mr. Hemsley; $52,704,470 for Mr. Wichmann; $28,229,897 for Mr. Rex;
$21,242,391 for Mr. Witty; and $25,859,368 for Mr. Nelson.
Other
Information
Other
Annual
Executive
Compensation
Corporate
Governance
Directors
2
1
4 Audit
99
For "For Good Reason or Not for Cause," the amount includes the value of unvested equity awards held by the
named executive officer that will not immediately vest upon termination but will continue to vest through any
applicable severance. For "Retirement," the amount includes the value of certain unvested equity awards granted in
2015, 2016, 2017 and 2018 that will continue to vest and be exercisable for a period of five years (but not after the
award's expiration date). The value of the awards that will not immediately vest is based on their intrinsic values on
December 31, 2018. However, because these awards would continue to vest after termination of employment or
retirement, the actual value the named executive officer would receive is not determinable. At December 31, 2018,
Messrs. Hemsley, Wichmann, and Nelson had met the retirement eligibility provisions.
Board of
(3) Does not include value of benefits, plans or arrangements that would be paid or available following termination of
employment that do not discriminate in scope, terms or operation in favor of our executive officers and that are
generally available to all salaried employees or accrued balances under any non-qualified deferred compensation
plan that is described above.
5
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are
providing the following information about the relationship between the annual total compensation of our median
employee and the annual total compensation of our CEO.
For purposes of reporting annual total compensation and the ratio of annual total compensation of our CEO to our
median employee, both the CEO and median employee's annual total compensation were calculated consistent
with the Summary Compensation Table executive compensation disclosure requirements, plus the value of
employer-paid health insurance contributions. Our median employee compensation was $57,412 and our Chief
Executive Officer's compensation was $18,124,873. Accordingly, our CEO to median employee pay ratio is 316:1.
Our enterprise-wide Company compensation philosophy is designed to attract and retain high-quality talent and
provide market-competitive total compensation opportunities that support our pay-for-performance culture. Actual
pay practices vary for employees by level and geographic location based on competitive market factors. The most
significant difference in the pay practices for our CEO versus our median employee is the use of variable/at-risk
compensation.
CEO Pay Ratio
66
10. How can I listen to the live webcast of the Annual Meeting?
www.unitedhealthgroup.com/investors/annual-meeting.html.
8.
How can I vote at the Annual Meeting if I own shares in street name?
If you are a street name holder, you may not vote your shares at the Annual Meeting unless you obtain a legal
proxy from your bank or broker. A legal proxy is a bank's or broker's authorization for you to vote the shares it
holds in its name on your behalf. To obtain a legal proxy, please contact your bank or broker for further
information.
9. What shares are included on the Notice, proxy card or voting instruction form?
If you are a shareholder of record, you will receive only one Notice or proxy card for all the shares of common
stock you hold:
in certificate form;
•
•
in any Company benefit plan.
If you hold your shares in street name, you will receive one Notice or voting instruction form for each account you
have with a bank or broker. If you hold shares in multiple accounts, you may need to provide voting instructions for
each account.
If you hold shares in our 401(k) savings plan and do not vote your shares or specify your voting instructions on
your proxy card, the administrators of the 401(k) savings plan will vote your 401(k) plan shares in the same
proportion as the shares for which they have received voting instructions. To allow sufficient time for voting by
the 401(k) administrators, your voting instructions must be received by 11:59 p.m. Eastern Time on
May 29, 2019.
Please note that use of cameras, phones or other similar electronic devices and the bringing of large bags,
packages or sound or video recording equipment will not be permitted in the meeting room. Attendees will also be
required to comply with meeting guidelines and procedures that will be available at the meeting. A copy of the
meeting guidelines and procedures is also available on our website at
•
in book-entry form; and
Directors
Other
How do I attend the Annual Meeting? What do I need to bring?
To attend the Annual Meeting, you will need to bring an admission ticket and valid photo identification.
Only our shareholders are entitled to attend the meeting. The procedure you must follow in order to attend the
meeting depends on whether you are a shareholder of record or a street name holder of our common stock.
Shareholders of Record. If you are a shareholder of record and received a Notice, the Notice is your admission
ticket. If you are a shareholder of record and received proxy materials by mail, your admission ticket is attached to
your proxy card. You will need to bring the Notice or the admission ticket and valid photo identification with you to
the Annual Meeting in order to be admitted to the meeting.
Street Name Holders. If you hold your shares in street name, bring with you to the Annual Meeting valid photo
identification and your most recent brokerage statement or a letter from your broker or other nominee indicating
that you hold our shares. We will use that statement or letter to verify your ownership of common stock and admit
you to the Annual Meeting; however, you will not be able to vote your shares at the Annual Meeting without a legal
proxy, as described in Question 8.
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You can listen to the live webcast of the Annual Meeting by visiting www.unitedhealthgroup.com and clicking on
"Investors" and then on the link to the webcast. An archived copy of the webcast will also be available on our
website for 14 days following the Annual Meeting.
The record date for the Annual Meeting is April 9, 2019. Only owners of record of shares of common stock of the
Company at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting, or
at any adjournments or postponements of the Annual Meeting. On April 9, 2019, there were 952,244,528 shares of
common stock issued, outstanding and entitled to vote. Each owner of record on the record date is entitled to one
vote for each share of common stock held.
By Written Proxy. All shareholders of record who received proxy materials by mail can vote by written proxy card. If
you received a Notice or the proxy materials electronically, you may request a proxy card at any time by following
the instructions on the Notice or on the voting website. If you are a street name holder, you will receive instructions
on how you may vote from your bank or broker, unless you previously enrolled in electronic delivery.
vote at the Annual Meeting and any adjournments or postponements of the Annual Meeting.
13. If I submit a proxy, may I later revoke it and/or change my vote?
Shareholders of record may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
signing another proxy card with a later date and delivering it to an officer of the Company before the
Annual Meeting;
•
voting again over the Internet or by telephone prior to 11:59 p.m., Eastern Time, on June 2, 2019;
•
•
•
notifying the Secretary to the Board of Directors in writing before the Annual Meeting.
Street name holders may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
•
7.
•
voting at the Annual Meeting; or
receive notice of the Annual Meeting; and
•
The record date was established by our Board of Directors as required by the Delaware General Corporation Law.
Owners of record of common stock at the close of business on the record date are entitled to:
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By Telephone or Internet. All shareholders of record can vote by telephone from the United States and Canada,
using the toll-free telephone number on the proxy card, or through the Internet using the procedures and
instructions described on the Notice or proxy card. Street name holders may vote by Internet or telephone if their
bank or broker makes those methods available, in which case the bank or broker will enclose the instructions with
the proxy materials. The Internet and telephone voting procedures are designed to authenticate shareholders'
identities, allow shareholders to vote their shares and to confirm their instructions have been properly recorded.
In Person. All shareholders of record may vote in person at the Annual Meeting. Street name holders may vote in
person at the Annual Meeting if they have a legal proxy, as described in Question 8.
The Notice is not a proxy card and cannot be used to vote your shares.
12. What is the record date and what does it mean?
11. What different methods can I use to vote?
Street Name Holders. If you hold your shares in a bank or brokerage account, you also may have the opportunity
to receive the proxy materials electronically. Please check the information provided in the proxy materials you
receive from your bank or broker regarding the availability of this service.
Meeting
Instead of receiving future copies of our proxy materials by mail, you can elect to receive an e-mail that will provide
electronic links to these documents. Opting to receive your proxy materials online will save the cost of producing
and mailing documents to your home or business, will give you an electronic link to the proxy voting site and will
also help preserve environmental resources.
The Board has a strong Lead Independent Director with robust responsibilities.
The Board is highly independent and benefits from an ongoing commitment to refreshment. Since January
2017, we have appointed five new directors to the Board who are standing for election this year.
The Company's Nominating Advisory Committee, comprised of long-term shareholders of the Company and
a member of the medical community, provides our Nominating and Corporate Governance Committee with
additional input regarding desirable characteristics of director candidates and the composition of our Board.
Shareholders have the right to call a special meeting.
Shareholders have the right to act by written consent.
The Company has a robust, ongoing shareholder engagement program.
The Company's proxy access bylaw is consistent with market practice and strikes the appropriate balance between
providing meaningful proxy access and safeguarding shareholders by mitigating misuse, while limiting
administrative burden and expense. Our corporate governance practices assure strong Board accountability and
provide shareholders with appropriate access to the Board. We do not believe it is necessary or in the best
interests of the Company or its shareholders to change the Company's proxy access bylaw as outlined in the
proposal.
Board members are elected annually by a majority vote of our shareholders.
For these reasons, the Board of Directors recommends that shareholders vote AGAINST the proposal.
Executed proxies will be voted AGAINST this proposal unless you specify otherwise.
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•
•
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submitting new voting instructions in the manner provided by your bank or broker; or
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The proponent's requested change to the Company's proxy access bylaw would place no limit on the number of
shareholders who may aggregate their holdings to reach the required 3% ownership threshold. An aggregation limit
of 20 provides abundant opportunities for the Company's shareholders to combine with other shareholders to
satisfy the ownership requirement. The Company's proxy access policies are further strengthened in the context of
leading corporate governance measures supporting the accountability of the Board to our shareholders, including:
⋅
•
•
•
Annual
Shareholders of Record. If you vote on the Internet at www.proxyvote.com, simply follow the prompts for enrolling
in the electronic proxy delivery service. You also may enroll in the electronic proxy delivery service at any time by
going directly to www.unitedhealthgroup.com and following the enrollment instructions.
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Information
1. What is the purpose of the Annual Meeting?
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5.
How many shares must be present to hold the Annual Meeting?
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Information
In order to conduct the Annual Meeting, holders of a majority of the shares entitled to vote as of the close of
business on the record date must be present in person or by proxy. This constitutes a quorum. Your shares are
counted as present if you attend the Annual Meeting and vote in person, if you vote your proxy over the Internet or
by telephone or by mail. Abstentions and broker non-votes will be counted as present for purposes of establishing
a quorum. If a quorum is not present, we will adjourn the Annual Meeting until a quorum is obtained.
6. How can I access the proxy materials for the Annual Meeting?
Shareholders may access the proxy materials, which include the Notice of Annual Meeting of Shareholders, Proxy
Statement (including a form of proxy card) and Annual Report for the year ended December 31, 2018 on the
Internet at www.unitedhealthgroup.com/investors/annual-reports.html. We will also provide a hard copy of any of
these documents free of charge upon request to: UnitedHealth Group Incorporated, 9900 Bren Road East,
Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors.
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Street Name Holders. If you hold your shares in an account at a bank or broker, then you are the beneficial owner
of shares held in "street name." The Notice or proxy materials were forwarded to you by your bank or broker, who
is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you
have the right to direct your bank or broker on how to vote the shares held in your account.
Shareholders of Record. If your shares are registered in your name with our transfer agent, EQ Shareowner
Services, you are a shareholder of record with respect to those shares and the Notice of Internet Availability of
Proxy Materials ("Notice") or the proxy materials were sent directly to you by Broadridge Financial Solutions.
At the Annual Meeting, shareholders will act upon the matters outlined in the Notice of Annual Meeting of
Shareholders. These include:
⋅
election of directors;
.
an advisory vote to approve our executive compensation (a "Say-on-Pay" vote);
•
ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting
firm; and
if properly presented, one shareholder proposal.
Also, once the business of the Annual Meeting is concluded, management of the Company will give a business
update. Management, Chairs of each standing Board committee and representatives of Deloitte & Touche LLP will
be available to respond to questions from shareholders.
2.
What is a proxy?
It is your legal designation of another person to vote the stock you own in the manner you direct. That other
person is called a proxy. If you designate someone as your proxy in a written document, that document also is
called a proxy or a proxy card. We have designated Dannette L. Smith and Faraz A. Choudhry to serve as proxies
for the Annual Meeting. The Board of Directors will use the proxies at the 2019 Annual Meeting of Shareholders.
The proxies also may be voted at any adjournments or postponements of the meeting.
3. What is a proxy statement?
The Company's Board of Directors is soliciting proxies for use at the 2019 Annual Meeting of Shareholders. A
proxy statement is a document we give you when we are soliciting your vote pursuant to SEC regulations.
4. What is the difference between a shareholder of record and a shareholder who holds
stock in street name?
Questions and Answers About the Annual Meeting and Voting
contacting your bank or broker to request a legal proxy in order to vote your shares in person at the
Annual Meeting.
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Other Shareholder Proposals for Presentation at the 2020 Annual Meeting (Advance Notice Provision). A
shareholder proposal that is not submitted for inclusion in our proxy statement for our 2020 Annual Meeting
pursuant to Section 3.04 of our Bylaws or SEC Rule 14a-8 and is sought to be presented at the 2020 Annual
Meeting must comply with the "advance notice" deadlines in our Bylaws. As such, these shareholder proposals
must be received no earlier than February 4, 2020, and no later than the close of business on March 5, 2020.
These shareholder proposals must be in writing and received within the "advance notice" deadlines described
above at our principal executive offices at UnitedHealth Group Center, 9900 Bren Road East, Minnetonka,
Minnesota 55343, Attention: Secretary to the Board of Directors. These shareholder proposals must be in the form
provided in our Bylaws and must include the information set forth in the Bylaws. If we do not receive a shareholder
proposal and the required information by the "advance notice" deadlines described above, the proposal may be
excluded from consideration at the 2020 Annual Meeting. The “advance notice" requirement described above
supersedes the notice period in SEC Rule 14a-4(c)(1) of the federal proxy rules regarding the discretionary proxy
voting authority with respect to such shareholder business.
25. How are proxies solicited and what is the cost?
We bear all expenses incurred in connection with the solicitation of proxies. We have engaged Morrow Sodali LLC
to assist with the solicitation of proxies for a base fee of $20,000 plus expenses. We will reimburse brokers,
fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of common stock.
Our directors, officers and employees may also solicit proxies by mail, telephone and personal contact. They will
not receive any additional compensation for these activities.
26. Where can I find more information about my voting rights as a shareholder?
The SEC has an informational website that provides shareholders with general information about how to cast their
vote and why voting should be an important consideration for shareholders. You may access that information at
https://www.investor.gov/research-before-you-invest/research/shareholder-voting or at www.investor.gov.
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21. Are my shares voted if I do not provide a proxy?
Other
Information
If you are a shareholder of record and do not provide a proxy, you must attend the Annual Meeting in order to
vote. If you hold shares through an account with a bank or broker, your shares may be voted by the bank or broker
on some matters if you do not provide voting instructions. Banks and brokers have the authority under NYSE rules
to vote shares for which their customers do not provide voting instructions on routine matters. The ratification of
Deloitte & Touche LLP as our independent registered public accounting firm is considered a routine matter. The
other matters being voted on at the Annual Meeting are not considered routine and banks and brokers cannot vote
shares without instruction on those matters. Shares that banks and brokers are not authorized to vote are counted
as "broker non-votes."
22. How are abstentions and broker non-votes counted?
Abstentions have no effect on the election of directors. Abstentions have the effect of an "AGAINST" vote on the
advisory vote to approve our executive compensation, the ratification of the appointment of the Company's
independent registered public accounting firm and the shareholder proposal. Broker non-votes have no effect on
the vote for any matter at the meeting.
23. Does the Company have a policy about directors' attendance at the Annual Meeting
of Shareholders?
The Company expects directors to attend the Annual Meeting, absent a compelling reason.
24. What are the deadlines for submitting director nominees and other shareholder
proposals for the 2020 Annual Meeting?
Shareholder Director Nominations for Inclusion in the Company's Proxy Materials (Proxy Access). To be considered
for inclusion in our proxy statement for our 2020 Annual Meeting, director nominations submitted pursuant to
Section 3.04 of our Bylaws must be received at our principal executive offices at UnitedHealth Group Center,
9900 Bren Road East, Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors, no earlier than
November 21, 2019 and no later than December 21, 2019, and must be submitted in accordance with Section 3.04
of our Bylaws. If we do not receive the information required by our Bylaws by the deadline described above, the
director nominee will be excluded from our proxy statement for our 2020 Annual Meeting.
Other Shareholder Proposals to Be Considered for Inclusion in the Company's Proxy Materials (SEC Rule 14a-8).
To be considered for inclusion in our proxy statement for our 2020 Annual Meeting, shareholder proposals
submitted pursuant to SEC Rule 14a-8 must be received no later than December 21, 2019 and be submitted in
accordance with Rule 14a-8. These shareholder proposals must be in writing and received by the deadline
described above at our principal executive offices at UnitedHealth Group Center, 9900 Bren Road East,
Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors. If we do not receive a shareholder
proposal by the deadline described above, the proposal may be excluded from our proxy statement for our 2020
Annual Meeting.
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1
88
2
Percent of
Class
71,461,036
7.42%
69,831,381
7.30%
Amount and Nature of
Beneficial Ownership
65,200,422
(1) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by The
Vanguard Group. Inc. on February 11, 2019. The Vanguard Group, Inc. reported having sole voting power
over 1,186,163 shares, shared voting power over 225,198 shares, sole dispositive power over 70,075,335
shares and shared dispositive power over 1,385,701 shares.
(2) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by
BlackRock, Inc. on February 7, 2019. BlackRock, Inc. reported having sole voting power over 60,772,629
shares and sole dispositive power over 69,831,381 shares.
(3) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by FMR LLC
on February 13, 2019. FMR LLC reported having sole voting power over 9,280,832 shares and sole
dispositive power over 65,200,422 shares.
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6.78%
Boston, Massachusetts 02210
245 Summer Street
FMR LLC (3)
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Security Ownership of Certain Beneficial Owners and Management
The following table provides information about shareholders known to us to beneficially own more than 5% of the
outstanding shares of our common stock, based solely on the information filed by such shareholders in 2019 for
the year ended December 31, 2018 on Schedule 13G under the Exchange Act.
Name and Address of Beneficial Owner
The Vanguard Group, Inc. (1)
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
BlackRock, Inc. (2)
55 East 52nd Street
New York, New York 10055
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2
•
15. How may I confirm my vote was counted?
We are offering our shareholders the opportunity to confirm their votes were cast in accordance with their
instructions. Vote confirmation is consistent with our commitment to sound corporate governance standards and an
important means to increase transparency. Beginning May 20, 2019 and for up to two months after the Annual
Meeting, you may confirm your vote beginning 24 hours after your vote is received, whether it was cast by proxy
card, electronically or telephonically. To obtain vote confirmation, log onto www.proxyvote.com using your control
number (located on your Notice or proxy card) and receive confirmation on how your vote was cast. If you hold
your shares through a bank or brokerage account, the ability to confirm your vote may be affected by the rules of
your bank or broker and the confirmation will not confirm whether your bank or broker allocated the correct number
of shares to you.
16. What are my choices when voting for director nominees and what vote is needed to
elect directors?
In the vote on the election of director nominees, shareholders may:
⋅
vote in favor of a nominee;
We have retained Broadridge Financial Solutions to tabulate the votes. We have retained CT Hagberg LLC to act
as independent inspector of the election.
•
abstain from voting with respect to a nominee.
A director nominee will be elected if the number of votes cast "for" the nominee exceeds the number of votes cast
"against" the nominee. To address a provision in Delaware law that allows a director who has not been re-elected
to remain in office until a successor is elected and qualified, we have a policy requiring any director who does not
receive a greater number of votes “for” than “against” his or her election in an uncontested election to tender his
or her resignation from the Board of Directors following certification of the shareholder vote. Under this policy, the
Board of Directors will determine whether to accept or reject the offer to resign within 90 days of certification of the
shareholder vote. The text of this policy appears in our Principles of Governance, which is available on our website
at www.unitedhealthgroup.com/about/corporate-governance.
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vote against a nominee; or
to allow the independent inspectors of the election to certify the results of the vote.
if a shareholder makes a written comment on the proxy card or otherwise communicates his or her vote to
management; or
•
AGAINST the shareholder proposal regarding the amendment to the proxy access bylaw.
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14. Are votes confidential? Who counts the votes?
We hold the votes of all shareholders in confidence from directors, officers and employees except:
⋅
as necessary to meet applicable legal requirements and to assert or defend claims for or against the
Company;
•
in the case of a contested proxy solicitation;
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Executive
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•
•
The Board of Directors recommends a vote FOR each of the director nominees.
The Board of Directors recommends a vote FOR advisory approval of the Company's executive
compensation.
The Board of Directors recommends a vote FOR ratification of the appointment of Deloitte & Touche LLP
as our independent registered public accounting firm.
20. What if I do not specify a choice for a matter when returning a proxy?
•
Shareholders should specify their choice for each matter in the manner described in the Notice or on their proxy
card. If no specific instructions are given, proxies that are signed and returned will be voted:
FOR the election of all director nominees;
•
FOR the advisory approval of our executive compensation;
Corporate
Governance
FOR the ratification of the appointment of Deloitte & Touche LLP as the Company's independent registered
public accounting firm; and
.
•
The Board of Directors makes the following recommendation with regard to each proposal:
The Board of Directors recommends a vote AGAINST the shareholder proposal regarding amending the
proxy access bylaw.
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17. What are my choices when voting on each of the other proposals considered at the
Annual Meeting?
For each of the other proposals, shareholders may:
19. What is the Board's recommendation with regard to each proposal?
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•
•
vote against the proposal; or
•
abstain from voting on the proposal.
18. What vote is needed to approve each of the other proposals?
The proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting
firm and the shareholder proposal must be approved by the holders of a majority of the shares of common stock
present and entitled to vote in person or by proxy at the Annual Meeting in order to pass. For the advisory vote to
approve our executive compensation, there is no minimum approval necessary since it is an advisory vote;
however, the Board of Directors will consider the results of the advisory vote when considering future decisions
related to such proposal.
vote for the proposal;
Annual
Board and Committee Evaluations
Audit and Finance Committee Report
17
Board Meetings and Annual Meeting Attendance
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Director Compensation . . .
Communication with the Board of Directors
17
Disclosure of Fees Paid to Independent Registered
Public Accounting Firm
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2021 Director Compensation Table
720
13
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Board Committees
Potential Payments Upon Termination or Change in
Company's Executive Compensation
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Executive Employment Agreements
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PROPOSAL 1: Election of Directors
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2022 Director Nominees
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Control...
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CEO Pay Ratio
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Board Leadership Structure.
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PROPOSAL 2: Advisory Approval of the
Director Independence
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Director Nomination Process
Audit and Finance Committee's Consideration of
Independence of Independent Registered Public
Accounting Firm . . . . .
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...
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Compensation Discussion and Analysis .
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Householding Notice
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PROPOSAL 4: Shareholder Proposal Seeking
Shareholder Ratification of Termination Pay
PROPOSAL 5: Shareholder Proposal Regarding
Political Contributions Congruency Report
Questions and Answers About the Annual Meeting
and Voting
Compensation and Human Resources Committee
Board of Directors
Report
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Compensation and Human Resources Committee
Other Information
Interlocks and Insider Participation
48
Security Ownership of Certain Beneficial Owners and
Other Matters at Meeting
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Executive Compensation
Overview
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Code of Conduct: Our Principles of Ethics &
Integrity
Audit and Non-Audit Services Approval Policy
PROPOSAL 3: Ratification of Independent
Registered Public Accounting Firm
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Executive Summary.
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Annual Meeting
Risk Oversight . . .
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Alignment of Environment, Social and Governance
(ESG) with Our Long-Term Strategy
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Compliance and Ethics
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Andrew Witty
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Dear Fellow Shareholders:
April 22, 2022
UnitedHealth Group is starting 2022 with strong momentum - well-positioned to deliver high-quality care to even
more people and create greater long-term value for our shareholders and the communities we serve as we pursue our
mission of helping people live healthier lives and helping the health system work better for everyone.
Combining Optum's clinical expertise, technology and data capabilities with UnitedHealthcare's leadership in health
benefits, we are determined to help connect the fragmented pieces of the health system. Through innovations and
realigning incentives, we are working in partnership with care providers, employers, and public sector leaders to help
build a modern, high-performing health system and improve access, affordability, outcomes and experiences for
everyone who depends on it.
Our Long-Term Growth Strategy
As an enterprise, we are prioritizing five distinct growth opportunities - which both build on our well-established, market-
leading positions and further differentiate our capabilities and services to reach new markets. They are:
•
•
Minnetonka, Minnesota 55343
•
Care Delivery: Building a value-based system of care focused on better outcomes at lower costs; aligning
patient, provider and payer incentives; and seamlessly integrating primary, specialty, urgent, post-acute and
behavioral care across clinic, in-home and virtual settings.
Health Benefits: Growing our market-leading position in health benefits with a primary focus on affordable
coverage, a simpler experience and high-quality, supported care.
Health Technology: Developing and deploying new technology to help modernize and simplify the health
system.
Health Financial Services: Streamlining the health payments and banking experience to make it simpler,
faster and more convenient for providers, payers, and consumers alike.
Pharmacy Services: Integrating our medical, pharmacy, and behavioral capabilities to provide whole-person
care, support the discovery of new drugs and treatments, and offer new services.
Informed by our deep clinical expertise, these strategies present opportunities for innovation and collaboration at
Optum and UnitedHealthcare - and they support our expected long term 13% to 16% earnings per share growth rate.
Ongoing Board Development
As part of its ongoing oversight, the Board reviewed committee charters and made several changes in 2021. This
included assigning overall oversight for the company's ESG agenda to the Governance Committee and having other
committees oversee specific ESG elements within their purview. We also reconstituted our Public Policy Committee, now
renamed the Health and Clinical Practice Policies Committee, to better reflect its expanded oversight of clinical care
and practice matters and access to care, in addition to health policy matters.
In 2021, Michele Hooper became Lead Independent Director, John Noseworthy chair of the Governance Committee
and Valerie Montgomery Rice chair of the Health and Clinical Practice Policies Committee. In November, Paul Garcia,
retired chairman and CEO of Global Payments, joined the Board, bringing additional executive operating experience
and technological, payments and financial expertise as well as advancing the diversity of the Board.
•
Two of our directors, Richard Burke and Gail Wilensky, are not standing for re-election this year and will retire as of
the Annual Meeting following extraordinary and distinguished service to the company and shareholders. We are deeply
grateful to Mr. Burke and Dr. Wilensky for their leadership. We benefited greatly from their insights, experience, and
9900 Bren Road East
Demonstrate excellence in everything we do.
2022 Proxy Statement
UNITEDHEALTH GROUP
Our Mission
Helping people live healthier lives and helping make the
health system work better for everyone.
Our Culture
The people of UnitedHealth Group are aligned around
core values that inspire our behavior as individuals and as
an organization.
Integrity
Honor commitments.
UNITEDHEALTH GROUP
Never compromise ethics.
Walk in the shoes of
people we serve and those
with whom we work.
Relationships
Build trust through collaboration.
Innovation
Invent the future, learn from the past.
Performance
Compassion
2021 Non-Qualified Deferred Compensation.
guidance. The Board continues to assess its composition to ensure that it has the balance of skills and operating
experience needed to oversee long-term strategy and provide effective oversight.
As a mission-driven company, we are committed to using our reach and resolve to help ensure everyone has access
to high-quality, affordable care when and where it is needed. We see the intrinsic societal value of primary and preventive
care and ensuring physicians have the resources, tools and support they need to keep their patients healthy — helping
people live longer and more fulfilling lives while reducing cost in the system for everyone. To support our growing
focus on sustainability, the company created the role of Chief Sustainability Officer, responsible for helping develop a
comprehensive ESG strategy, including annual and long-term sustainability goals and a governance structure to achieve
The 2022 Annual Meeting will be held in virtual format only. If you plan to
participate in the Annual Meeting, please see the “Questions and Answers
About the Annual Meeting and Voting" section in the attached proxy
statement. Shareholders will be able to participate in, vote, view the list of
shareholders of record and submit questions from any location.
Proxy Voting
Important. Even if you plan to participate in the Annual Meeting, we still
encourage you to submit your proxy by internet, telephone or mail prior to the
meeting. If you later choose to revoke your proxy or change your vote, you
may do so by following the procedures under Question 12 of the "Questions
and Answers About the Annual Meeting and Voting" section in the attached
proxy statement.
June 6, 2022
11:00 a.m. Eastern Time
Our Annual Meeting can
be accessed virtually at:
www.virtualshareholder
meeting.com/UNH2022
Record Date
April 8, 2022
Access to the Annual Meeting
Only shareholders of record
of the Company's common
stock at the close of business
on the record date are entitled
to receive notice of, and to
vote at, the Annual Meeting
and any adjournments or
postponements of the
meeting.
The Notice of Internet
Availability of Proxy
Materials, Notice of Annual
Meeting of Shareholders,
Proxy Statement and Annual
Report are available at
www.unitedhealthgroup.com/
proxymaterials.
Table of Contents
Proxy Summary
1
2021 Option Exercises and Stock Vested
IMPORTANT NOTICE
REGARDING AVAILABILITY
OF PROXY MATERIALS FOR
THE ANNUAL MEETING OF
SHAREHOLDERS TO BE
HELD VIRTUALLY VIA THE
INTERNET ON JUNE 6, 2022:
Advancing our Efforts in Sustainability & ESG
Proposals 4 and 5: Consider the shareholder proposals set forth in the
attached proxy statement, if properly presented at the Annual Meeting.
Items of business may also include transacting any other business that
properly come before the Annual Meeting or any adjournments or
postponements of the meeting. Proxy materials are first being mailed to our
shareholders and made available at www.unitedhealthgroup.com/
proxymaterials on or about April 22, 2022. Website addresses included
throughout this proxy statement are for reference only. The information
contained on our website is not incorporated by reference into this proxy
statement.
Proposal 2: Conduct an advisory vote to approve the compensation
paid to the Company's named executive officers as disclosed in the
attached proxy statement (a "Say on Pay") vote.
them.
Shareholder Meeting details
As a shareholder of UnitedHealth Group, your continued feedback is important to our company. We cordially invite you
to participate in our 2022 Annual Meeting of Shareholders to be held on Monday, June 6, 2022, at 11:00 a.m. Eastern
Time. We will once again hold our meeting virtually.
Attached you will find a notice of meeting and proxy statement containing information about the items upon which you
will be asked to vote and the meeting itself, including different methods you can use to vote your proxy, including by
internet, telephone and mail. Every shareholder vote is important, and we encourage you to vote as promptly as
possible. Instructions on how to participate in the Annual Meeting are included in the proxy statement.
On behalf of UnitedHealth Group's Board and management team, we appreciate your continued trust and support.
Sincerely,
Andrew Witty
Management .
Proposal 3: Ratify the appointment of Deloitte & Touche LLP as the
independent registered public accounting firm for the Company for the
year ending December 31, 2022.
Chief Executive Officer
Stephen Hemsley
Chair of the Board
•
•
•
2022 Notice of Annual Meeting
Items of Business
Proposal 1: Elect the eight nominees set forth in the attached proxy
statement to the Company's Board of Directors.
Stephen Hemsley
80
•
48
AGAINST
Page 69
2022 Proxy Statement | Proxy Summary 3
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
4 Audit
Board of Directors
5
Annual
Other
6
Meeting
Information
PROPOSAL 1: Election of Directors
Page 66
AGAINST
5 Shareholder Proposal Regarding Political Contributions
Congruency Report
4 Shareholder Proposal Seeking Shareholder Ratification of
Termination Pay
Broadened our clawback policy to include material detrimental conduct as a trigger;
Enhanced our disclosure on the non-financial metrics included in the annual incentive plan; and
Enhanced our disclosure of the rationale for executive compensation targets.
The Board appreciates feedback provided by shareholders. Additional information on the feedback provided and
responsive actions taken may be found beginning on page 33 of this proxy statement.
COVID-19 Response
Throughout the COVID-19 pandemic, UnitedHealth Group has worked tirelessly to ensure the stability of the health
system and the health and safety of every individual we serve — our patients, members and customers as well as our
colleagues and their families. From providing billions of dollars in advance payments to providers and premium
credits and cost-sharing waivers to customers and consumers; to providing COVID-19 testing services to several
states; to providing more than $100 million in support to those affected by COVID-19, we were honored to bring the
combined resources of UnitedHealth Group, UnitedHealthcare and Optum and the compassion and commitment of our
340,000 team members in the fight against COVID-19. As the pandemic enters a new stage and society begins to
emerge from this crisis, UnitedHealth Group will continue working with our many partners across the health system
to use the lessons learned over the past two years to guide our business as we seek to ensure equitable access to
high-quality, affordable, and convenient care for everyone.
Voting Matters and Vote Recommendations
Items of Business
1 Election of Eight Directors
Our Board of Directors has nominated eight directors for election at the 2022 Annual Meeting to hold office until the
next annual meeting and the election of their successors. All of the nominees are currently directors and have agreed
to be named in this proxy statement and to serve if elected. After many years of exceptional service to the Board,
Mr. Burke and Dr. Wilensky are not standing for election this year.
2 Advisory Approval of Executive Compensation
Details
FOR
Page 4
FOR
Page 61
3 Ratification of Independent Registered Public Accounting Firm
FOR
Page 65
Board's Recommendation
In accordance with our Principles of Governance, each nominee has also tendered an irrevocable offer to resign as a
director, which will become effective if the director fails to receive a majority vote for election at the Annual Meeting and
our Board accepts the director's offer to resign. Please see the "Corporate Governance" section of this proxy statement
for additional details on this policy. All of the nominees are expected to attend the 2022 Annual Meeting. All then-current
directors attended the 2021 Annual Meeting. We ask for your voting support for each of the director nominees at our
2022 Annual Meeting.
2022 Director Nominees
The following is a brief biographical description of each director nominee. A matrix listing the skills and areas of
expertise held by each director and which, in part, led the Board to conclude each respective director should continue
to serve as a member of the Board, is included on page 9.
2007
F. William McNabb III
65
Former Chairman and CEO, The Vanguard Group, Inc.
2018
Valerie C. Montgomery Rice, M.D.
60
President and Dean, Morehouse School of Medicine
President and CEO, The Directors' Council
2017
70
Former CEO and President, Mayo Clinic
2019
Andrew Witty
57
CEO, UnitedHealth Group
2021
2022 Proxy Statement | Proposal 1: Election of Directors | 2022 Director Nominees 4
John H. Noseworthy, M.D.
Our Compensation and Human Resources Committee has confirmed that it has no intention of paying
severance in connection with the retirement of an executive officer going forward;
70
2000
The Board of Directors recommends you vote FOR the election of each of the nominees. Executed proxies will be
voted FOR the election of each nominee unless you specify otherwise.
Director
Director
Timothy P. Flynn
Paul R. Garcia
Stephen J. Hemsley
Age
Primary Occupation
Michele J. Hooper
Since
Former Chair, KPMG International
2017
69
Retired Chair and Chief Executive Officer, Global Payments
2021
69
69
Chair, UnitedHealth Group
65
We were pleased to hear shareholders indicate their strong support of the overall design of our executive
compensation program as well as the Company's overall pay-for-performance philosophy. Shareholders
overwhelmingly did not indicate a desire for broad changes to our program design;
•
•
Net earnings increased 12% year-over-year to $17.3 billion; operating earnings increased 7% year-over-year
to $24.0 billion; and cash flows from operations were $22.3 billion in 2021;
Fully diluted earnings per share increased 13% to $18.08 per share from $16.03 in 2020. Adjusted earnings
per share¹ increased 13% to $19.02 per share from $16.88 per share in 2020;
Return on equity at 25.2% in 2021 compared to 24.9% in 2020, reflecting the Company's strong operating
performance and efficient capital structure; and
The annual cash dividend rate increased to $5.80 per share, representing a 16% increase over the annual
cash dividend rate of $5.00 per share since the second quarter of 2020.
Awards and Recognition
1
•
⋅
Revenues increased 12% to $287.6 billion in 2021 from $257.1 billion in 2020;
•
•
•
•
•
•
UnitedHealth Group was the top ranked company in the insurance and managed care sector on Fortune's
2022 "World's Most Admired Companies" list. This is the twelfth consecutive year UnitedHealth Group has
ranked No. 1 overall in its sector. The Company ranked No. 1 on all nine key attributes of
reputation ― innovation, people management, use of corporate assets, social responsibility, quality of
management, financial soundness, long-term investment value, quality of products and services and global
competitiveness;
UnitedHealth Group has been named to both the Dow Jones Sustainability World and North America Indices
every year since 1999;
•
UnitedHealth Group received a score of 100 on the Human Rights Campaign Foundation's Corporate
Equality Index 2022, earning the distinction of one of the “Best Places to Work for LGBTQ Equality";
Total shareholder return in 2021 was 45%, and 107% from 2019-2021, reflecting continued strong fundamental
performance;
•
2021 Grants of Plan-Based Awards
51
Certain Relationships and Transactions
82
Outstanding Equity Awards at 2021 Fiscal Year-End . .
_
53
Appendix A Reconciliation of Non-GAAP Financial
•
Measure
Proxy Summary
Business Results
We are a diversified health care company with a mission to help people live healthier lives and help make the health
system work better for everyone. Our two distinct, yet complementary business platforms Optum and
UnitedHealthcare — are working to help build a modern, high-performing health system through improved access,
affordability, outcomes and experiences for the individuals and organizations we are privileged to serve. The breadth
and scope of our diversified company help to consistently improve health care quality, access and affordability. We
again performed strongly in 2021.
Financial
•
•
•
•
84
2021 Summary Compensation Table.
In 2021, and for the tenth consecutive year, The Civic 50, a Points of Light initiative that highlights companies
that improve the quality of life in the communities where they do business, ranked UnitedHealth Group one
of America's 50 most community-minded companies. In addition, UnitedHealth Group was named the leader
in the Healthcare Sector category for the fourth time overall;
Prospanica, an organization that has worked to empower Hispanic professionals for over 30 years, recognized
UnitedHealth Group with the 2021 Brillante Award for Corporate Excellence;
Shareholder Special Meeting and Written Consent
Rights
Shareholders hold the right to call a special meeting
and to act by written consent.
Prohibition on Short Sales, Hedging and Pledging
Transactions in Company Securities
Stock Ownership Guidelines
All of our executive officers and directors were in
compliance with our stock ownership guidelines as of
April 8, 2022.
Stock Retention Policy
We require executive officers to hold, for at least one
year, one-third of the net shares acquired upon vesting
or exercise of any equity award. Our directors are
required to hold all equity awards granted until
completion of service on the Board, or until they have
met our stock ownership requirements.
Clawback Policy
Our clawback policy entitles the Board to seek cash or
equity reimbursement from our senior executives if they
are directly involved in fraud or misconduct causing a
material restatement, material detrimental conduct or
violate non-compete, non-solicit or confidentiality
provisions.
We do not have a shareholder rights plan, commonly
referred to as a "poison pill."
Political Contributions Disclosure
See the "Corporate Governance” portion of this proxy statement for further information on our governance practices.
2022 Proxy Statement | Proxy Summary 2
Executive Compensation
Our executive compensation program uses a mix of base salary, annual cash incentives, equity awards and
broad-based benefits to attract and retain highly qualified executives and maintain a strong alignment between
executive pay and Company performance. Information regarding compensation paid to each of our named executive
officers in 2021 is described in the "Executive Compensation" section.
Addressing the 2021 Say on Pay Vote
Having received 72% support for our 2021 say on pay vote, we sought feedback from shareholders to better understand
what motivated their votes and what actions we could take to address topics relating to our executive compensation
program. The following summarizes key feedback received and responsive actions we have taken related to executive
compensation:
•
•
We publicly disclose our political contributions and
public advocacy efforts and the contributions of our
federal and state political action committees.
UnitedHealth Group was named to Forbes' list of 2021 World's Best Employers;
Absence of Rights Plan
ESG Oversight
The CDP (formerly Carbon Disclosure Project) named UnitedHealth Group to its Leadership Band in 2020
for efforts to reduce greenhouse gas emissions;
The Disability Equality IndexⓇ named UnitedHealth Group one of the best places to work for disability
inclusion in 2021;
UnitedHealth Group has been ranked No. 4 in the nation on the 2022 Military FriendlyⓇ Employers list; and
UnitedHealth Group is recognized as a "Trendsetter” in the 2021 Center for Political Accountability-Zicklin
Index of Political Accountability.
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for a
reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
2022 Proxy Statement | Proxy Summary 1
Corporate Governance
UnitedHealth Group is committed to meeting high standards of ethical behavior, corporate governance and business
conduct. Our company, our Board of Directors (the "Board") and our people are committed to the shared cultural
values of integrity, compassion, innovation, relationships and performance. This commitment has led us to implement
many governance best practices.
Board Structure and Composition
Our Board provides robust oversight over ESG topics,
as codified in our Board Committee charters.
Our directors are elected annually by a majority vote of
our shareholders. Each nominee tenders an irrevocable
offer to resign in case they do not receive a majority vote
from shareholders at the annual meeting. Our current
Board structure separates the positions of Chair of the
Board and CEO. We have a Lead Independent
Director, and six of our eight director nominees are
independent.
Our directors may serve on no more than three other
public company boards and our CEO may serve on no
more than one other public company board.
One Share, One Vote
The Company does not have a dual-class share
structure. Each share of Company common stock is
entitled to one vote.
Proxy Access
A shareholder or group of shareholders who have
owned at least 3% of our common stock for at least
three years, and who comply with specified procedural
and disclosure requirements, may include our proxy
materials shareholder-nominated director candidates
representing up to 20% of the Board.
Board Succession Planning, Tenure and Diversity
Since January 2017, seven new directors have been
appointed to our diverse and deeply experienced Board,
including the addition of Paul Garcia in November 2021.
Six of these new directors are standing for election
this year, five of whom are independent, advancing both
the skill and experience profile of the Board as well as
its diversity. Two directors are not standing for re-election.
Chief Executive Officer Succession Planning
Our succession plan, which is reviewed annually by our
Board, addresses both an unexpected loss of our
CEO and longer-term succession.
Public Company Board Service Limits
Our insider trading policy prohibits all directors,
executive officers and employees from engaging in
short sales and hedging transactions relating to our
common stock. Additionally, our insider trading policy
prohibits directors and executive officers from engaging
in pledging transactions.
UNITEDHEALTH GROUP
•
6
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Meeting
Board of
Directors
2022 Proxy Statement | Director Nomination Process
3-5 Years
4
2
0-2 Years
1
Over 20 Years
1
9
Information
Board Diversity
UnitedHealth Group embraces and encourages a culture of inclusion and diversity. Valuing diversity makes good
business sense and helps to ensure our future success, because the customers, clients, and consumers we serve are
as diverse as the thousands of communities where we live and work across all 50 states in the U.S. and 150 other
countries. While our Board does not establish specific goals with respect to diversity, the Board's diversity is a
consideration in the director nomination process and is assessed annually when the Board evaluates its overall
effectiveness. We are committed to actively seeking women and racially/ethnically diverse director candidates. The
Governance Committee maintains an active recruiting pipeline of potential director candidates based upon skills identified
in our skills matrix and includes diverse candidates.
Andrew
Witty (1)
2017
2018
Departures
2020
William C.
Ballard, Jr.
David S.
Wichmann
Richard T.
Burke
Timothy P.
Flynn
F. William
McNabb III
John H.
Noseworthy, M.D.
2021
2022
2017
2018
2019
Paul R.
Garcia
Andrew
Witty(1)
2021
Additions
Recent Changes in Board Membership
10-15 Years
Our Governance Committee strives to maintain a balance of tenure on the Board. Long-serving directors bring valuable
experience with our Company and familiarity with the successes and challenges the enterprise has faced over the years,
while newer directors contribute fresh perspectives. Upon the election of the director nominees presented in this proxy
statement, the average tenure of our Board will be 6.6 years following the 2022 annual meeting.
Tenure of Director Nominees
EX
$
Paul R. Garcia
888
888
$
Timothy P. Flynn
888
Capital
Markets
Clinical Policy/
Practice Regulatory
Health
Care
Direct
Social
Large Technology/
Consumer Media/
Complex Business
Markets Marketing Diversity Organizations Processes
Governance Finance Industry
Director
Health
Care
Corporate
with
Political/
Experience
The skills matrix provides a number of substantive areas of expertise the Board as a whole should represent. The
following table includes a list of these areas and the director nominees with expertise in each area.
080
Rodger A.
Lawson
ågå
$
A
DO DO
g
Information
8
☑
Π
888
ÅÅ
Andrew Witty
88
John H. Noseworthy, M.D.
Valerie C. Montgomery Rice, M.D.
ågå
$
F. William McNabb III
888
$
Michele J. Hooper
M
M
Optimal Mix of Skills and Expertise of Director Nominees
Glenn M.
Renwick
Robert J.
Darretta
.
•
Our Principles of Governance outline the specific duties of the Lead Independent Director, including:
Our Board's leadership structure also separates the positions of CEO and Chair of the Board. The Board believes this
separation is appropriate for the Company at this time because it allows for a division of responsibilities and a sharing of
ideas between individuals having different perspectives. The Board will continue to evaluate the Board structure on an
ongoing basis.
Our Board of Directors believes having independent Board leadership is an important component of our governance
structure. As such, our Bylaws require the Company to have either an independent Chair of the Board or a Lead
Independent Director. In October 2021, Michele Hooper was appointed Lead Independent Director, succeeding Richard
Burke.
Board Leadership Structure
Our shareholders may also nominate candidates for election to the Board at our Annual Meeting of Shareholders,
instead of including the director candidate in our proxy statement, by submitting timely written notice to the Secretary to
the Board in accordance with our Bylaws. The notice must include the information required by our Bylaws, which are
available at www.unitedhealthgroup.com/who-we-are/corporate-governance. For the 2023 Annual Meeting, this notice
must be received at our principal executive offices, directed to the Secretary to the Board of Directors, no earlier than
February 6, 2023 and no later than March 8, 2023.
Shareholder Nominations of Director Candidates at an Annual Meeting
serving as the principal liaison between the independent directors and the Chair of the Board;
Information
6
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
Meeting
presiding at all meetings of the Board at which the Chair of the Board is not present and at executive sessions
of the Board's independent directors;
calling meetings of the independent directors as appropriate and, in coordination with the Chair of the Board,
all members of the Board;
facilitating discussion and open dialogue among the independent directors during Board meetings, executive
sessions and outside of Board meetings;
Meeting
6
Other
Annual
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Board Leadership Structure 12
meeting periodically with individual independent directors to discuss Board and committee performance,
effectiveness and composition;
communicating to the Chair of the Board any decisions reached, suggestions, views or concerns expressed by
Independent Directors in executive sessions or outside of Board meetings;
assisting the Chair of the Governance Committee in reviewing and reporting on the results of the Board and
committee performance self-evaluations;
coordinating the preparation of agendas and materials for executive sessions of the Board's Independent
Directors, if any;
meeting individually with the Chair of the Board after each regularly scheduled Board meeting;
working with the Chair of the Board on the appropriateness (including quality and quantity) and timeliness of
information provided to the Board;
working with the Chair of the Board to approve the agendas and meeting schedules for Board meetings;
serving as an ex officio member of each Board committee of which the Lead Independent Director is not a
member and working with the Board committee chairs on the performance of their designated roles and
responsibilities;
2
Board of
Directors
2022 Proxy Statement | Director Nomination Process 11
Shareholder Director Candidates for Inclusion in our Proxy Statement (Proxy Access)
Our Bylaws provide a shareholder or group of shareholders (of up to 20) who have owned at least 3% of our common
stock for at least three years the ability to include in our proxy statement shareholder-nominated director candidates for up
to 20% of the Board. To be eligible to use this right, the shareholder(s) and the candidate(s) must satisfy the
requirements specified in our Bylaws. Our Bylaws are available at www.unitedhealthgroup.com/who-we-are/corporate-
governance. For the 2023 Annual Meeting, director nominations submitted under these Bylaw provisions must be received
at our principal executive offices, directed to the Secretary to the Board of Directors, no earlier than November 23,
2022 and no later than December 23, 2022.
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Director Nomination Process 10
For this year's election, the Board has nominated eight individuals. All are incumbent directors who collectively bring
tremendous diversity to the Board in terms of professional experience, skills and background, as well as diversity of
nationality, race and gender. Each nominee is a strategic thinker and has varying, specialized experience in the areas
relevant to the Company and its businesses. Moreover, their collective experience covers a wide range of industries,
including health care and clinical practice, insurance, consumer products, technology, capital markets and financial
services, and roles in academia, corporate governance, government and intergovernmental organizations. The eight
director nominees range in age from 57 to 70; two of the eight director nominees are women; two are African American;
one is Hispanic; one is a citizen of Canada and one is a citizen of the United Kingdom.
Our current slate of director candidates reflects the retirement of two highly-successful and longstanding directors and
the addition of a new diverse director in 2021. In October 2021, Michele Hooper was appointed Lead Independent Director.
These changes to our Board composition have reduced our average and individual director tenure, and reflect the
Board's ongoing succession planning.
(1) Andrew Witty first joined the Board as an independent director in August 2017, stepped down in March 2018 to
serve as CEO of Optum and rejoined the Board in connection with his appointment as the Company's CEO in
February 2021.
are not
Standing for
Re-Election at
the Annual
Meeting
Mr. Burke and
Dr. Wilensky
Gail R.
Wilensky,
Ph.D.
David S.
Wichmann
Witty (1)
Andrew
Valerie C.
Montgomery
Rice, M.D.
6
Kenneth I.
Shine, M.D.
Meeting
Search Process for New Directors
The Board of Directors formed the Nominating Advisory Committee in 2006 to provide the Governance Committee with
additional input from shareholders and others regarding desirable characteristics of director candidates and the
composition of the Board of Directors. The key features of the skills matrix are also discussed with members of our
Nominating Advisory Committee and their feedback is considered by the Governance Committee when it updates the
skills matrix. The Governance Committee considers, but is not bound by, input provided by the Nominating Advisory
Committee. The Nominating Advisory Committee includes four individuals affiliated with long-term shareholders of the
Company and one individual who is a member of the medical community. Members of the Nominating Advisory
Committee do not receive any compensation from the Company for serving on the Nominating Advisory Committee.
The Nominating Advisory Committee met once in 2021. A description of the Nominating Advisory Committee, including
a description of how the members of the Nominating Advisory Committee are nominated and selected, can be found
on our website at www.unitedhealthgroup.com/who-we-are/corporate-governance.
Nominating Advisory Committee
since 2017 are standing
for election in 2022
6 directors who have
joined the Board
Nominate Director
to Our Board
Review
by Full
Board
Recommend
Selected Candidate
for
Appointment
• Meet with directors
• Review independence
and potential conflicts
• Consider skills matrix
• Screen qualifications
• Consider diversity
In-Depth Review by the
Committee
Directors
Shareholders
Firm
Independent Search
Source Candidate
Pool from
Prior to the appointment of each of the new independent directors beginning in 2017, the Governance Committee
considered a wide slate of potential candidates, including qualified women and racially/ethnically diverse candidates.
Each eventual nominee was selected due to his or her overall skills and experience.
The Governance Committee screens and recommends candidates for nomination by the full Board. We have for
several years maintained an active "evergreen" director candidate pipeline which reflects our continuing commitment to
diversity in life, cultural and business experience among director nominees. The Governance Committee will also consider
recommendations submitted by shareholders for director candidates. Recommendations should be directed to the
Secretary to the Board of Directors. None of the Company's shareholders recommended candidates for the Board of
Directors in connection with the 2022 Annual Meeting.
Information
Information
Stephen J. Hemsley
Other
Mr. Flynn was Chairman of KPMG International (“KPMG"), a global
professional services organization that provides audit, tax and advisory
services, from 2007 until his retirement in October 2011. From 2005 until
2010, he served as Chairman and from 2005 to 2008 as CEO of KPMG LLP
in the U.S., the largest individual member firm of KPMG. Prior to serving as
Chairman and CEO of KPMG LLP, Mr. Flynn was Vice Chairman, Audit and
Risk Advisory Services, with operating responsibility for Audit, Risk Advisory
and Financial Advisory Services practices at KPMG LLP. He previously
served as a trustee of the Financial Accounting Standards Board, a member
of the World Economic Forum's International Business Council, and as a
director of Alcoa and the International Integrated Reporting Council.
Timothy P. Flynn
Other
Information
6
Annual
Meeting
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
where appropriate, supporting the Company in interactions with shareholders and regulators in consultation
with the Chief Executive Officer and Chair of the Board; and
interviewing, along with the Chair of the Governance Committee, all Board candidates and making director
candidate recommendations to the Governance Committee.
Director Independence
Our Board of Directors has adopted the Company's Standards for Director Independence, which are available at
www.unitedhealthgroup.com/who-we-are/corporate-governance. The Standards for Director Independence requirements
exceed the independence standards set by the NYSE.
Our Board of Directors has determined director nominees Timothy P. Flynn, Paul R. Garcia, Michele J. Hooper, F.
William McNabb III, Valerie C. Montgomery Rice, M.D., and John H. Noseworthy, M.D., are each “independent” under
the NYSE rules and the Company's Standards for Director Independence, and have no material relationships with the
Company that would prevent the directors from being considered independent.
In accordance with the Company's Standards for Director Independence, the Board of Directors considered, among
other factors, the business relationships between the Company and our directors and nominees, their immediate family
members (as defined by the NYSE) and their affiliated companies. The Board of Directors considered whether any
director or any nominee was a director, partner, significant shareholder or executive officer of an organization that has a
relationship with the Company, and also considered charitable contributions the Company or its affiliates made to
organizations with which such directors or nominees are or have been associated. In particular, the Board of Directors
evaluated the following relationships and determined such relationships were in the normal course of business and did
not impair the directors' ability to exercise independent judgment:
•
Dr. Montgomery Rice is President and Chief Executive Officer of Morehouse School of Medicine. In 2021,
Morehouse School of Medicine paid the Company approximately $212,700 for claims software, equipment,
maintenance licenses and subscriptions. The Company paid Morehouse School of Medicine approximately
$642,900 for services as a network care provider and approximately $595,000 for health care related studies.
Total amounts paid by the Company to Morehouse School of Medicine during 2021 were substantially less than
1% of Morehouse School of Medicine's total revenues for 2021. Dr. Montgomery Rice was not directly involved
in these relationships.
Director since: 2017
Mr. Flynn's brother is President and Chief Executive Officer of Sightpath Medical. Sightpath Medical paid the
Company approximately $1.5 million for premium payments in 2021. Total amounts paid by Sightpath Medical to
the Company during 2021 were less than 2% of Sightpath Medical's total revenues for 2021. Mr. Flynn was
not directly involved in this relationship.
Age: 65
Compensation and Human
Resources (Chair)
Governance
2022 Proxy Statement | 2022 Director Nominees
Current Outside Public
Directorships:
None
Health and Clinical Practice
Policies
Committees:
Age: 69
Director since: 2000
Repay Holdings Corporation
Deluxe Corporation
Current Outside Public
Directorships:
Audit and Finance
Committees:
Age: 69
Director since: 2021
Mr. Hemsley is non-executive Chair of the Board of UnitedHealth Group and
has served in this capacity since November 2019. Mr. Hemsley previously
served as Executive Chair of the Board from September 2017 to
November 2019, Chief Executive Officer from November 2006 to
August 2017, President from May 1999 to November 2014, and Chief
Operating Officer from November 1998 to November 2006. He joined the
Company in 1997 and has been a member of the Board of Directors since
2000. Mr. Hemsley currently serves as a director of Cargill, Inc.
Stephen J. Hemsley
Mr. Garcia is the retired Chairman and Chief Executive Officer of Global
Payments Inc., a publicly traded, leading provider of electronic payment
processing services, and served in that capacity from 1999 to 2014. Prior to
his role at Global Payments, Mr. Garcia served as President & CEO of
NaBanco, an electronic credit card processor, from 1982 to 1995. Mr. Garcia
currently serves as a director of Deluxe Corporation and Repay Holdings
Corporation. He has also served on the board of directors of Global
Payments Inc. and MasterCard International and, in the past five years,
served as a director of The Dun & Bradstreet Corporation, West Corporation,
Truist Financial Corporation and Payment Alliance International, Inc.
Paul R. Garcia
JPMorgan Chase & Co.
Walmart Inc.
6
Committees:
5
Board Committees
2022 Proxy Statement | Director Independence | Board Committees 13
Other
6
Information
Compensation
and Human
Resources
Health and
Clinical Practice
Governance
Policies
Å
8
8
Ms. Hooper is our Lead Independent Director and an ex-officio member of the Compensation and Human Resources
Committee, Governance Committee and Health and Clinical Practice Policies Committee. As an ex-officio member,
Ms. Hooper has a standing invitation to attend each committee meeting, but does not count for quorum purposes
or vote on committee matters.
Audit and Finance Committee
Committee Members:
F. William McNabb III (Chair), Michele J. Hooper and Paul R. Garcia
Primary Responsibilities:
Meetings Held in 2021: 10
The Audit and Finance Committee has responsibility for the selection and retention of the independent registered
public accounting firm and oversees financial reporting, internal controls and public disclosure. The Audit and
Finance Committee reviews and assesses the effectiveness of the Company's policies, procedures and resource
commitments in the areas of compliance, ethics, privacy and cyber security. The Audit and Finance Committee also
oversees management's processes to identify and quantify material risks facing the Company, management's
investing and financing policies and practices, ESG investment criteria, and assurance of ESG disclosures. The
Audit and Finance Committee establishes procedures concerning the receipt, retention and treatment of
complaints regarding accounting, internal accounting controls and auditing matters. The Audit and Finance
Committee operates as a direct line of communication between the Board of Directors and our independent
registered public accounting firm, as well as our internal audit, compliance and legal personnel.
Independence:
Each of the Audit and Finance Committee members is an independent director under the NYSE listing standards
and the SEC rules. The Board of Directors has determined Mr. McNabb, Ms. Hooper and Mr. Garcia are "audit
committee financial experts" as defined by the SEC rules.
2022 Proxy Statement | Board Committees
Annual
Meeting
The Board of Directors has established four standing committees as listed in the table below. These committees help
the Board fulfill its responsibilities and assist the Board in making informed decisions. Each committee operates under a
written charter, and evaluates its charter and conducts a committee performance evaluation annually.
E
Financial Expert
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
4 Audit
The following table identifies the members of each committee as of April 8, 2022:
*
Director
Timothy P. Flynn
Paul R. Garcia
Stephen J. Hemsley
Michele J. Hooper
F. William McNabb III
Valerie C. Montgomery Rice, M.D.
John H. Noseworthy, M.D.
Andrew Witty
Chair
Å Member
Audit and
Finance
Board of
Directors
Current Outside Public
Directorships:
Corporate
Governance
None
Current Outside Public
Directorships:
Age: 57
Committees:
None
Director since: 2021
Mr. Witty is Chief Executive Officer of UnitedHealth Group and has served in
that capacity since February 2021. He was President of UnitedHealth Group
from November 2019 to February 2021, Chief Executive Officer of Optum
from July 2018 to April 2021, and a UnitedHealth Group director from
August 2017 to March 2018. Prior to joining UnitedHealth Group, he was
Chief Executive Officer and a board member of GlaxoSmithKline, a global
pharmaceutical company, from 2008 to April 2017.
Andrew Witty
Other
Information
6
2
Annual
Meeting
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | 2022 Director Nominees 7
Current Outside Public
Directorships:
None
Resources Health and Clinical
Practice Policies Governance
(Chair)
4 Audit
Criteria for Nomination to the Board
Our Board's Governance Committee assesses the optimal skills, experiences, and attributes our Board should represent
to align its individual and group strengths with our Company's long-term strategic plan and the interests of our
shareholders and stakeholders.
The skills matrix has two sections ― a list of core criteria every member of the Board should meet and a list of skills
and attributes to be represented collectively by the Board. The core director criteria are:
Annual
Meeting
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
8
2022 Proxy Statement | Director Nomination Process
Each of our independent director nominees has satisfied all the core director criteria set forth in the skills matrix.
All of the director nominees were elected by our shareholders at the 2021 Annual Meeting except Mr. Garcia, who was
appointed unanimously by the Board in November 2021. With respect to that appointment, the Governance Committee
considered a number of potential candidates and Mr. Garcia emerged as the finalist due to his overall skill set and
experience. Mr. Garcia was initially recommended as a potential director candidate by an external consulting firm.
Ability to work collegially and collaboratively with other directors and management.
Understanding of and experience with complex public companies or like organizations; and
Ability to oversee risks within the individual director's particular skill set;
Standing and reputation in the individual's field;
•
High integrity and ethical standards;
•
Service on no more than three other public company boards; except our Chief Executive Officer may serve on
no more than one other public company board;
Independence under the Company's Standards for Director Independence and New York Stock Exchange
("NYSE") listing requirements, subject to waiver by the Governance Committee;
Compensation and Human
Committees:
Director Nomination Process
Director since: 2019
Committees:
Age: 65
Director since: 2018
United Airlines Holdings, Inc.
Current Outside Public
Directorships:
Audit and Finance
Committees:
Age: 70
Director since: 2007
Mr. McNabb served as Chairman of The Vanguard Group, Inc. from 2010
until his retirement in 2018 and served as CEO from 2008 to 2017. He joined
Vanguard in 1986. In 2010, he became Chairman of the Board of Directors
and the Board of Trustees of the Vanguard group of investment companies.
Earlier in his career, Mr. McNabb led each of Vanguard's client facing
business divisions. Mr. McNabb is active in the investment management
industry and served as the Chairman of the Investment Company Institute's
Board of Governors from 2013 to 2016. Mr. McNabb is Chairman of the
Board of the Zoological Society of Philadelphia and serves on the Wharton
Leadership Advisory Board, the Dartmouth Athletic Advisory Board and the
Columbia Law School's Millstein Center Advisory Board. Mr. McNabb is a
board member of CECP: The CEO Force for Good.
F. William McNabb III
Ms. Hooper is Lead Independent Director of the Board of Directors of
UnitedHealth Group and has served in this capacity since October 2021.
Ms. Hooper is also President and CEO of The Directors' Council, a private
company she co-founded in 2003 that works with corporate boards to
increase their independence, effectiveness and diversity. She was President
and CEO of Voyager Expanded Learning, a developer and provider of
learning programs and teacher training for public schools, from 1999 until
2000. She previously served as President and CEO of Stadtlander Drug
Company, Inc., a provider of disease-specific pharmaceutical care, from 1998
until Stadtlander was acquired in 1999. Ms. Hooper is a nationally recognized
corporate governance expert. In the past five years, Ms. Hooper also served
as a director of PPG Industries, Inc.
Michele J. Hooper
Other
Information
6
Annual
Meeting
4 Audit
Executive
Compensation
Age: 70
Audit and Finance (Chair)
Governance
Current Outside Public
Directorships:
3
2022 Proxy Statement | 2022 Director Nominees 6
International Business
Machines Corporation
23andMe Holding Co.
Current Outside Public
Directorships:
Health and Clinical Practice
Policies (Chair)
Compensation and Human
Resources
Committees:
Age: 60
Director since: 2017
Dr. Noseworthy is the former Chief Executive Officer and President of Mayo
Clinic, a world renowned health care organization. He retired at the end of
2018 after a 28 year career at Mayo Clinic, recognized by U.S. News and
World Report as best in its honor roll of America's top providers of care for
patients with serious and complex problems. Mayo Clinic cares for patients in
every U.S. state and 143 countries worldwide. Dr. Noseworthy joined Mayo
Clinic in 1990 and served in various capacities, including as Chairman of
Mayo Clinic's internal Board of Governors, member of the Board of Trustees,
Professor of Neurology at Mayo Clinic College of Medicine & Science, Chair
of Mayo's Department of Neurology, medical director of the Department of
Development and Vice Chair of the Mayo Clinic Rochester Executive Board.
Dr. Noseworthy also served as editor-in-chief of Neurology, the official journal
of the American Academy of Neurology, from 2007 to 2009. Dr. Noseworthy
was a Health Governor of the World Economic Forum from 2012 to 2018
and, in the past five years, also served as a director of Merck & Co.
John H. Noseworthy, M.D.
Dr. Montgomery Rice is President and Chief Executive Officer of the
Morehouse School of Medicine, a medical school in Atlanta, Georgia. She
has served as President since 2014 and as Chief Executive Officer since
2021. She also served as Dean of the Morehouse School of Medicine from
2011 to 2021 and as Executive Vice President from 2011 to 2014.
Morehouse School of Medicine is among the nation's leading educators of
primary care physicians and was recently recognized as the top institution
among U.S. medical schools for its social mission. Prior to joining Morehouse
School of Medicine, she served as Dean of the School of Medicine and
Senior Vice President of Health Affairs at Meharry Medical College from
March 2006 to June 2009, and as director of the Center for Women's Health
Research, one of the nation's first research centers devoted to studying
diseases that disproportionately impact women of color, from 2005 to 2011.
Dr. Montgomery Rice also served previously as a Council Member of the
National Institute of Health and National Center for Advancing Translational
Science, and previously on the National Institute of Health's Minority Health
and Health Disparities and Office of Research on Women's Health advisory
councils, and the Association of American Medical Colleges Council of
Deans administrative board. Dr. Montgomery Rice is a member of the
National Academy of Medicine and a renowned infertility specialist and
women's health researcher.
14
Other
Information
Valerie C. Montgomery Rice, M.D.
2
Corporate
Governance
3
Board of
Directors
4 Audit
Annual
Meeting
6
Executive
Compensation
Annual
Information
Meeting
6
5
4 Audit
Other
Executive
Compensation
2022 Proxy Statement | Board Meetings and Annual Meeting Attendance | Board and Committee Evaluations 16
Corporate
Governance
2
Board of
Directors
As part of director feedback received through the annual evaluation process, the Board continues to place a focus on
Board and executive leadership succession and development, engaging with management on achievement of the
Company's long-term strategies and direction, and Board and executive leadership and succession and sustainability,
diversity, equity and inclusion topics.
appropriate. The Board
monitors proposed actions
to respond to evaluations
to assure that agreed
upon improvements are
implemented and
effective.
Respond to Director Input
The Board and each
Committee consider the
results and ways in which
the Board and Committee
processes and
effectiveness may be
enhanced, and changes to
the Board's and each
Committee's practices
and agenda topics are
implemented as
The feedback received
from the interviews is
compiled anonymously
and reviewed and
discussed by the Board
and each Committee in
executive sessions at their
meetings held in the first
quarter of 2022 and, as
appropriate, addressed
with management.
Review Feedback
interviewed on a range of
topics including Board and
Committee performance,
Board and Committee
operations, structure and
performance; oversight of
business strategy, results
and operations; succession
planning and talent
development; and agenda
topics for future meetings.
3
Communication with the Board of Directors
We compensate our non-employee directors fairly for work required for a company of our size, complexity and scope
and to align their interests with the long-term interests of our shareholders. Director compensation reflects our desire to
attract, retain and benefit from the expertise of highly qualified people with backgrounds and experience relevant to
our business and those we serve. The Compensation and Human Resources Committee annually reviews the
compensation of our non-employee directors and makes recommendations to the Board of Directors. In August 2021,
the Compensation and Human Resources Committee, with the advice of its independent compensation consultant,
undertook a review of the structure, philosophy and overall mix of the director compensation program as compared
to the Company's compensation peer group and also the four large publicly traded managed care and health care and
services companies included in the peer group. Following this review, the Compensation and Human Resources Committee
recommended no changes to director compensation.
Appropriate matters to raise in communications to the Board include Board composition; Board and CEO succession
planning process; executive compensation; uses of capital; and general Board oversight, including sustainability, human
capital management, corporate governance, accounting, internal controls, auditing and other related matters.
Annual Chair of the Board Cash Retainer
Annual Cash Retainer
Compensation Element
The following table highlights the material elements of our director compensation program:
Other
Information
Meeting
6
5
The Board of Directors values the input and insights of our shareholders and other interested parties and believes
effective communication strengthens the Board's role as an active, informed and engaged fiduciary. The Board has
adopted a Board of Directors Communication Policy to facilitate communication between shareholders and other
interested parties and the Board. Under this policy, the Board has designated the Company's Secretary to the Board of
Directors as its agent to receive and review communications. The Secretary to the Board will not forward to the directors
communications received which are of a personal nature or not related to the duties and responsibilities of the Board,
including, without limitation, mass mailings, business solicitations, routine customer service complaints, new product
or service suggestions and opinion surveys.
4 Audit
Conduct Evaluation
Each director was
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Communication with the Board of Directors | Director Compensation 17
Director Compensation
The policy, including information on how to contact the Board of Directors, may be found in the corporate governance
section of our website, www.unitedhealthgroup.com/who-we-are/corporate-governance.
Annual
Executive
Compensation
supplemented by facilitated
interviews every third year.
The 2021 Board and
Committee evaluations were
conducted by facilitated
interviews.
Evaluation Format
23,577
5,889
3,026
3,539
4,375
33,500
3,427
Deferred
Stock Units
26,512
6,232
Gail R. Wilensky, Ph.D.
Glenn M. Renwick
John H. Noseworthy, M.D.
Valerie C. Montgomery Rice, M.D.
F. William McNabb III
Michele J. Hooper
Stephen J. Hemsley
Paul R. Garcia
Timothy P. Flynn
Richard T. Burke
Name
As of December 31, 2021, our non-employee directors held outstanding DSU awards as follows:
Includes the value of DSUS issued upon conversion of annual cash retainers as described in footnote 2 above
of $145,608 for Mr. Flynn, $345,532 for Mr. Hemsley, $133,881 for Mr. McNabb, $86,239 for Dr. Montgomery
Rice, $125,985 for Dr. Noseworthy, and $37,746 for Mr. Renwick.
(4) In 2021, the Company matched charitable contributions made by the following directors to charitable organizations
selected by the directors pursuant to the Company's Board Matching Program: $15,000 for Messrs. Burke, Flynn,
Garcia and Hemsley, Ms. Hooper and Drs. Montgomery Rice and Wilensky; and $10,000 for Dr. Noseworthy. In 2021,
the Company also paid $13,254, $8,168, $8,928, $4,494, $8,987 and $521 in health care premiums on behalf of
Messrs. Burke, Flynn, Hemsley, Renwick and McNabb and Ms. Hooper, respectively. This amount also includes
$18,100 for use of corporate aircraft by Dr. Montgomery Rice pursuant to an exception to our corporate aircraft policy.
*
2022 Proxy Statement | 2021 Director Compensation Table 21
2
Corporate Environmental Policy
•
Political Contributions Policy
Board of Directors Communication Policy
•
• Related-Person Transactions Approval Policy
Code of Conduct: Our Principles of Ethics & Integrity
UnitedHealth Group is committed to high standards of corporate governance and ethical business conduct. Important
documents reflecting this commitment are listed below.
Overview
Corporate Governance
Information
Meeting
6
Other
Annual
5
4 Audit
Executive
Compensation
3
Corporate
Governance
Directors
Board of
51,386
51,826
51,390
87,730
87,725
51,386
51,421
51,390
51,377
($)
($)
($)
October 1, 2021
July 1, 2021
April 1, 2021
January 4, 2021
($)
Gail R. Wilensky, Ph.D.
Glenn M. Renwick*
John H. Noseworthy, M.D.*
Valerie C. Montgomery Rice, M.D.*
F. William McNabb III*
Michele J. Hooper
Stephen J. Hemsley*
Timothy P. Flynn*
87,861
87,866
137,703
137,651
51,377
66,402
88,831
88,773
82,767
82,598
82,591
82,832
74,922
74,905
Corporate Governance Documents
74,882
89,043
84,217
82,591
82,832
51,386
51,421
51,390
51,377
137,683
137,663
67,104
•
Certificate of Incorporation
•
2022 Proxy Statement | Overview
Compensation and Human Resources Committee annually reviews
and approves incentive program design, goals and objectives for
alignment with compensation and business strategies
Executive Compensation program received more than 95%
shareholder support from 2011 through 2020; responsive actions
taken to address topics identified by shareholders in connection with
2021 say on pay result of 72% support
Annual Review of Compensation
Program
Align Management Incentive Structures with Long-Term Strategy
Say on Pay Results
Full disclosure of corporate governance policies and practices
Board oversight over ESG strategy as codified in Board Committee
charters; Company appointed Chief Sustainability Officer
To avoid potential conflicts of interest, a director is required to seek
approval of the Governance Committee if the director or his/her
immediately family member proposes to engage in a transaction or
activity in the health care field
Frequent executive sessions of independent directors held
Independent directors may serve on no more than three other public
company boards; and our CEO may serve on no more than one other
public company board
Directors attended 99% of combined total Board and applicable
committee meetings in 2021 and all then-current directors attended
the 2021 Annual Meeting
Active Board succession plan; seven Board members added since
2017, six of whom are standing for election
Annual Board and Committee evaluation conducted by independent
consultant and led by the Chair of Governance Committee
3/8 of our director nominees are ethnically diverse, 1/4 are women and
1/4 are African American
75% of our Board members are independent
ESG Oversight
Disclosure
Executive Sessions
Conflicts of Interest
Board Service Limits
Attendance
Board Succession Planning
Board and Committee Evaluations
23
23
Board of
Directors
2
2022 Proxy Statement | Code of Conduct | Compliance and Ethics 24
We strongly and broadly encourage employees to raise ethics and compliance concerns, including concerns about
accounting, internal controls or auditing matters. We offer several channels for employees and third parties to report
ethics and compliance concerns or incidents, including by telephone or online, and individuals may choose to remain
anonymous in jurisdictions where anonymous reporting is permissible. We prohibit retaliatory action against any individual
who in good faith raises concerns or questions regarding ethics and compliance matters or reports suspected violations.
We train all employees annually and periodically advise them regarding the means by which they may report possible
ethics or compliance issues and their affirmative responsibility to report any possible issues.
Compliance and Ethics
Any waiver of the Code for the Company's executive officers, senior financial officers or directors may be made only by
the Board or a committee of the Board. We will publish any amendments to the Code and waivers of the Code for an
executive officer or director on our website. Our entire global workforce, including independent contractors and part-
time employees, receives periodic training on our Code and other ethical standards.
Our Board adopts and oversees enforcement of the Company's Global Code of Conduct (Code). Foundational to the
Company's compliance and ethics program and subject to periodic ethical risk assessments, our Code defines
responsibilities, accountabilities and reporting lines related to business conduct, conflicts of interest, public disclosure
practices, legal compliance obligations, and other areas. The Code also describes misconduct reporting and whistleblower
legal protections, reporting confidentiality and helpline contact information, violation actions (including termination and
possible legal action), non-retaliation principles, fair dealing, and the protection and proper use of personal information
and Company assets. The Code is available on the Company's website.
Code of Conduct: Our Principles of Ethics & Integrity
Strong and effective governance practices are critical to UnitedHealth Group's long-term value creation. The Board has
enhanced governance policies over time to align with best practices, drive sustained shareholder value and serve the
interests of shareholders. Our corporate governance practices align with the corporate governance principles developed
by the Investor Stewardship Group (ISG), which includes some of the largest institutional investors and global asset
managers and advocates for best practices in corporate governance.
Clawback policy entitles the Board to seek cash or equity
reimbursement from our senior executives if they are directly involved
in fraud or misconduct causing a material restatement, material
detrimental conduct or violate non-compete, non-solicit or
confidentiality provisions.
A portion of our annual incentive award is dependent upon the
achievement of goals of customer, provider and employee satisfaction,
which are viewed to be important to achieving long-term success for
the Company
Annual and long-term incentive programs are designed to reward
financial and operational performance that furthers short- and
long-term strategic objectives
Diversity
Clawback Policy
Align Management Incentive Structures with Long-Term Strategy
Incentive Programs Linked to Strategy
Information
Meeting
6
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
Non-Financial Performance Goals
Richard T. Burke
Independence
Proxy discloses why Board believes current leadership structure is
appropriate
Shareholder Voting Rights in Proportion to Economic Interests
One Share, One Vote
No shareholder rights plan (commonly referred to as a "poison pill")
Majority voting in uncontested director elections; directors tender an
irrevocable offer to resign if they do not receive majority vote and the
Board will accept such offer to resign absent a compelling reason
Shareholders have the rights to call a special meeting and act by
written consent
All directors stand for election by majority vote annually
Proxy access with market terms
No Poison Pill
Special Meeting / Written Consent
Rights
Majority Voting Standard/Irrevocable
Offer to Resign
Proxy Access
Annual Election
Board Accountability to Shareholders
Commitment to Effective Corporate Governance
You can access these documents at www.unitedhealthgroup.com/who-we-are/corporate-governance to learn more
about our corporate governance practices. We will also provide copies of these documents without charge upon written
request to the Company's Secretary to the Board of Directors.
Director Conflict of Interest Policy
•
Standards for Director Independence
•
Board of Directors Committee Charters
•
Principles of Governance
•
Bylaws
No Supermajority Requirements
No dual class structure; each share of common stock is entitled to one
vote
No supermajority shareholder approval requirements
Board Responsiveness to Shareholders / Proactive Understanding of Shareholder Perspectives
Shareholder Engagement Process
Independent Committee chairs with clear charters and oversight
mandates
Board considers appropriateness of its leadership structure at least
annually
Lead Independent Director with clearly defined and robust duties
Disclosure
Committee Membership
Annual Review
Lead Independent Director
Board Leadership
Strong Independent, Board Leadership Structure
Separate CEO and Chair of the Board
Adopt Structures and Practices Enhancing Board Effectiveness
Information
Other
Annual
Meeting
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Overview 22
Management and Board members met with key shareholders in 2021
Shareholder engagement topics included Board composition,
leadership and refreshment, executive compensation program,
diversity and inclusion, sustainability, climate change, cyber security,
human capital and social topics
6
Name
The aggregate grant date fair values of the stock awards granted in 2021, computed in accordance with FASB
ASC Topic 718 based on the closing price of our common stock on the grant date, are as follows:
Information
2
Board of
Directors
2022 Proxy Statement | Director Compensation 18
If a director elects to convert his or her cash compensation into common stock or DSUs, such conversion grants are
made on the day the eligible cash compensation becomes payable to the director. The director receives the number of
shares of common stock or DSUs, as applicable, equal to the cash compensation foregone, divided by the closing price
of our common stock on the date of grant, rounded up to the nearest share. The DSUs immediately vest upon grant.
A director may only elect to receive common stock if he or she has met the stock ownership guidelines.
The DSUS immediately vest upon grant and must be retained until completion of the director's service on the Board.
Upon completion of service, the DSUs convert into an equal number of shares of the Company's common stock. A
director may defer receipt of the shares for up to ten years after completion of service pursuant to the Director Deferral
Plan. Non-employee directors who have met their stock ownership requirement may elect to receive common stock in
lieu of DSUS and/or in-service distributions on pre-selected dates.
Non-employee directors receive annual grants of DSUs under the 2020 Stock Incentive Plan having an aggregate fair
value of $205,000. The grants are issued quarterly in arrears on the first business day following the end of each fiscal
quarter and prorated if the director did not serve the entire quarter. The number of DSUs granted is determined by dividing
$51,250 (the quarterly value of the annual equity award) by the closing price of our common stock on the grant date,
rounded up to the nearest share. The grants are in consideration of general service and responsibilities and required
meeting preparation and serve to align the interests of our directors with those of our shareholders.
Equity-Based Compensation
Cash retainers are payable on a quarterly basis in arrears on the first business day following the end of each fiscal
quarter and are subject to pro rata adjustment if the director did not serve the entire quarter. Directors may elect to receive
deferred stock units ("DSUS") or common stock (if the director has met the stock ownership guidelines) in lieu of their
cash compensation or may defer receipt of their cash compensation to a later date pursuant to the Directors' Compensation
Deferral Plan ("Director Deferral Plan"). The cash retainers are in consideration of general service and responsibilities
and required meeting preparation.
Cash Compensation
205,000 aggregate fair value in deferred stock units
At the director's election, cash compensation may be
converted into DSUs, or if the director has met the
stock ownership guidelines, into common stock
75,000
20,000
20,000
20,000
25,000
220,000
125,000
($)
Compensation Value
Equity Conversion Program
Annual Equity Award
Corporate
Governance
3
Executive
Compensation
Annual
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Director Compensation 19
Our corporate aircraft use policy generally prohibits personal use of corporate aircraft by any independent director.
The Company maintains a program through which it will match up to $15,000 of charitable donations made by each
director for each calendar year. The directors do not receive any financial benefit from this program because the charitable
income tax deductions accrue solely to the Company. Donations under the program may not be made to family trusts,
partnerships or similar organizations.
We reimburse directors for any reasonable out-of-pocket expenses incurred in connection with service as a director. We
also provide health care coverage to directors if the director is not eligible for subsidized coverage under another
group health care benefit program. Health care coverage is provided on the same terms and conditions as current
employees. Upon retirement from the Board of Directors, directors may continue to obtain health care coverage under
benefit continuation coverage, and after the lapse of such coverage, under the Company's post-employment medical plan
for up to a total of 96 months if they are otherwise eligible.
Annual Lead Independent Director Cash Retainer
Other Compensation
Director Deferral Plan
Under our stock ownership guidelines, we require non-employee directors to achieve ownership of shares of the
Company's common stock (excluding stock options, but including vested DSUs and vested restricted stock units) having
a fair market value equal to five times the directors' annual base cash retainer. Non-employee directors must comply
with the stock ownership guidelines within five years of their appointment to the Board of Directors. All of our non-
employee directors have met the stock ownership requirement or have served as a director for less than five years. Our
directors are required to hold all equity awards granted until completion of service on the Board or until they have met
our stock ownership requirements.
Stock Ownership and Retention Guidelines
The Company pays dividend equivalents in the form of additional DSUs on all outstanding DSUs. Dividend equivalents
are paid at the same rate and at the same time that dividends are paid to Company shareholders and are subject to the
same vesting conditions as the underlying grant.
Information
Meeting
6
5
4 Audit
Other
Under the Director Deferral Plan, subject to compliance with applicable laws, non-employee directors may elect
annually to defer receipt of all or a percentage of their compensation. Amounts deferred are credited to a bookkeeping
account maintained for each director participant that uses a predetermined collection of unaffiliated mutual funds as
measuring investments. The Director Deferral Plan does not provide for matching contributions by the Company.
Other
Annual Health and Clinical Practice Policies
Committee Chair Cash Retainer
Annual Compensation and Human Resources
Committee Chair Cash Retainer
2022 Proxy Statement | Board Committees 15
Board of
Directors
2
Corporate
Governance
Executive
Compensation
4 Audit
Annual
Meeting
6
Other
Information
Health and Clinical Practice Policies Committee
Committee Members:
Meetings Held in 2021:4
Valerie C. Montgomery Rice, M.D. (Chair), John H. Noseworthy, M.D., and Stephen J. Hemsley
Primary Responsibilities:
The Health and Clinical Practice Policies Committee is responsible for assisting the Board of Directors in fulfilling
its responsibilities relating to (i) oversight of management's initiatives to improve health care affordability, clinical
care and safety, enhance health care experience, achieve better outcomes, advance health equity and reduce
disparities, and (ii) the Company's public policy, including the identification, evaluation and monitoring of legislative,
regulatory and policy issues, both domestic and international, that affect or could affect the Company's business
reputation, business activities and performance.
Independence:
Drs. Montgomery Rice and Noseworthy are each independent directors under the NYSE listing standards.
Board Meetings and Annual Meeting Attendance
Directors are required to attend at least 75% of Board meetings, meetings of committees on which they serve and the
Annual Meeting of Shareholders. All of the nominees are expected to attend the 2022 Annual Meeting. During the year
ended December 31, 2021, the Board of Directors held 16 meetings. All current directors attended at least 75% of
the meetings of the Board and any Board committees of which they were members in 2021.
Board and Committee Evaluations
The Governance Committee oversees the Board and Committee evaluation process. In addition, the Chair of the Board
and the Lead Independent Director meet regularly with individual directors to discuss Board and Committee
performance, effectiveness and composition.
Each of the Governance Committee members is an independent director under the NYSE listing standards.
Independence:
The Governance Committee's duties include (i) identifying and nominating individuals to be proposed as nominees
for election as directors at each annual meeting of shareholders or to fill Board vacancies, (ii) conducting the Board
evaluation process, (iii) evaluating the categorical standards which the Board of Directors uses to determine
director independence, (iv) providing oversight over ESG policies and practices, including identifying key ESG
topics, (v) monitoring and evaluating corporate governance practices, and (vi) reviewing and recommending
changes to the Company's Political Contributions Policy, reviewing political contributions at least semi-annually, and
monitoring the Company's advocacy lobbying processes and activities, including key trade associations and
coalition memberships. The Governance Committee also oversees Board processes and corporate governance
related risk.
Meetings Held in 2021: 6
Annual Audit and Finance Committee Chair Cash
Retainer
Board of
Directors
Corporate
2
3
Governance
Executive
Compensation
4 Audit
Annual
Meeting
6
Annual Governance Committee Chair Cash Retainer
Other
Information
Committee Members:
Meetings Held in 2021: 6
Timothy P. Flynn (Chair), Valerie C. Montgomery Rice, M.D. and John H. Noseworthy, M.D.
Primary Responsibilities:
The Compensation and Human Resources Committee is responsible for overseeing (i) our policies and practices
related to total compensation for executive officers, (ii) the administration of our incentive and equity based plans,
(iii) the risk associated with our compensation practices and plans, and (iv) human capital management, including
diversity, equity and inclusion initiatives. The Compensation and Human Resources Committee establishes
employment arrangements with our CEO and other executive officers, conducts an annual performance review of
the CEO, and reviews and monitors director compensation programs and the Company's stock ownership
guidelines.
Independence:
Each of the Compensation and Human Resources Committee members is an independent director under the
NYSE listing standards and the SEC rules, and a non employee director under the SEC rules.
Governance Committee
Committee Members:
John H. Noseworthy, M.D. (Chair), Timothy P. Flynn and F. William McNabb III
Primary Responsibilities:
Compensation and Human Resources Committee
The Board retained an
independent consultant to
conduct the annual
evaluation process. The
Board uses a written
evaluation format,
4 Audit
6
145,608
(#)
($)
Units
Glenn M. Renwick
John H. Noseworthy, M.D.
Valerie C. Montgomery Rice, M.D.
F. William McNabb III
Stephen J. Hemsley
Timothy P. Flynn
Name
Cash
Amount of Deferred Stock
(2) Directors converted some or all of cash compensation payable to such director into DSUs as follows:
(1) Mr. Renwick did not stand for re-election at the 2021 Annual Meeting of Shareholders and ceased serving as a
member of the Board of Directors on June 7, 2021. Because director compensation is paid quarterly in arrears and
Mr. Garcia joined the Board on November 2, 2021, he did not receive any cash or equity compensation in 2021,
although the Company matched $15,000 in charitable contributions he made in 2021.
365,978
15,000
205,978
145,000
248,500
4,494
386
345,532
916
133,881
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
244,006
Board of
Directors
20
2022 Proxy Statement | 2021 Director Compensation Table
(3) The amounts reported reflect the aggregate grant date fair value of the stock awards granted in 2021 computed in
accordance with FASB ASC Topic 718, based on the closing price of our common stock on the grant date. For a
description of the assumptions used in computing the aggregate grant date fair value, see Note 11 to the Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31,
2021. For 2021, Dr. Wilensky elected for a portion of her annual DSU awards be granted in shares of common stock.
108
37,746
334
125,985
227
86,239
354
20
5
340,787
330,787
($)(3)
($)(2)
Total
All Other
Compensation
Stock
Awards
Fees Earned or
Paid In Cash
Gail R. Wilensky, Ph.D.
Glenn M. Renwick
John H. Noseworthy, M.D.
Valerie C. Montgomery Rice, M.D.
F. William McNabb III
Michele J. Hooper
Stephen J. Hemsley
Paul R. Garcia
Timothy P. Flynn
Richard T. Burke
Name (1)
2021 Director Compensation Table
The following table provides information for the year ended December 31, 2021, relating to compensation paid to or
accrued by us on behalf of our non-employee directors who served in this capacity during 2021.
Information
Meeting
($)(4)
($)
200,000
205,573
363,973
33,100
291,813
39,061
347,669
8,987
338,682
-
366,094
15,521
10,000
205,573
574,628
23,928
550,700
15,000
15,000
374,350
23,168
351,182
433,827
28,254
145,000
Board of
Directors
Annual
Corporate
Governance
128.11
100.00
224.70
178.15
157.04
129.97
122.08
100.00
123.65
338.16
192.13
160.13
139.82
100.00
($)
12/2021
12/2020
($)
($)
232.87
154.99
170.06
205.68
Compensation Discussion and Analysis
Information
6
Other
Annual
Meeting
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Executive Compensation Summary 31
The stock price performance included in this graphic is not necessarily indicative of future stock price performance.
UnitedHealth Group's market capitalization has grown 42%, 98% and 210% over the one year, three year and
five year periods, respectively, for the period ended December 31, 2021.
233.41
181.35
153.17
116.49
121.83
100.00
($)
($)
($)
12/2017 12/2018 12/2019
Among UnitedHealth Group, the S&P Health Care Index,
the Dow Jones US Industrial Average Index and the S&P 500 Index
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
The following performance graph compares the cumulative one-year, three-year and five-year return to shareholders
on our common stock relative to the cumulative total returns of the S&P Health Care Index, the Dow Jones US
Industrial Average Index and the S&P 500 index for the period ended December 31, 2021. The comparisons assume
the investment of $100 on December 31, 2016 in our common stock and in each index, and dividends were
reinvested when paid.
Performance Graph
Other
Information
Meeting
4 Audit
Annual
Executive
Compensation
3
Corporate
Governance
Directors
2
Board of
2022 Proxy Statement | Executive Compensation Summary 30
Pursuant to applicable SEC rules, the entire amount payable to Mr. Wichmann over the two-year period is
included in this year's Summary Compensation Table. The amount set forth for Mr. Wichmann in this proxy
statement is consistent with the disclosures made in the Company's 2021 proxy statement. Mr. Wichmann has not
been provided with any additional compensation since his departure from the Company in February 2021.
As previously disclosed in the Company's 2021 proxy statement, the terms of Mr. Wichmann's employment
agreement provide for payments approximating his most recent base salary and non-equity incentive compensation
award for a two-year period.
Former CEO David S. Wichmann
No hedging and pledging transactions by directors and executive officers.
$400
The following table sets forth the Company's compensation program and philosophy, core principles that reinforce our
philosophy and process for determining compensation.
$350
$250
12/2016
---A--S&P 500
* S&P Health Care
12/20
S&P 500 Index
Dow Jones US Industrial Average
S&P Health Care Index
--Dow Jones US Industrial Average
UnitedHealth Group
12/19
12/18
UnitedHealth Group
12/17
12/16
$0
$50
$100
$150
$200
$300
No reload of stock options.
Program Philosophy and
Objectives
•
In our meetings with shareholders, we were pleased to hear strong
shareholder support of the overall design of our executive compensation
program as well as the Company's overall pay-for-performance alignment
Shareholders overwhelmingly did not indicate a desire for broad changes
to our program design
Company Comments / Board Response
Target executive compensation should
be set at the median for peer group
companies
Clawback policy only applies if a
financial restatement occurs
Improve disclosure of annual incentive
plan metrics
Payment of severance in connection
with former CEO's retirement disclosed
in the 2021 proxy statement and
reflected in the Summary Compensation
Table on page 48 of this proxy
statement.
Overall design and philosophy of the
executive compensation program
Topic Raised
The following is a summary of feedback raised by a majority of shareholders when voting on our 2021 say on pay
resolution and how the Board/Compensation and Human Resources Committee has responded to those topics.
The Compensation and Human Resources Committee confirmed that
going forward it has no intention of paying severance in connection with
the retirement of an executive officer
• Corporate Secretary
Chief People Officer
•
• Chair of the Compensation and Human Resources Committee met with 15.1% of
outstanding shares
Met with: 27 shareholders representing 40.2% of our outstanding shares
Contacted: 46 shareholders representing 53.5% of our outstanding shares
Shareholder Engagement Efforts - Key Statistics
•
•
.
The Compensation and Human Resources Committee broadened the
clawback policy to include material detrimental conduct as a trigger
The CD&A includes enhanced disclosure on the non-financial metrics
included in the annual incentive plan
The CD&A includes enhanced disclosure of the rationale for executive
compensation targets
2022 Proxy Statement | Compensation Discussion and Analysis 33
2022 Proxy Statement | Compensation Discussion and Analysis 34
In general, the Compensation and Human Resources Committee's goal is to achieve total compensation for the named
executive officers as a group that falls within a range of the 50th to 75th percentiles of the market data for our peer group
(as discussed below), if paid at target. The Compensation and Human Resources Committee believes this range is an
appropriate reflection of the Company's relative size in comparison to our peer group and the broader market, complexity
and consistently strong performance over the past several years, with the Company positioned above the 75th percentile
of our peer group on key measures such as revenue, market capitalization, and employees, as shown below. The
following briefly summarizes the processes followed by the Compensation and Human Resources Committee to select
competitive compensation benchmark data and how the Compensation and Human Resources Committee uses these
data.
The Compensation and Human Resources Committee believes total compensation for the named executive officers
should be heavily weighted toward long-term performance-based compensation, but it does not target a specific mix of
annual and long-term compensation or cash and equity compensation and does not formulaically set compensation
targets.
Competitive Positioning
The Compensation and Human Resources Committee retains an independent compensation consultant, Jon Weinstein
of Pay Governance LLC, to advise the Compensation and Human Resources Committee on executive and director
compensation matters, assess total compensation program levels and program elements for executive officers and
evaluate competitive compensation trends. Pay Governance does not provide any other services to the Company and
does not perform any work for management. The Compensation and Human Resources Committee has assessed the
independence of Mr. Weinstein and of Pay Governance, specifically considering, in accordance with SEC rules, whether
Mr. Weinstein and Pay Governance had any relationships with the Company, our officers or our Board members that
would impair their independence. Based on this evaluation, the Compensation and Human Resources Committee
concluded Mr. Weinstein and Pay Governance are independent and their work for the Compensation and Human
Resources Committee does not raise any conflict of interest.
Respective Roles of Management and the Compensation and Human Resources Committee
The Compensation and Human Resources Committee oversees the Company's risks, policies and philosophy related to
total compensation for executive officers. Management recommends appropriate enterprise-wide financial and
non-financial performance goals for use in incentive compensation. The Compensation and Human Resources
Committee reviews and approves the compensation for the named executive officers based on its own evaluation, input
from the Chair of the Board, our CEO (for all executive officers except himself), internal pay equity considerations, the
tenure, role and performance of each named executive officer, input from its independent consultant and market data.
The Compensation and Human Resources Committee's Use of an Independent Compensation
Consultant
Additional issues raised in the course of engagement with shareholders included Board tenure, actions focused on
carbon emissions and ESG disclosure. As we have disclosed in this proxy statement, the average tenure of our director
nominees is 6.6 years and we will map our disclosures to the SASB reporting framework in our 2021 Sustainability Report.
We have also previously announced our commitment to achieving operational net zero carbon emissions by 2035.
The Board and the Compensation and Human Resources Committee considered our shareholders' feedback carefully
and continue to strongly believe that our compensation program's strong design contributes meaningfully to the Company's
success and is strongly aligned with shareholder interests. It remains critical that the Company continues to have an
executive compensation program that appropriately attracts, retains and incentivizes management while aligning pay with
performance, driving long-term value creation and reflecting the views of shareholders. We will continue to consider
shareholder feedback on an ongoing basis with respect to potential changes to the program while preserving the
program's general design and value to UnitedHealth Group and all of our shareholders.
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Engagement Team:
Scope of
Engagement:
We contacted shareholders representing approximately 53.5% of our outstanding shares and met with holders of
40.2% of our outstanding shares.
Shareholder Engagement and Our Response
Reward long-term growth and
focus management on sustained
success and shareholder value
creation. Compensation of our
executive officers is heavily
weighted toward equity, and we
require significant stock
ownership and share retention by
our management team. This
encourages sustained
Enhance the long-term value of
the business. Our pay system is
weighted toward long-term
compensation to promote
long-term shareholder value
creation and avoid excessive
risk-taking.
Pay-for-performance. A large
majority of our executive officers'
total compensation is at risk and
only earned based on
achievement of enterprise-wide
goals.
•
•
Compensation Program Principles
executives.
Attract and retain highly qualified
with innovative thinking and
action that leverages the
ingenuity of our employees.
Foster an entrepreneurial spirit
Reward performance that
supports the Company's values.
Reward performance that
emphasizes teamwork and close
collaboration among executive
officers while also recognizing
individual performance.
Reward performance that
advances our mission of helping
people live healthier lives and
helping make the health system
work better for everyone.
our executive officers with those
of our shareholders.
Align the economic interests of
•
•
.
.
performance and positive
shareholder returns.
⋅
• Provide standard benefits. We
Determination of Compensation
Our annual say on pay vote is one of our opportunities to receive feedback from shareholders regarding our executive
compensation program. The say on pay proposal at the 2021 Annual Meeting received 72% as compared to an average
of over 95% support from 2011 through 2020. We sought feedback from shareholders to better understand what
motivated their votes and what actions we could take to address their concerns.
Addressing the 2021 Say on Pay Vote
Our 2021 Say On Pay Vote; Shareholder Engagement
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Compensation Discussion and Analysis 32
consultant and market data.
• The Compensation and Human
Resources Committee reviews
and approves the compensation
for the named executive officers
based on its own evaluation,
input from the Chair of the
Board, our CEO (for all executive
officers except himself), internal
pay equity considerations, the
tenure, role, and performance of
each named executive officer,
input from its independent
The Compensation and Human
Resources Committee oversees
the Company's risks, policies,
and philosophy related to total
compensation for executive
officers.
provide standard employee
benefits and generally do not
have "executive-only" benefits or
perquisites.
No repricing of stock options and stock appreciation rights or cash buyouts without shareholder approval.
No discounted stock options or stock appreciation right awards.
No excise tax gross-ups. Generally no executive-only perquisites.
•
Improving health care affordability through advancing value-based care, optimizing where patients receive care
and lowering the cost of prescription drugs.
Expanding access to care through a long-standing commitment to achieve universal coverage by harnessing
digital tools and virtual platforms and investing in primary care.
Helping to Create a Modern, High-Performing Health System
•
•
•
Engaging our stakeholders — including team members and partner organizations to promote and practice
environmental responsibility.
•
Enhancing the health care experience by improving patient and clinician satisfaction and providing
personalized, dedicated member support and culturally competent care.
• Minimizing our impact on the environment by reducing our carbon footprint, using water and energy efficiently,
implementing comprehensive waste management programs and employee engagements. We target to achieve
operational net zero emissions by 2035 (Scope 1 and Scope 2) and will be outlining our plan to achieve these
goals in our 2021 Sustainability Report.
Environmental Health
Information
Meeting
6
4 Audit
Other
Annual
Executive
Compensation
Maintaining sound governance and oversight of our environmental management efforts.
Achieving better health outcomes by managing chronic disease, applying a holistic approach to mental health
care and improving health literacy.
• Advancing health equity with personalized care tailored to an individual's needs, helping to build a diverse
health workforce, improving the health of underserved communities and leveraging data to reduce disparities in
care.
Information
Meeting
6
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Alignment of Environment, Social and Governance (ESG) with Our Long-Term Strategy 27
Developing and growing our talent with robust virtual onboarding and digital self-assessment tools.
•
⚫ Sustaining high performance and resilience by supporting employee well-being and rewarding and recognizing
outstanding performance.
Fostering an inclusive, equitable and diverse environment where all team members are appreciated, valued
and able to reach their full potential.
⋅
Our People and Culture
• Building healthier communities through our social responsibility efforts, including philanthropic grants, in-kind
contributions and supporting our employees who volunteer their time and resources in the communities where
they work and live.
3
Corporate
Governance
2
Board of
Directors
Cyber Security Risk Oversight
Our Board of Directors maintains overall responsibility for oversight of the work of its various committees by receiving
regular reports from the committee chairs regarding their work. In addition, discussions about the Company's culture,
strategic plan, consolidated and segment business results, capital structure, merger and acquisition-related activities and
other business discussed with the Board of Directors include a discussion of the risks associated with the particular
item under consideration. Our Board of Directors and Board committees also have authority to retain independent
advisers. Our Board of Directors' and committee's respective processes for managing cyber security risk oversight and
incentive compensation risk are set forth below.
The Health and Clinical Practice Policies Committee oversees (i) management's initiatives to improve health
care affordability, clinical care and safety, enhance the health care experience, achieve better health outcomes,
advance health equity and reduce disparities, and (ii) risk associated with the public policy arena, including
health care reform and modernization activities, government relations, and risk related to health and clinical
practices.
The Governance Committee oversees Board processes and corporate governance-related risk, community and
charitable activities and overall strategy on ESG policies and practices; and
The Compensation and Human Resources Committee oversees risks associated with our compensation
policies, practices and plans and human capital management practices;
The Audit and Finance Committee oversees management's internal controls and compliance activities. The
Audit and Finance Committee also oversees management's processes to identify and quantify material risks
facing the Company, including risks disclosed in the Company's Annual Report on Form 10-K. The enterprise risk
management function assists the Company in identifying and assessing the Company's material risks. The
Company's General Auditor, who reports to the Audit and Finance Committee, assists the Company in evaluating
risk management controls and methodologies. The Audit and Finance Committee receives periodic reports on
the enterprise risk management function and the Company's cyber security efforts and meets periodically with
management to review the Company's significant risks and the steps management has taken to monitor,
control or mitigate such risks. In connection with its risk oversight role, the Audit and Finance Committee regularly
meets privately with representatives from the Company's independent registered public accounting firm and
the Company's Chief Financial Officer, General Auditor and Chief Legal Officer;
_
•
•
Our Board of Directors oversees management's enterprise-wide risk management activities. Risk management
activities include assessing and taking actions necessary to manage risk incurred in connection with the long-term
strategic direction and operation of our business. Each director on our Board is required to have risk oversight ability for
each skill and attribute the director possesses reflected in the collective skills section of our director skills matrix
described in "Proposal 1 — Election of Directors Director Nomination Process Criteria for Nomination to the
Board" above. Collectively, our Board of Directors uses its committees to assist in its risk oversight function as follows:
Enterprise-Wide Risk Oversight
Information
Meeting
6
4 Audit
Other
Annual
Executive
Compensation
3
We believe health care data and related information should be used solely for the purposes of improving individual
health, advancing health system performance and to aid in new health care discoveries. We operate in a sector where
the use of health care information is highly regulated. Federal, state, and international laws and contractual commitments
regulate our collection, use and disclosure of confidential information such as protected health information and
personally identifiable information. Our success depends on maintaining a high level of trust among consumers, clients,
providers, regulators and our associates. Protecting this information is critical and is reflected in our Code of Conduct,
security standards, and privacy policies.
Responsible Business Practices
2022 Proxy Statement | 25
2
2022 Proxy Statement | Alignment of Environment, Social and Governance (ESG) with Our Long-Term Strategy 26
We are dedicated to earning the opportunity to serve more people and drive shareholder and societal value by focusing
on the following key topics determined through broad stakeholder engagement and approval from our senior leaders
and Board of Directors.
Sustainability is an extension of our business strategy, culture and mission as we work to help ensure the health care
system works better for everyone. At UnitedHealth Group, we are committed to providing distinct value for those we are
privileged to serve, including our shareholders and society broadly.
What Sustainability Means to Us
Alignment of Environment, Social and Governance (ESG) with Our
Long-Term Strategy
The Compensation and Human Resources Committee also receives an annual report on the Company's compliance
with its equity award program controls.
Our Compensation and Human Resources Committee requested management to conduct an annual risk assessment
of the Company's enterprise-wide compensation programs. The risk assessment reviewed both cash incentive
compensation plans and individual cash incentive awards paid in 2021 for the presence of potential design elements
that could motivate employees to incur excessive risk. The review included the ratio and level of incentive to fixed
compensation, the amount of manager discretion, the level of compensation expense relative to the business units'
revenues, and the presence of other design features which serve to mitigate excessive risk-taking, such as the Company's
clawback policy, stock ownership and retention guidelines, multiple performance measures and similar features.
After considering the results of the risk assessment, management concluded the level of risk associated with the
Company's enterprise-wide compensation programs is not reasonably likely to have a material adverse effect on the
Company. The results of the risk assessment were reviewed with the Compensation and Human Resources Committee
at its February 2022 meeting. Please see “Compensation Discussion and Analysis" for a discussion of compensation
design elements intended to mitigate excessive risk-taking by our executive officers.
Incentive Compensation Risk Assessment
We provide annual security-awareness and privacy training to all of our employees, including part-time and temporary,
and contractors, which covers timely and relevant topics, including social engineering, phishing, password protection,
confidential data protection, asset use and mobile security. Our comprehensive privacy-incident response and
prevention program educates associates on the importance of reporting all incidents immediately. Each incident is
reviewed and action is taken to address issues identified, mitigate any potential impact and assess our obligations to
notify consumers, clients, regulators, the media and others. Information regarding how we manage data privacy and cyber
security is available at https://www.unitedhealthgroup.com/content/sustainability/en/responsible-business/data-
privacy.html.
The Audit and Finance Committee has oversight of our cyber security program and receives regular updates from our
Chief Information Security Officer. We devote significant resources to protecting and evolving the security of our computer
systems, software, networks and other technology assets in response to a continually changing threat landscape. The
operating maturity of our cyber security program is benchmarked against a continuously updated set of control
requirements based upon the HITRUST framework and is subject to an annual external certification process by the
HITRUST Alliance. An incidence response preparedness assessment was conducted in 2020 by a leading external cyber
security company.
Information
Meeting
6
Other
Annual
4 Audit
Executive
Compensation
3
Corporate
Governance
Board of
Directors
•
Maintaining strong and effective corporate governance to drive sustained shareholder value and respond to
the interests of our shareholders.
• Adhering to our values through ethics and compliance that guide our behavior and help us remain a trusted
partner.
•
•
•
Information
Meeting
4 Audit
Other
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Executive Compensation Summary 29
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement
for a reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
Prospanica, an organization that has worked to empower Hispanic professionals for over 30 years,
recognized UnitedHealth Group with the 2021 Brillante Award for Corporate Excellence;
UnitedHealth Group was named to Forbes' list of 2021 World's Best Employers;
In 2021, and for the tenth consecutive year, The Civic 50, a Points of Light initiative that highlights
companies that improve the quality of life in the communities where they do business, ranked UnitedHealth
Group one of America's 50 most community-minded companies. In addition, UnitedHealth Group was
named the leader in the Healthcare Sector category for the fourth time overall;
UnitedHealth Group received a score of 100 on the Human Rights Campaign Foundation's Corporate
Equality Index 2022, earning the distinction of one of the “Best Places to Work for LGBTQ Equality";
UnitedHealth Group has been named to both the Dow Jones Sustainability World and North America
Indices every year since 1999;
The CDP (formerly Carbon Disclosure Project) named UnitedHealth Group to its Leadership Band in
2020 for efforts to reduce greenhouse gas emissions;
United Health Group was the top ranked company in the insurance and managed care sector on Fortune's
2022 "World's Most Admired Companies" list. This is the twelfth consecutive year UnitedHealth Group
has ranked No. 1 overall in its sector. The Company ranked No. 1 on all nine key attributes of reputation -
innovation, people management, use of corporate assets, social responsibility, quality of management,
financial soundness, long-term investment value, quality of products and services and global
competitiveness;
The Disability Equality IndexⓇ named UnitedHealth Group one of the best places to work for disability
inclusion in 2021;
The Compensation and Human Resources Committee believes total compensation for the executive officers listed
in the 2021 Summary Compensation Table (the “named executive officers" or "NEOS") should be heavily weighted
toward long-term performance-based compensation. In 2021, long-term compensation represented approximately
75% of the total compensation granted to our NEOs. The elements of compensation for our NEOs were
unchanged from 2020. We endeavor to maintain strong governance standards in the oversight of our executive
compensation programs, including the following policies and practices in effect during 2021:
•
What We Don't Do
The direct retention by the Compensation and Human Resources Committee of its independent
compensation consultant, Pay Governance LLC, who performs no other consulting or other services for
the Company.
Annual advisory shareholder vote to approve the Company's executive compensation.
Each of our executive officers and directors was in compliance with our stock ownership guidelines as of
April 8, 2022.
A stock retention policy that requires executive officers to hold, for at least one year, one-third of the net
shares acquired upon vesting or exercise of any equity award.
A compensation clawback policy that entitles the Board of Directors to seek cash or equity reimbursement
from our senior executives if they are directly involved in fraud or misconduct causing a material
restatement, material detrimental conduct and a senior executive's violation of non-compete, non-solicit
or confidentiality provisions.
All long-term incentive awards are denominated and settled in equity.
Double-trigger accelerated vesting of equity awards, requiring both a change in control and a qualifying
employment termination, which is our only change in control consideration.
Compensation and Human Resources Committee consisting entirely of independent Board members.
Performance-based compensation arrangements, including performance-based equity awards that use a
balanced set of performance measures (including human capital measures), with different metrics used for
annual and long-term incentive plans.
•
•
•
•
•
•
•
•
Strong Oversight and Pay Practices
UnitedHealth Group has been ranked No. 4 in the nation on the 2022 Military FriendlyⓇ Employers list; and
UnitedHealth Group is recognized as a “Trendsetter" in the 2021 Center for Political Accountability-Zicklin
Index of Political Accountability.
2
•
•
Other
Annual
Executive
Compensation
Governance
Directors
3
2
Corporate
Board of
2022 Proxy Statement | Alignment of Environment, Social and Governance (ESG) with Our Long-Term Strategy 28
The Governance Committee is responsible for providing oversight over ESG policies and practices, including identifying
key ESG topics, ensuring appropriate Board or Board committee oversight of these topics, overseeing the Company's
environmental and climate change initiatives, corporate citizenship activities and reviewing the Company's ESG
sustainability reports. The Audit and Finance Committee oversees management's processes to identify ESG investment
criteria and provide assurance of ESG disclosures. The Compensation and Human Resources Committee reviews the
Company's strategies, programs and outcomes related to each of human capital management as well as diversity, equity
and inclusion. The Health and Clinical Practice Policies Committee oversees management's efforts and initiatives to
expand access to health care, improve health care affordability, clinical care and safety, enhance the health care
experience, achieve better health outcomes, advance health equity, and reduce health disparities.
In close partnership with business leaders from across our enterprise, the Chief Sustainability Officer is responsible for
developing and implementing a comprehensive ESG strategy, establishing annual and long-term sustainability goals,
performance metrics, a governance structure to achieve them, and helping to shape our environmental, social and
governance agendas.
Sustainability Governance
Our 2020 Sustainability Report, available at https://sustainability.uhg.com/content/dam/UHG/PDF/sustainability/final/
2020 SustainabilityReport.pdf, summarizes the steps the Company is taking to build a health system that works better
for everyone through the organization's environmental, social and governance efforts. We also attached our EEO-1 report
as an exhibit to the Sustainability Report. We have committed to map our disclosures to the Sustainability Accounting
Standards Board ("SASB") in our 2021 Sustainability Report.
Committing to supplier diversity by developing a supplier base that reflects the communities and customers we
are privileged to serve.
.
• Partnering with suppliers to maximize value in our supply chain to ensure we buy the right goods and services,
from the right suppliers, for the right price, in a timely manner.
Maintaining data privacy and cyber security, recognizing our obligation to build and maintain the trust and
confidence of our stakeholders and customers, ensuring we can protect the information for all those we serve.
•
4 Audit
•
Meeting
Executive Compensation
•
1.
Awards and Recognition
The annual cash dividend rate increased to $5.80 per share, representing a 16% increase over the annual
cash dividend rate of $5.00 per share since the second quarter of 2020.
Return on equity at 25.2% in 2021 compared to 24.9% in 2020, reflecting the Company's strong operating
performance and efficient capital structure; and
earnings per share1 increased 13% to $19.02 per share from $16.88 per share in 2020;
Fully diluted earnings per share increased 13% to $18.08 per share from $16.03 in 2020. Adjusted
year to $24.0 billion; and cash flows from operations were $22.3 billion in 2021;
Net earnings increased 12% year-over-year to $17.3 billion; operating earnings increased 7% year-over-
Revenues increased 12% to $287.6 billion in 2021 from $257.1 billion in 2020;
Total shareholder return in 2021 was 45%, and 107% from 2019-2021, reflecting continued strong
fundamental performance;
•
•
•
•
In determining 2021 executive compensation, the Compensation and Human Resources Committee considered
the Company's strong growth, operating performance and financial results, all of which were achieved in an uncertain
environment, as well as individual executive performance. Some of our key business results for 2021 were:
Financial
UnitedHealth Group's compensation program is designed to attract and retain highly qualified executives and to
maintain a strong link between pay and the achievement of enterprise-wide goals. We emphasize and reward
teamwork and collaboration among executive officers, which we believe fosters Company growth and performance,
optimizes the use of enterprise-wide capabilities, drives efficiencies and integrates products and services for the
benefit of our customers and other stakeholders.
Overview
Executive Summary
Information
12/21
• Creating systemic change by co-chairing the National Academy of Medicine's Climate Collaborative to
meaningfully reduce the carbon footprint of the U.S. health system.
12,779
Brian R. Thompson
Marianne D. Short
Annual Cash Incentive Awards
2021 Annual Incentive Plan Performance Goals
2020 Base Salary
2021 Base Salary
1,100,000
1,500,000
1,000,000
1,200,000
1,000,000
1,200,000
800,000
850,000
Dirk C. McMahon
1,000,000
Annual cash incentive awards may be paid if our Company meets or exceeds annual performance goals established for
the year as determined by the Compensation and Human Resources Committee. In establishing the performance
measures for the 2021 annual cash incentive awards, the Compensation and Human Resources Committee sought to
align broadly the compensation of our executive officers with key elements of the Company's 2021 business plan.
Development of the Company's 2021 business plan was a robust process that involved input from all of the Company's
business units and was reviewed with the Company's Board of Directors on multiple occasions. These performance goals
are based on enterprise-wide metrics because the Compensation and Human Resources Committee believes the
named executive officers share responsibility to support the goals and performance of the Company as key members
of the Company's leadership team.
We assess our progress toward enhancing customer experiences using the Net Promoter System (NPS), which
holistically measures the experiences we deliver to the Company's customers, including how likely a person is to
recommend our Company to their friends or family. Similarly, listening to our team members is one of the key ways we
help build and reinforce a culture of inclusion and encourage employee engagement. We recognize that improved
employee sentiment leads to increased talent and improved productivity, and for well over a decade, we have measured
employee sentiment annually. We use our human capital management metric - the Employee Experience Index
_
(EXI) — to measure an employee's sense of commitment and belonging to the Company, establishing a direct link
between our executive compensation program and our commitment to human capital management. We believe both
metrics NPS as well as EXI - demonstrate meaningful measures of executive performance.
The following table sets forth the performance measures and goals established for 2021, as well as 2021 performance
results:
2021 Performance
Measure
Revenue*
Weight
30%
Threshold
Performance
Target
Performance
Maximum
Performance
2021
900,000
$266.0 billion
John F. Rex
Name
17%
Annual cash incentive
award
Restricted
stock
units
Other NEOS
Compensation
19%
Mix
Performance
shares
38%
76% Long-term
incentives
Performance shares
36%
74% Long-term
incentives
Annual Compensation
Andrew Witty
Base Salary
2022 Proxy Statement | Compensation Discussion and Analysis 37
Board of
Corporate
2
3
Directors
Governance
Executive
Compensation
4 Audit
5
Annual
Meeting
6
Other
Information
The Compensation and Human Resources Committee generally determines base salary levels for our named executive
officers early in the fiscal year. The Compensation and Human Resources Committee increased Mr. Witty's salary to
$1,500,000 effective February 3, 2021 upon his promotion to Chief Executive Officer. Messrs. McMahon's and Rex's
salaries were increased by the Committee effective February 28, 2021 to reflect Mr. McMahon's promotion to President
and Mr. Rex's expanded duties. Effective February 28, 2021, Mr. Thompson's salary was increased to $1,000,000 effective
April 7, 2021 upon his promotion to Chief Executive Officer, UnitedHealthcare. Ms. Short's salary increase was effective
April 7, 2021 when she resumed her role as Chief Legal Officer. These changes are reflected in the chart below.
Annual cash
incentive award
$280.0 billion
30%
The 2021 financial performance measures at target level represented, respectively, year-over-year growth in revenues
of $22.9 billion, or 9%; year-over-year growth in operating income of $1.0 billion, or 4%; and year-over-year decrease in
operating cash flows of $1.7 billion or 8%, and all of these measures were impacted by the COVID-19 pandemic.
2021 targeted cash flows declined from 2020 actual results as 2020 cash flows were impacted by the COVID-19
pandemic, primarily due to timing factors.
The 2021 non-financial performance measures were based on survey results and, at target levels, represented levels at
or above 2020 performance. These measures were viewed to be important to longer-term financial success, customer
satisfaction and employee welfare that might not be immediately reflected in annual financial results. The Compensation
and Human Resources Committee believes that the breadth of financial and non-financial performance measures for
the 2021 annual cash incentive award would motivate executive officers to achieve results that contribute to value creation
for our shareholders on a long-term basis, reward performance advancing the Company's mission and values, and
avoid excessive risks.
At the beginning of 2021, the Compensation and Human Resources Committee believed achievement of the annual
incentive goals required substantial performance on a broad range of initiatives contained in the 2021 business plan.
These initiatives included the following:
•
Execute on Optum's growth initiatives, with major focus areas including further expansion of patients served in
value-based care arrangements and the continued build-out of care delivery capabilities, technology-enabled
services, and advancing the scope of pharmacy care services offerings;
Grow people served in UnitedHealthcare;
Continue to enhance the quality and operations of our government benefit businesses;
Continue to innovate in commercial benefit products, services, and distribution;
Deliver ever more effective and comprehensive clinical management, and continue expanding value-based
elements in our network;
Further enhance customer service and increase the Company's NPS across all business platforms; and
Further improve our consolidated operating cost ratio after considering the impact of changes in business mix,
repeal of the health insurance tax, and effects from COVID-19.
With respect to these initiatives, Optum achieved double digit percentage revenue and operating earnings growth, and
added new patients in accountable, value-based arrangements. The Company significantly exceeded its targets for people
served by UnitedHealthcare, and improved net promoter scores in many, but not all, of its businesses. UnitedHealthcare
2022 Proxy Statement | Compensation Discussion and Analysis 39
Board of
Directors
Context for the 2021 Annual Cash Incentive Plan Performance Goals
2
3
Executive
Compensation
4 Audit
Annual
Other
6
Meeting
Information
demonstrated excellence in its Medicare plans by further improving its Medicare Star ratings. The Company achieved or
made substantial progress on all other initiatives listed above.
Revenues for 2021 grew 12% from the prior year, while operating income grew 7% and cash flows from operations
increased 1%. 2021 revenues, operating income and cash flows from operations were each impacted by the COVID-19
pandemic.
Non-financial performance measures were above threshold for EXI, and below threshold for NPS. Diluted earnings per
share and adjusted earnings per share increased 13% in 2021.
While the Company uses defined performance measures and weightings to determine an overall funding level for the
Company's bonus pool, individual annual cash incentive awards are not purely formulaic. In determining the amount of
the actual annual incentive award to be paid to each officer, the Compensation and Human Resources Committee
considers the CEO's recommendations for executive officers, the business performance underlying each of the
performance measures, macroeconomic factors impacting business performance, individual executive performance,
market positioning, and related matters. The Compensation and Human Resources Committee retains discretion to pay
an annual incentive award higher or lower than the performance level achieved based on these considerations if
threshold performance is achieved on any performance measure. However, the overall pool cannot be exceeded.
Determination of 2021 Annual Cash Incentive Award Opportunities
Corporate
Governance
Operating Income*
The Company's annual incentive plan allows for adjustments to the Company's reported results for the impact of
changes in accounting principles, extraordinary items and unusual or non-recurring gains or losses, including
significant differences from the assumptions contained in the financial plan upon which the incentive targets were
established. Adjustments to reported results are intended to better reflect executives' line of sight, align award
payments with growth of the Company's business, avoid artificial inflation or deflation of awards due to unusual or
non-recurring items in the applicable period and emphasize the Company's preference for long-term and
sustainable growth. The Compensation and Human Resources Committee adjusted 2021 revenue, operating
income and cash flows from operations to exclude impacts resulting from the COVID-19 pandemic, unrealized
investment gains, and other non-recurring items. These adjustments remove benefits to management from items
over which they had no control which were not contemplated in the 2021 plan and had the net effect of decreasing
the financial results and negatively affecting executive compensation.
Information
$19.9 billion
$23.4 billion
Cash Flows from Operations*
15%
$17.4 billion
Stewardship:
25%
• Net Promoter System (NPS)
Employee Experience
Index (EXI)
1.2 points above
2020 results for
NPS; 4.2 points
below 2020
results for EXI
$20.5 billion
2.5 points above
2020 results for
NPS; at 2020
results for EXI
*
3.8 points above
2020 results for
NPS; 4.2 points
above 2020
results for EXI
$294.0 billion
$26.9 billion
$23.6 billion
Performance
$284.0 billion
$23.3 billion
$19.7 billion
2022 Proxy Statement | Compensation Discussion and Analysis 38
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
4 Audit
Annual
Other
6
Meeting
1.7 points below
2020 results for
NPS (below threshold);
2.4 points below
target for EXI
19%
9%
Non-qualified stock
options
50th Percentile
Annual Revenue
$57B
$139B
UnitedHealth
Group
$288B
(88th percentile)
Maximum
$470B
Market Cap
$120B
$473B
(78th percentile)
$2,913B
Employees
40,000
Minimum
156,500
1,608,000
(94th percentile)
At the request of the Compensation and Human Resources Committee, Pay Governance conducts an annual review of
the Company's compensation peer group. This review ensures the peer group companies remain appropriate from a
business and talent perspective. This occurs at the second quarter Compensation and Human Resources Committee
meeting, because recent financial and compensation data are available at this time.
The Compensation and Human Resources Committee uses the following screening methodology, which formulates a
peer group focused on the characteristics and industries most relevant to the Company:
The 40 largest U.S. companies by revenue and market capitalization.
Apply an industry screen to limit peer companies to those industries from which the Company recruits senior
leaders:
- Managed Care
-
Pharma/Life Sciences
- Technology
•
- Health Care and Services
- Financial Services
350,000
Include the Company's 4 largest managed care competitors, even if they do not all meet the screening criteria.
This screening process resulted in the 19 companies set forth above. We are significantly larger than most of our peers
as reflected below (data as of December 31, 2021):
JPMorgan Chase & Co.
McKesson Corporation
2022 Proxy Statement | Compensation Discussion and Analysis 44
Board of
Directors
Corporate
Executive
2
3
4 Audit
Governance
Compensation
Annual
Meeting
6
Other
Information
Peer Group
Microsoft Corporation
Walgreens Boots Alliance, Inc.
Wells Fargo & Company
Peer Group
Johnson & Johnson
Cigna Corporation
Alphabet Inc.
Amazon.com, Inc.
AmerisourceBergen Corporation
Anthem, Inc.
Citigroup Inc.
CVS Health Corporation
Apple Inc.
Bank of America Corporation
Cardinal Health, Inc.
Humana Inc.
International Business Machines
Centene Corporation
2022 Proxy Statement | Compensation Discussion and Analysis 35
Board of
Directors
2
4 Audit
5
Compensation
Annual
Meeting
Other
6
Information
Compensation Element
Equity awards
Long-term performance compensation,
variable
Employee benefits
Annual indirect compensation, not
variable
Purpose
3
To motivate and retain executive officers and align their long-term interests with
shareholders through the use of:
• RSUs to retain executive officers and build stock ownership positions
Non-qualified stock options to encourage sustained stock price appreciation
To promote the health, well-being and financial security of employees, including
executive officers; constitutes the smallest part of total remuneration.
As reflected in the charts below, the mix of total target compensation granted in 2021 to our named executive officers,
excluding Mr. Wichmann, was heavily weighted towards performance-based and long-term incentive compensation, with
long-term incentive awards making up approximately 75% of total target compensation for our named executive
officers in aggregate.
Non-qualified
stock options
8%
19%
16%
Restricted
stock
units
19%
CEO
Compensation
Mix
Base salary
Base salary
Performance shares to encourage sustained performance and growth and
potentially assist executives in building ownership in the Company
Executive
Corporate
Governance
Directors
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
6
Meeting
Information
Once the process is concluded and peer group companies are selected, the Compensation and Human Resources
Committee generally uses the market data as follows:
•
•
At the fourth quarter Compensation and Human Resources Committee meeting, Pay Governance presents an
annual review of the market competitiveness of the Company's executive compensation levels for the Company's
executive officers. The review compares the compensation opportunities provided to the Company's executive
officers to peer group companies on a position-by-position basis and on an aggregate basis.
At the first quarter Compensation and Human Resources Committee meeting, the Compensation and Human
Resources Committee determines pay opportunities for each officer using the market competitiveness assessment
from the previous fourth quarter as a reference point. In addition, the Compensation and Human Resources
Committee takes into consideration the individual officer's tenure in such position, Company's performance
against previously established performance goals, each officer's individual performance, internal equity, the
CEO's recommendations and other relevant business performance that may not be adequately captured by the
Company and individual officer goals.
Target total compensation of our named executive officers as a group in 2021, consisting of base salary, target annual
cash incentive award, and the grant date fair value of equity awards (including performance shares at target) was between
the 50th and the 75th percentiles of the market data for our peer group. Our CEO's total compensation is below the
median of our peer group.
The Compensation and Human Resources Committee believes this positioning is appropriate because the Company is
above the median of peer group companies on all scope metrics and the Company's exceptional long-term
performance further supports the effectiveness of this positioning.
Use of Tally Sheets and Wealth Accumulation Analysis
When approving compensation decisions, the Compensation and Human Resources Committee reviews tally sheet
information for each of our executive officers. These tally sheets are prepared by management and quantify the elements
of each executive officer's total compensation. The tally sheets include a summary of all equity awards previously
granted to each executive officer, the gain realized from past vesting or exercise of equity awards, and the projected
value of accumulated equity awards based upon then current stock price scenarios. The tally sheets help the
Compensation and Human Resources Committee members analyze the compensation each executive officer has
accumulated to date and to fully understand the amount the executive officer could potentially accumulate in the future.
Elements of our Compensation Program
The compensation program for our named executive officers consists of the following elements:
Compensation Element
Base salary
Annual compensation,
not variable
Annual cash incentive awards
Annual performance compensation,
variable
Purpose
To provide a base level of cash compensation for executive officers tied to role, scope
of responsibilities and experience.
To encourage and reward executive officers for achieving annual corporate
performance, human capital and customer-oriented goals and individual performance
results.
2022 Proxy Statement | Compensation Discussion and Analysis 36
Board of
2
At the beginning of each year, the Compensation and Human Resources Committee approves an annual cash incentive
target opportunity for each executive officer as a percentage of the executive officer's base salary.
The target opportunities established for the named executive officers are intended to increase collaboration, teamwork
and accountability across the enterprise, to recognize the skills and versatility of each executive officer and to reflect
relative contributions to the success of the overall enterprise. At the end of the fiscal year, the Compensation and
Human Resources Committee reviews the Company's performance against the goals set at the beginning of the year
and determines annual cash incentive awards. The Compensation and Human Resources Committee has the discretion
to increase or decrease the awards made in view of actual performance, individual contributions and overall business
and market conditions.
$14B
The target percentages for annual cash incentive awards to our named executive officers and the actual 2021 annual
cash incentive awards paid are set forth in the table below. Mr. Wichmann did not receive an annual cash incentive award
in 2021. An explanation of how the individual amounts were determined follows the table.
4 Audit
5
6
Meeting
Information
Since these factors were not contemplated in the performance targets, and would have resulted in a net benefit to
management, they were excluded from final results, reducing the calculated payout ratio and related compensation.
Long-Term Performance Shares
*
Name
Andrew Witty*
John F. Rex
**
Dirk C. McMahon
Other
Brian R. Thompson
David S. Wichmann**
Threshold Target
Maximum
Shares
Shares
Shares
Actual
Shares Paid
Paid
Award
(#)
(#)
(#)
(#)
Marianne D. Short
(% of Target)
Annual
3
•
Delivery of more effective and comprehensive clinical management;
•
Continued growth and enhancement of the quality and operations of our government businesses;
Continued growth in technology-enabled services and specialty networks products and services, driving
distinctive revenue, margin, and earnings performance;
•
Ongoing improvements to our consolidated operating cost ratio on a comparable business mix basis; and
Effective cross-enterprise collaboration among various business units for the benefit of customers and our
overall reputation and performance.
To achieve maximum performance for the performance share plan, the Company would have had to achieve cumulative
three-year adjusted earnings per share ("AEPS”) performance of $51.60 and an average return on equity ("ROE”) of
26.2%. These maximum performance levels corresponded to a compound annual growth rate in AEPS of 15% over the
three-year period. For long-term compensation purposes (see adjustments described below), the Company generated
cumulative AEPS of $49.31, which was between target and maximum performance levels, and accompanying ROE of
24.8%, which was between target and maximum performance levels. This represented a compound annual AEPS
growth rate of 14% over the three-year performance period, consistent with the Company's projected long-term growth
rate of 13% to 16%.
Factors which positively or negatively influenced our results subsequent to the approval of the long-term business plan
in early 2019 included:
•
Onset of the COVID-19 pandemic beginning in early 2020;
•
•
Executive
Compensation
•
Difficult Brazilian economy and significant devaluation of the Brazilian Real against the U.S. Dollar;
Growth in investment and other income from the Company's continued collaborative growth and innovation
efforts with Optum Ventures; and
The permanent repeal of the Health Insurance Tax.
Similar to the annual incentive plan, the Company's long-term incentive plan allows for adjustments to the Company's
reported results in determining long-term incentive plan awards, namely adjustments that account for the impact of
changes in accounting principles, extraordinary items, and unusual or non-recurring gains or losses. Two adjustments
were made in measuring 2019-2021 performance, which resulted in lowering the payouts to the named executive
officers:
.
•
Excluded from 2020 and 2021 results were the impacts from unusual events not contemplated when the
performance targets were set; and
Excluded from 2019, 2020 and 2021 results were impacts from capital allocation actions not contemplated
when the performance targets were set, primarily from merger and acquisition activity and share repurchase
activity.
2022 Proxy Statement | Compensation Discussion and Analysis 43
Board of
Directors
2
Corporate
Governance
Significant acquisition activities over the three-year period;
Modest US economic growth with a gradual increase in interest rates, and a more rapidly growing economy in
Brazil, with a stable Brazilian Real — U.S. Dollar exchange rate;
47
48,102
In 2021, the Compensation and Human Resources Committee granted the following target number of performance
shares, RSUs and stock options to our named executive officers:
Name
Andrew Witty
John F. Rex
Dirk C. McMahon
Brian R. Thompson
David S. Wichmann
Target Number of
Performance Shares
Annual RSU
Award
Annual Stock
Option Award
(#)
(#)
(#)
Equity Awards - 2021
17,958
51,325
14,242
8,699
40,703
14,242
8,699
40,703
6,559
6,193
28,684
5,622
The Compensation and Human Resources Committee evaluated the Company's 2021 performance against the
performance goals, overall business results, economic conditions and individual performance objectives. The Committee
noted the strong 2021 business results discussed above while also noting that performance was below threshold for
NPS and below target for EXI. Accordingly, the Committee determined that the 2021 annual cash incentive for officers
should be awarded at 85% of the targets set.
2,811
10,969
24,051
The Company does not pay dividend equivalents on performance shares granted to employees. Unvested shares of
RSUS receive dividend equivalents, which are subject to the same terms as the RSUs and will be forfeited if the underlying
RSUs do not vest. The determination to pay dividend equivalents on RSUs was made after considering market practices.
The aggregate number of shares subject to equity awards made in 2021 for all employees was less than 1% of the
Company's shares outstanding at the end of 2021.
Due to the length of Mr. Wichmann's tenure with the Company and under the standard terms of equity awards
applicable to all employees receiving equity awards, Mr. Wichmann's award was eligible for retirement vesting.
Equity Award Practices
32,229
134%
26
13,309
26,618
17,835
134%
20
10,458
20,916
14,014
134%
15
The Compensation and Human Resources Committee's equity award policy requires all grants of equity to be made at
set times. We do not have a specific program, plan or practice to time equity compensation awards to named executive
officers in coordination with our release of material information.
7,606
10,193
134%
17
8,556
17,112
11,466
134%
47
24,337
48,674
32,612
134%
As previously disclosed, Mr. Witty's 2019 performance shares were granted as two separate grants, 18,063 target
shares on February 14, 2019 and 5,988 target shares on November 6, 2019, for a total of 24,051 target shares.
15,212
Information
Marianne D. Short
6
85%
200
2,400,000
2,050,000
85%
200
2,400,000
2,050,000
85%
200
2,000,000
1,700,000
85%
2,550,000
135
1,030,000
85%
In determining the 2021 annual cash incentive award amounts for the named executive officers, the Compensation and
Human Resources Committee took into account the Company's performance against the 2021 annual performance
goals set forth in the table above and business results described under "Context for the 2021 Annual Cash Incentive
Plan Performance Goals," including each executive officer's role in achieving those results.
The Compensation and Human Resources Committee did not make specific assessments of, quantify or otherwise
assign relative weightings to the factors listed above as it reached its decisions with respect to any of the named executive
officers. See the 2021 Summary Compensation Table and other related compensation tables below for details regarding
2021 total compensation for the named executive officers.
Long-Term Incentive Compensation
Long-term incentive compensation, consisting solely of equity awards in 2021, represents the largest portion of
executive officer compensation. The combination of long-term incentives we employ provides a compelling performance-
based compensation opportunity, aids in aligning and retaining the senior management team and accelerates the
advancement of business unit capabilities across the enterprise.
The Compensation and Human Resources Committee determined that long-term equity-based compensation for 2021
should include grants of performance shares, RSUs, and non-qualified stock options to achieve balance and effectiveness
in our equity-based compensation and to align the interests of our executive officers and our shareholders. The mix of
equity-based compensation granted in 2021 was as follows, based on the grant date fair value of the total award:
50% performance shares, 25% RSUs, and 25% non-qualified stock options.
Performance share grants were selected to ensure a strong pay-for-performance alignment of the Company's
compensation program with drivers of shareholder value, specifically weighted equally between cumulative earnings
per share and average return on equity for the three-year performance period. Participants can earn between 0% and
200% of the target performance share award based upon actual results. The performance share payouts are determined
formulaically, subject to the authority of the Compensation and Human Resources Committee to make appropriate
adjustments to account for events not contemplated when the performance targets were set. RSU grants were selected
because they are full value shares with time vesting (typically, ratably over four years) and, as such, provide added
retention value. Non-qualified stock options were selected because they have value only if the Company's stock price
increases and, as such, provide incentives for sustained long-term stock price appreciation. Non-qualified stock options
typically vest ratably over four years. Our equity award types, vesting terms, and termination provisions are summarized
in the chart below.
2022 Proxy Statement | Compensation Discussion and Analysis 41
Board of
2
Directors
Corporate
Governance
1,215,000
3
3,000,000
(% of Target)
2022 Proxy Statement | Compensation Discussion and Analysis 40
Meeting
1. Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for a
reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
Board of
Corporate
Executive
2
3
4 Audit
Directors
Governance
Compensation
Annual
Meeting
200
Other
Name
Andrew Witty
John F. Rex
Dirk C. McMahon
Brian R. Thompson
Marianne D. Short
2021 Annual Cash Incentive Awards
Target Percentage
(% of Salary)
Target Award Value
($)
Actual Award Paid
Paid Award
($)
Information
Executive
Compensation
6
Other
Weight
Cumulative Adjusted Earnings Per Share
50%
Threshold
Performance
$45.33
Return on Equity
50%
22.2%
Target
Performance
$47.95
24.2%
Maximum
Performance
$51.60
26.2%
2019-2021
Performance
$49.31
24.8%
The performance measures and goals for the 2019-2021 performance period were established during the first quarter
of 2019 based on the Company's long-term business plan. The first year of the long-term business plan was based on the
Company's 2019 business plan. Subsequent years were based on assumptions and growth initiatives developed by
the Company's business units and reviewed by the Board of Directors.
Key assumptions and elements of the 2019-2021 long-term business plan were:
•
Continued expansion of the Optum Care Delivery platform and capabilities;
.
.
Medicaid, Medicare Advantage, Medicare Supplement and Global growth in people served over the three-year
period;
Commercial risk-based and fee-based health insurance growth in people served in all years, leveraging
enhanced products, services, and distribution including a continued focus on diversification into ancillary
businesses;
2022 Proxy Statement | Compensation Discussion and Analysis 42
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Other
4 Audit
Annual
Annual
Performance Measure
2019-2021
An expectation that medical cost trends would be consistent with historical levels;
2019-2021 Long-Term Goals and Context
5
6
The long-term performance share program creates financial incentives for achieving or exceeding three-year financial
goals for the enterprise as follows. The table below shows the goals for the 2019-2021 plan, as well as the Company's
actual performance against plan:
Meeting
Information
Award Type and Vesting Terms
Performance Share Award (3-year
performance period with cliff vesting)
(4-year ratable vesting*)
And
Stock Option Award
4 Audit
•
Termination Provisions
Unvested performance share awards will vest if, within two years of a change in control, an
executive terminates employment for Good Reason or is terminated without Cause (i.e., "double
trigger" vesting), as these terms are defined in the award agreement. The number of
performance awards that vest will be dependent upon the performance vesting criteria that have
been satisfied.
RSU Award
Except as provided in footnote 4 to the Outstanding Equity Awards at 2021 Fiscal Year-End table.
• If the executive officer is retirement-eligible, upon retirement, the number of performance shares
earned at the end of the performance period based on actual performance, if any, will vest as if
the executive officer had been continuously employed throughout the entire performance period,
provided the executive officer served for at least one year of the performance period.
Unless the executive officer is retirement-eligible, award is subject to earlier termination upon
certain events related to termination of employment.
•
Unvested award will vest in full upon death or disability.
(4-year ratable vesting)
•
Upon death or disability, the executive officer will receive at the end of the applicable
performance period, the number of performance shares that are earned, if any.
Upon termination of employment for Good Reason or without Cause (as these terms are
defined in the award agreement), the executive officer will receive at the end of the applicable
performance period, a pro rata number of performance shares that are earned, if any, based on
the number of full months employed plus the number of months for any severance period.
.
Long-Term Awards
•
Unvested award will vest in full if, within two years of a change in control, an executive
terminates employment for Good Reason or is terminated without Cause (i.e., "double trigger"
vesting), as these terms are defined in the award agreement.
Marianne D. Short
Annual Cash Incentive Award (2)
Performance Share Award (3)(4)
RSU Award (3)
Stock Option Award (3)
David S. Wichmann
Annual Cash Incentive Award
Performance Share Award
RSU Award
6/7/2021
1,125,063
2,430,000
1,093,500
1,215,000
1108050 1285 240 5.82 112442811
Mr. Wichmann was not granted any incentive awards in 2021.
Stock Option Award
2,250,206
1,125,103
(1) The actual value to be realized by a named executive officer depends upon the appreciation in value of the
Company's stock and the length of time the award is held. No value will be realized with respect to any stock
option award if the Company's stock price does not increase following the grant date. For a description of the
assumptions used in computing grant date fair value for stock option awards pursuant to FASB ASC Topic 718, see
Note 11 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2021. The grant date fair value of each RSU award and targeted grant date value of each
performance share award were computed in accordance with FASB ASC Topic 718 based on the closing stock
price on the grant date. Under the 2020 Stock Incentive Plan, all equity-based compensation awards are subject to
one year minimum vesting requirements, subject to an exception for a limited number of shares not to exceed
5%. Equity-based compensation awards to employees are generally subject to three or four year vesting provisions.
For additional information on vesting of 2021 Grants of Plan-Based Awards, see footnote 3 below.
875,030
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation program
necessary for an understanding of the information disclosed in this table.
12,779
400.25
6/7/2021
6/7/2021
400.25
2/22/2021
1,312,525
327.64
2,850,024
5,700,361
Brian R. Thompson
Annual Cash Incentive Award (2)
2022 Proxy Statement | 2021 Grants of Plan-Based Awards 51
1,800,000 2,000,000 4,000,000
Performance Share Award (3)(4)
6/7/2021
RSU Award (3)
2/22/2021
RSU Award (3)
6/7/2021
Stock Option Award (3)
Stock Option Award (3)
6/7/2021
|||||
10
6,559
13,118
4,006
2,625,240
1,312,526
9,939
Board of
Directors
Option Awards
Corporate
Governance
Equity
Number
of
Number of
Number of
Date of
Option
Name
Grant
Securities
Underlying
Unexercised
Options (#)
Exercisable
Securities
Underlying
Option
Unexercised
Options (#)
Unexercisable
Exercise/
Grant
Price ($)
Option
327.64
| 8
Andrew Witty
2/22/2021
51,325(3)
Stock Awards
The following table presents information regarding outstanding equity awards held at the end of fiscal year 2021 by our
named executive officers.
Outstanding Equity Awards at 2021 Fiscal Year-End
Information
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
(2) Amounts represent estimated payouts of annual cash incentive awards granted under our Executive Incentive Plan
in 2021. The Executive Incentive Plan permits a maximum annual bonus pool for executive officers equal to 2% of
the Company's net income (as defined in the plan) and no executive officer may receive more than 25% of such
annual bonus pool. The Compensation and Human Resources Committee has generally limited annual cash
incentive payouts to not more than two times the target amount, and the maximum amounts shown for each named
executive officer equal two times each executive officer's target amount. In order for any amount to be paid, the
Company must achieve approved performance measures of (i) revenue, (ii) operating income, (iii) cash flow, (iv) NPS,
and (v) employee experience index. The estimated threshold award represents the amount that may be paid if
threshold performance is achieved on each of the performance measures. Once threshold performance is achieved
on an approved performance measure, the Compensation and Human Resources Committee has the discretion
to pay an award. The actual annual cash incentive amounts earned in connection with the 2021 awards are reported
in the 2021 Summary Compensation Table.
(3) Amounts represent grants under the 2020 Stock Incentive Plan. Please refer to the chart on page 42 for a summary
of our equity award types, vesting terms and termination provisions. RSUs are eligible to receive dividend
equivalents, which are subject to the same terms as the RSUs and will be forfeited if the underlying RSUs do not
vest. No dividend equivalents are paid on performance shares.
2
(4) Amounts represent the estimated future number of performance shares that may be earned under our 2020 Stock
Incentive Plan at each of the threshold, target and maximum levels. The performance share award will be paid
out in shares of Company common stock. The number of performance shares the executive officer will receive will
be determined at the conclusion of the 2021-2023 performance period and will be dependent upon the Company's
achievement of a cumulative AEPS measure and an average ROE measure approved by the Compensation and
Human Resources Committee. The Compensation and Human Resources Committee has the discretion to
reduce the number of performance shares an executive officer is entitled to receive. The estimated threshold
award represents the number of performance shares that may be awarded if threshold performance is achieved on
one of the performance measures.
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
2022 Proxy Statement | 2021 Grants of Plan-Based Awards 52
40,703
Threshold
(#)
21
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
6
Meeting
Information
2021 Grants of Plan-Based Awards
The following table presents information regarding each grant of an award under our compensation plans made during
2021 to our named executive officers for fiscal year 2021.
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
Name
Grant
Date
Threshold
($)
Target
($)
Maximum
($)
(#)
Estimated Future Payouts
Under Equity Incentive
Plan Awards
Target Maximum
(#)
of Shares
of Stock
2022 Proxy Statement | 2021 Summary Compensation Table 50
The terms of Mr. Wichmann's employment agreement provided for payments approximating his most recent base
salary and non-equity incentive compensation award for a two-year period following departure and is subject to
restrictive covenants, including non-competition and non-solicitation provisions during this two-year period.
Pursuant to applicable SEC rules, the entire amount payable to Mr. Wichmann over the two-year period is included
in the table. The amount set forth in this footnote for Mr. Wichmann is consistent with the disclosures made in the
Company's 2021 proxy statement. Mr. Wichmann has not been provided with any additional compensation since his
departure from the Company in 2021.
Andrew Witty is provided with tax equalization pursuant to the Company's tax equalization policy to ensure that as
a U.S. non-resident, his overall tax obligation is the same as if he were taxed exclusively in the United Kingdom. This
policy also provides assistance in preparation of tax returns due to the complexity of multi-jurisdictional filing
requirements.
As permitted by SEC rules, we have omitted perquisites and other personal benefits that we provided to certain
named executive officers in 2021 if the aggregate amount of such compensation to each such named executive
officer was less than $10,000. The Company provided each of the named executive officers a $2 million face value
term life insurance policy.
Brian R. Thompson
Marianne D. Short
Dirk C. McMahon
David S. Wichmann
Expiration
Date(1)
2/22/2031
Contributions
Under 401(k)
Savings Plan
($)
Insurance
Premiums
($)
Separation Pay
($)
10,320
13,050
12,854
or Units
(#)
13,050
13,050
6,134
13,050
49,440
13,050
2,966
10,812,000
Tax
Equalization
and Tax Return
Preparation
($)
46,704
18,374
2,850,024
Options
All Other
Stock
Awards:
Number
2.18000 20000 20000 21
17,958 35.916 10.989 513
184_ 5.700.361
12
7,187,690
Stock Option Award (3)
2/22/2021
Dirk C. McMahon
Annual Cash Incentive Award (2)
2,160,000 2,400,000
4,800,000
Performance Share Award (3)(4)
6/7/2021
RSU Award (3)
2/22/2021
2:18080 248000 4800280 21 14242 28.404800003
Stock Option Award (3)
2/22/2021
།སྦྲ།
「༅། །
14242 28,4840
40,703
327.64
2,160,000 2,400,000 4,800,000
2/22/2021
RSU Award (3)
6/7/2021
All Other
Option
Awards:
Number of
Securities
Underlying
Exercise
or Base
Price of
Grant Date
Fair Value
of Stock
and Option
Awards
($)(1)
Option
Awards
($/Sh)
Andrew Witty
(#)
Annual Cash Incentive Award (2)
Performance Share Award (3)(4)
6/7/2021
RSU Award (3)
2/22/2021
Stock Option Award (3)
2/22/2021
2
26
John F. Rex
Annual Cash Incentive Award (2)
Performance Share Award (3)(4)
2,700,000 3,000,000 6,000,000
2/13/2020
12,025(3)
38,113(3)
302.20
262.98
226.64
6/7/2021
6/7/2021
2/22/2021
8/12/2029 2/13/2020
2/26/2029 2/13/2020
2/13/2028 8/12/2019
2/8/2027 2/26/2019
2/13/2018
6/7/2031 6/7/2021
2/13/2030 6/7/2021
2/26/2029 2/13/2020
2/13/2028 2/26/2019
2/8/2027 2/13/2018
3/31/2026 2/13/2020
3/31/2026 2/13/2020
3/31/2026 2/26/2019
2/13/2018
2/10/2025
2/12/2024
2/22/2031 2/22/2021
2/13/2030 6/7/2021
2/26/2029 2/13/2020
2/13/2028 2/13/2020
2/8/2027 2/26/2019
2/9/2026 2/13/2018
2/10/2025
6/7/2031
2/22/2031
8,437(4) 4,236,555
14,242(5) 7,151,478
5,759(4) 2,891,824
14,891(5)
7,477,367
2,741(4) 1,376,366
1,612(4) 809,450
2,209(3) 1,109,227
6,559(5)
3,293,536
4,061(3) 2,039,191
3,199(3) 1,606,346
8,273(5) 4,154,204
1,069(3) 536,788
1,993(3)
880(3)
2,717(4)
1,000,765
441,883
1,364,314
5,622(5)
2,823,031
5,759(4) 2,891,824
2,242(4)
1,173(4)
8,190(4) 4,112,527
1,125,798
589,010
21,179(5)
10,634,823
34,203(3)
16,355(3)
6,377(4) 3,202,147
3,253(4) 1,633,461
2/13/2018
45,594(3)
2/13/2018
2/8/2017
13,260
4,421(3)
226.64
6,535
160.31
Marianne D. Short
6/7/2021
2/13/2020
2/26/2019
12,779(3)
10,686
32,058(3)
400.25
302.20
12,024
262.98
2/13/2018
17,680
5,894(3)
226.64
2/8/2017
31,539
160.31
David S. Wichmann
2/13/2020
2/26/2019
2022 Proxy Statement | Outstanding Equity Awards at 2021 Fiscal Year-End 53
Board of
Directors
2
Stock Awards
Number of
Shares
Acquired on
Value
Realized on
Vesting
($)
22,442,929
Vesting
($)(1)
(#)
48,418
52,972
18,760,034
24,968
11,295,940
20,769
9,315,737
14,871
6,694,048
39,213
458,832
9,422,492
110,411,515(2)
16,611
7,464,946
45,520
20,719,074
John F. Rex
2022 Proxy Statement | 2021 Option Exercises and Stock Vested 54
(1) Computed by determining the market value per share of the shares acquired based on the difference between:
(a) the per share market value of our common stock at exercise, defined as the closing price on the date of exercise,
or the weighted average selling price if same-day sales occurred, and (b) the exercise price of the stock options.
(2) For Mr. Wichmann, the amount reflects option awards granted over an eight-year period from 2013-2020.
Exercise
Value
Realized on
(#)
Number of
Shares
Acquired on
Exercise
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
(1) The expiration date shown is the latest date that stock options may be exercised. Stock options may terminate
earlier in certain circumstances, such as in connection with the named executive officer's termination of employment.
(2) Based on the per share closing market price of our common stock on December 31, 2021 of $502.14.
(3) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date.
262.98
(4) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date, other than for
retirement eligible executive officers. A portion of a retirement eligible executive officer's award that otherwise
would have vested on the next specified vesting date is cancelled to pay applicable FICA taxes owed by the executive
officer. The cancellation occurs in the year of grant if the executive officer is retirement eligible during that year or
in the first year the executive officer becomes retirement eligible. The remainder of the award vests proportionally
over the remaining vesting period. Mr. McMahon and Ms. Short are retirement eligible while Mr. Wichmann's equity
grants are eligible for retirement treatment.
(6) Vest 20% annually over a five-year period beginning on the first anniversary of the grant date.
2021 Option Exercises and Stock Vested
The following table presents information regarding the exercise of stock options during fiscal year 2021 by our named
executive officers and vesting of performance shares and RSUs held by our named executive officers for fiscal year 2021.
Name
Andrew Witty
John F. Rex
Dirk C. McMahon
Brian R. Thompson
Marianne D. Short
David S. Wichmann
Option Awards
(5) Vest 100% at the end of the three-year performance period. The number of performance shares the executive
officer will receive is dependent upon the achievement of a cumulative EPS measure and an average ROE measure
approved by the Compensation and Human Resources Committee. The number of performance shares reported
above for grants made in 2021 and 2020 is at the target number established by the Compensation and Human
Resources Committee because we currently believe that is the probable outcome based on the Company's
performance through December 31, 2021.
10,689(3)
10,688
2/26/2019
John F. Rex
2/22/2021
40,703(3)
2/13/2020
10,686
32,058(3)
327.64
302.20
2/26/2019
18,705
18,705(3)
262.98
2/13/2018
22,101
7,367(3)
226.64
2/22/2031 2/22/2021
2/13/2030 6/7/2021
2/26/2029 2/13/2020
2/13/2028 2/13/2020
8,818(3) 4,427,871
14,242(5)
7,151,478
5,759(3) 2,891,824
14,891(5)
7,477,367
2/8/2017
17,329(6) 8,701,584
6/5/2018
1,549(3) 777,815
4,733(3)
2,376,629
2,275(3) 1,142,369
8,889,887
302.20
11/6/2019
8,922
8,923(3)
2/26/2019
6/5/2018
12,693
25,385(3)
11,774
11,774(3)
250.52
262.98
244.43
Stock
Award
Grant Date
2/22/2021
2/13/2030 6/7/2021
11/6/2029 2/13/2020
2/26/2029 2/13/2020
6/5/2028 11/6/2019
2/26/2019
6/5/2018
43,561
Shares or
Units of
Stock
That
11,119(3)
($)(2)
5,583,295
Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares or
Units That
Have Not
Vested (#)
Incentive
Plan
Awards:
Market
Value of
Unearned
Shares or
Units That
Have Not
Vested ($)(2)
17,958(5)
9,017,430
6,845(3) 3,437,148
17,704(5)
Have Not
Vested (#)
12,704
160.31
6/7/2016
39,205
160.31
2/9/2016
56,921
111.16
2/10/2015
11,643
108.97
Brian R. Thompson
6/7/2021
2/22/2021
9,939(3)
400.25
18,745(3)
327.64
2/13/2020
5,936
17,811(3)
302.20
2/13/2030
8/12/2019
6,504
6,504(3)
243.20
2/8/2017
226.64
8,104(3)
24,310
56,416
136.94
6/7/2026 2/13/2018
3,488(3) 1,751,464
1,465(3) 735,635
2/9/2016
31,623
111.16
2/9/2026
2/10/2015
25,504
2/12/2014
2/8/2027 2/26/2019
44,757
2/22/2021
40,703(3)
2/13/2020
10,686
32,058(3)
108.97
70.24
327.64
302.20
2/26/2019
14,696
14,697(3)
262.98
2/13/2018
Dirk C. McMahon
Andrew Witty
The Board has established a stock retention policy for executive officers subject to Section 16 of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), which includes our named executive officers. Under this policy,
Section 16 officers are generally required to retain for at least one year one-third of the net shares acquired upon the
vesting or exercise of any equity awards.
Company Matching
Name and Principal Position
The following table provides certain summary information for the years ended December 31, 2021, 2020 and 2019
relating to compensation paid or granted to, or accrued by us on behalf of our named executive officers.
2021 Summary Compensation Table*
During fiscal 2021, Mr. Flynn and Drs. Noseworthy and Wilensky served on the Compensation and Human Resources
Committee. Dr. Montgomery Rice joined the Compensation and Human Resources Committee in February 2022, replacing
Dr. Wilensky. None of these persons had ever been an officer or employee of the Company or any of its subsidiaries
while serving on the Compensation and Human Resources Committee. Furthermore, during 2021, none of these persons
served as a member of the Compensation and Human Resources Committee (or other board committee performing
equivalent functions) or as a director of another entity where an executive officer of such entity served on our
Compensation and Human Resources Committee or Board.
Compensation and Human Resources Committee Interlocks and Insider
Participation
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
Directors
2
6
Meeting
Information
Potential Impact on Compensation from Executive Misconduct/ Compensation Clawbacks
If the Compensation and Human Resources Committee determines an executive officer has engaged in detrimental
conduct as defined in the clawback policy, the Compensation and Human Resources Committee may take a range of
actions to remedy the detrimental conduct prevent its recurrence and impose such discipline as would be appropriate,
including, without limit: (i) terminating employment; (ii) initiating legal action against the executive officer; and (iii) requiring
reimbursement of (or canceling or reducing) rights to any annual incentive payments or equity awards subject to the
clawback policy. In addition, with respect to our senior executives, including our named executive officers, if the misconduct
causes, in whole or in part, a material restatement of the Company's financial statements, action may include (a) seeking
reimbursement of the entire amount of cash incentive compensation awarded to the executive officer, if the executive
officer would have received a lower (or no) cash incentive award if calculated based on the restated financial results;
(b) canceling all outstanding vested and unvested equity awards subject to the clawback policy and requiring the executive
officer return to the Company all gains from equity awards realized during the 12-month period following the filing of
the incorrect financial statements; and (c) seeking reimbursement of the entire amount of any bonus paid.
As discussed in “Enterprise-Wide Incentive Compensation Risk Assessment,” a compensation risk assessment is
performed annually and the results are reviewed with the Compensation and Human Resources Committee.
Accounting and Tax Considerations
Internal Revenue Code Section 162(m)(6) addresses the tax deductibility of compensation paid by health insurance
providers, including the Company. Section 162(m)(6) provides an annual tax deduction limit of $500,000 per person per
year for compensation that we pay to any of our employees, directors, officers and any other individuals who provide
services to or on behalf of the Company. While the Compensation and Human Resources Committee considers the
impact of Section 162(m)(6), it believes shareholder interests are best served by not restricting the Compensation and
Human Resources Committee's discretion and flexibility in crafting the executive compensation program, even if
non-deductible compensation expenses could result. The Compensation and Human Resources Committee also
considers the accounting consequences of its compensation decisions.
Compensation and Human Resources Committee Report
Year
The Compensation and Human Resources Committee has reviewed and discussed the above Compensation
Discussion and Analysis with management. Based on its review and discussions, the Compensation and Human
Resources Committee recommended to the Board of Directors that the Compensation Discussion and Analysis
be included in the proxy statement and incorporated by reference into the Company's Annual Report on
Form 10-K for the year ended December 31, 2021. This report was provided by the following independent
directors who comprise the Compensation and Human Resources Committee:
Timothy P. Flynn (Chair)
Valerie C. Montgomery Rice, M.D.
John H. Noseworthy, M.D.
The members of the Compensation and Human Resources Committee listed above participated in the review, discussion
and recommendation with respect to the Compensation Discussion and Analysis.
2022 Proxy Statement | Compensation and Human Resources Committee Report 47
Board of
Members of the Compensation and Human Resources Committee
5
Salary
($)(2)
Andrew Witty (1)
25,904
2,050,000
8,550,501 2,850,024
1,161,539
2021
John F. Rex
16,526,020
175,360
2,750,000
9,375,614 3,125,046
12,857,176
268,100
920,000
18,433,143
57,024
2,550,000
3,593,777
2021
1,450,769
Chief Executive Officer
2020
418,846 550,000
2019 1,100,000
Stock
Awards
($)(3)
10,781,573
8,025,223 2,675,007
Bonus
($)
Option
($)(4)
Non-Equity
Incentive Plan
Compensation
($)(5)
All Other
Compensation
Total
($)(6)
($)
Awards
4 Audit
Other
Annual
2
Board of
Directors
2022 Proxy Statement | Compensation Discussion and Analysis 45
Stock options do not count towards satisfying the ownership requirements under the guidelines, regardless of their
vesting status, and performance shares do not count towards satisfying the ownership requirements until they are vested.
Time-based RSUs and restricted stock awards are counted toward the satisfaction of the ownership requirements.
The Compensation and Human Resources Committee periodically reviews compliance with the ownership requirements.
As of April 8, 2022, all of our named executive officers were in compliance with the ownership requirements.
for any other executive officers who are not direct reports of the CEO, two times base salary.
for executive officers who are direct reports of the CEO, or the Chief Executive Officer of Optum or
UnitedHealthcare, three times base salary; and
for the CEO, eight times base salary;
•
The Compensation and Human Resources Committee believes that executive stock ownership aligns management's
interests with those of shareholders and fosters a long-term outlook, while also mitigating compensation risk. Under our
stock ownership guidelines, each executive officer must beneficially own at least the following amounts of the
Company's common stock within five years of the executive officer's election or appointment as an executive officer:
Executive Stock Ownership Guidelines and Stock Retention Policy
Other Compensation Practices
The Company has entered into employment agreements with each of our named executive officers. These employment
agreements are described in greater detail in “Executive Employment Agreements" and "2021 Summary Compensation
Table."
Employment Agreements and Post-Employment Payments and Benefits
We generally do not provide excise tax gross-ups or perquisites to our executive officers. We have agreed to provide
Andrew Witty with tax equalization payments to ensure that, as a U.S. non-resident, his overall tax obligation is the same
as if he were taxed exclusively in the United Kingdom, including assistance in tax return preparation due to the
complexity of multi-jurisdictional filing requirements. We generally prohibit personal use of corporate aircraft by any
executive officer unless the Company is reimbursed for the full incremental cost to the Company of such use. Because
there is no incremental cost to the Company, we permit on occasion an executive officer's family member to accompany
the executive officer on a business flight on Company aircraft provided a seat is available.
Perquisites
In addition to generally available benefits, our executive officers are eligible to receive supplemental long-term disability
coverage equal to 60% of base salary, and all of our named executive officers receive supplemental group term life
insurance coverage of $2 million. Executive officers are also eligible to participate in our non-qualified Executive Savings
Plan. See the 2021 Non-Qualified Deferred Compensation table for additional information regarding contributions,
earnings and distributions for each named executive officer under the Executive Savings Plan. Our Executive Savings
Plan does not provide for guaranteed or above-market interest. In 2020, we discontinued providing company matching
credits under this plan.
Benefits
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Corporate
Governance
Other
5
6
Meeting
Information
The grant date fair values and terms of these equity awards are discussed in the 2021 Grants of Plan-Based Awards
table. Please see the “Long-Term Incentive Compensation” section above for additional details regarding the rationale
underlying the Compensation and Human Resources Committee's determination to award performance shares, RSUs
and stock options.
Other Compensation
4 Audit
3
Executive
Compensation
Annual
Payouts are capped under the annual incentive and performance share programs;
•
We have stock ownership guidelines for our executive officers;
•
•
We require executive officers to hold, for at least one year, one-third of the net shares acquired upon vesting or
exercise of any equity award granted; and
•
We have a clawback policy that entitles the Board to seek reimbursement from any executive directly involved in
misconduct causing a restatement of financials, detrimental conduct or violation of certain employment
agreement provisions, including any non-compete, non-solicit or confidentiality provisions. Actions that trigger
the clawback policy may require an executive to reimburse all or a portion of certain annual incentive payments
and equity awards. The Board also has the right to cancel or reduce the executive's rights to any incentive
payment or equity awards.
2022 Proxy Statement | Compensation Discussion and Analysis 46
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
In addition, our Compensation and Human Resources Committee retains discretion to adjust compensation for quality
of performance, adherence to Company values and other factors.
14,637,967
No duplicative metrics between annual and long-term incentive programs;
A large majority of management compensation is delivered in long-term incentives that vest over multiple years;
4 Audit
5
6
Meeting
Other
Information
Transactions in Company Securities; Prohibition on Hedging, Short Sales and Pledging
•
In general, SEC rules prohibit uncovered short sales of our common stock by our executive officers, including the
named executive officers. Accordingly, our insider trading policy prohibits short sales and hedging transactions of our
common stock by all employees and directors. Hedging transactions include, for example, purchase or sale of options
(puts or calls, whether covered or uncovered), equity swaps or other derivatives directly linked to the Company's securities.
Additionally, our insider trading policy prohibits pledging transactions by directors and executive officers and discourages
our employees from pledging transactions.
Our compensation programs are balanced, focused on long-term pay-for-performance, allow for discretion and are
overseen by an independent Compensation and Human Resources Committee. The Compensation and Human
Resources Committee believes the design of the compensation program for our executive officers does not encourage
excessive or unnecessary risk-taking, as illustrated by the following list of features:
.
•
•
Our annual cash bonus program includes a variety of financial and non-financial measures that require
substantial performance on a broad range of initiatives;
Name
Consideration of Risk in Named Executive Officer Compensation
Executive Vice President
Our equity awards are delivered through a balanced mix of performance shares, RSUs and stock options to
encourage sustained performance over time;
1,000,000
Restricted
Stock Units
($)
3,593,883
Brian R. Thompson
Marianne D. Short
Dirk C. McMahon
John F. Rex
Andrew Witty
Name
(3) The amounts reported in this column reflect the aggregate grant date fair value of the RSUs and performance
shares (at target) granted in 2021, 2020 and 2019 and are computed in accordance with FASB ASC Topic 718, based
on the closing stock price on the grant date. The grant date fair value of RSUs granted in 2021 and the grant date
fair value of performance shares granted in 2021 if target performance and maximum performance were achieved
are as follows:
(2) Amounts reported reflect the base salary earned by named executive officers in the years ended December 31,
2021, 2020 and 2019. Amount reported for Mr. Wichmann for 2021 include $23,585 deferred by Mr. Wichmann under
our Executive Savings Plan.
to receive payments equal to his most recent base salary and non-equity incentive compensation award for a two-
year period following his departure and for him to be subject to restrictive covenants, including non-competition and
non-solicitation provisions. These terms are the same as the disclosures made in our 2021 proxy statement, and
no modification to these terms has been made since that filing. Ms. Short retired as Executive Vice President and
Chief Legal Officer on February 28, 2022.
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
9,600,592 3,200,038
9,600,348 3,200,033
3,500,000
4,500,000
172,083
201,993
17,872,713
18,886,989
Performance Shares
Target
*
(1) All principal positions set forth above are as of December 31, 2021. Andrew Witty has served as Chief Executive
Officer of the Company since February 3, 2021. David Wichmann served as Chief Executive Officer of the Company
until February 2, 2021. Mr. Wichmann has not been provided with any additional compensation since his departure
from the Company in 2021. Mr. Wichmann entered into an Amended and Restated Employment Agreement with
the Company on December 1, 2014, and an Amendment to Employment Agreement on August 16, 2017.
Mr. Wichmann's employment ended on March 31, 2021. The terms of his employment agreement provide for him
2022 Proxy Statement | Interlocks and Insider Participation | 2021 Summary Compensation Table 48
Board of
Directors
2
Corporate
Governance
3
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation
program necessary for an understanding of the information disclosed in this table. Please also see "Executive
Employment Agreements" below for a description of the material terms of each named executive officer's employment
agreement.
Maximum
($)
($)
1,030,000
2022 Proxy Statement | 2021 Summary Compensation Table 49
Board of
Directors
2
Corporate
Governance
3
1,700,000
Executive
Compensation
Annual
Meeting
Other
6
Information
(6) All other compensation for 2021 includes the following:
2020
4 Audit
1,384,615
123,000
2,050,000
7,187,690 14,375,380
2,850,140 5,700,361 11,400,722
2,850,140 5,700,361 11,400,722
2,187,873 2,625,240 5,250,480
1,125,103 2,250,206 4,500,412
See the 2021 Grants of Plan-Based Awards table for more information on stock awards granted in 2021.
(4) The actual value to be realized by a named executive officer depends upon the performance of the Company's
stock and the length of time the award is held. No value will be realized with respect to any award if the Company's
stock price does not increase following the award's grant date or if the executive officer does not satisfy the
vesting criteria.
The amounts reported in this column for 2021 reflect the aggregate grant date fair value of stock options granted
in 2021 computed in accordance with FASB ASC Topic 718. For a description of the assumptions used in computing
the aggregate grant date fair value, see Note 11 to the Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2021.
(5) Amounts reported reflect annual cash incentive awards to our named executive officers under our 2008 Executive
Incentive Plan. The 2021 annual incentive awards, including amounts deferred by the named executive officers, were
the following:
2,050,000
Name
Dirk C. McMahon
Brian R. Thompson
Marianne D. Short
Total Amount of
Annual Cash
Incentive Award
Amount of Annual
Cash Incentive
Award Deferred
($)
($)
2,550,000
John F. Rex
2019
Andrew Witty
2020
70,454
2,500,000
4,125,367 1,375,005
896,154
2019
Operating Officer
12,606,484
106,199
2,500,000
6,750,241 2,250,044
1,000,000
2020
President and Chief
14,643,488
31,424
2,050,000
8,550,501 2,850,024
6,750,241 2,250,044
1,400,000
2,500,000
96,777
12,597,062
and CFO
8,966,980
2019
5,250,133 1,750,040
2,500,000
126,912
10,627,085
Dirk C. McMahon
1,161,539
1,000,000
Brian R. Thompson
2021
951,154
3,375,309 1,125,063
2,250,181 2,250,044
3,375,085 1,125,012
1,030,000
62,490
6,437,093
1,500,000
88,305
850,000
6,938,530
6,963,677
David S. Wichmann (1)
Former CEO
2021
393,077
2021
10,828,016
113,580
2019
1,500,000
850,000
4,813,113 2,187,555
1,700,000
and Chief Legal Officer
19,184
9,671,006
Executive Vice President
2020
and CEO, UnitedHealthcare
11,221,093
2019
Marianne D. Short(1)
2021
844,231
Executive Vice President
2020
4,612,000
35,585,400
37,191,647
720,000
37,191,647
Total (3)
42,997,400
44,451,085
43,991,647 42,711,647 4,800,000 44,451,085
Dirk C. McMahon
Cash Payments
Insurance Benefits
Annual Cash Incentive (1)
Continued Equity Vesting (2)
Continued Equity Vesting (2)
43,202,976
Total(3)
Cash Payments
4,800,000 4,800,000
2,000,000 720,000
35,943,538 35,943,538 43,202,976 43,202,976
42,743,538 41,463,538 48,002,976 43,202,976
4,800,000
Brian R. Thompson
7,412,000
50,614,976
Change
Insurance Benefits
Insurance Benefits
Annual Cash Incentive (1)
Continued Equity Vesting (2)
Total (3)
John F. Rex
Cash Payments
For Good Reason
or Not For Cause
($)
Death
($)
Disability Retirement In Control
($)
7,232,000
56,897,821
64,129,821
6,000,000 6,000,000
2,000,000 900,000
58,878,493 58,878,493
66,878,493
6,000,000
67,853,241
65,778,493 6,000,000 67,853,241
7,412,000
Annual Cash Incentive (1)
4,800,000 4,800,000
4,800,000
2,000,000
Insurance Benefits
1,357,756
22,046,864
2022 Proxy Statement | 2021 Non-Qualified Deferred Compensation 55
(5) Under our Executive Savings Plan, unless an employee in the plan elects to receive distributions during the term of
his or her employment with the Company, benefits will be paid no earlier than at the beginning of the year following
the employee's termination. However, upon a showing of severe financial hardship, an employee may be allowed to
access funds in his or her deferred compensation account earlier. Benefits can be received either as a lump sum
payment, in five or ten annual installments, in pre-selected amounts and on pre-selected dates or a combination
thereof. An employee may change his or her election with respect to the timing and form of distribution for such
deferrals under certain conditions. However, for deferrals relating to services performed on or after January 1,
2004, employees may not accelerate the timing of the distributions.
(4) Amounts deferred are credited with earnings from measuring investments selected by the employee from a
predetermined collection of unaffiliated mutual funds identified by the Company. The Executive Savings Plan does
not credit above market earnings or preferential earnings to amounts deferred. Employees may change their selection
of measuring investments on a daily basis.
(3) For amounts deferred prior to 2020, for the first 6% of the employee's base salary and annual incentive award
deferrals under our Executive Savings Plan, the Company provided a matching credit of up to 50% of amounts
deferred at the time of each deferral. Company matching credits were discontinued in 2019.
(1) All amounts in these columns have been reported as compensation in the 2021 Summary Compensation Table.
(2) Named executive officers are eligible to participate in our Executive Savings Plan, which is a non-qualified deferred
compensation plan. Under the plan, employees may defer up to 80% of their eligible annual base salary (100%
prior to January 1, 2007) and up to 100% of their annual cash incentive awards. Amounts deferred, including
Company credits, are credited to a bookkeeping account maintained for each participant, and are distributable
pursuant to an election made by the participant as to time and form of payment that is made prior to the time of
deferral. The Company maintains a Rabbi Trust for the plan. The Company's practice is to set aside amounts in
the Rabbi Trust to be used to pay for all benefits under the plan, but the Company is under no obligation to do so
except in the event of a change in control.
17,674,674
2,421,859
2,421,380
2,677,037
3,926,597
180,017
177,671
331,681
491,483
—
233,585
150,000
David S. Wichmann
Annual Cash Incentive (1)
Board of
Directors
Continued Equity Vesting (2)
2
3
4,000,000 4,000,000
2,000,000 600,000
23,905,515 23,905,515
4,000,000
Total (3)
26,658,864
27,485,271
29,905,515 28,505,515 4,000,000 27,485,271
Marianne D. Short
Cash Payments
4,812,000
Annual Cash Incentive (1)
Insurance Benefits
2,000,000
540,000
Continued Equity Vesting (2)
21,005,403
25,817,403
Marianne D. Short
Other
Annual
4 Audit
Executive
Compensation
Corporate
Governance
Cash Payments
Dirk C.
McMahon
Name
Marianne D.
Short
✓
✓
✓
Participation in incentive compensation plans (1)
✓
✓
✓
Stock-based awards (1)
✓
✓
✓
✓
$2 million term life insurance policy (2)
✓
✓
✓
✓
Brian R.
Thompson
✓
Base salary(1)
Andrew
Witty
6
Meeting
Information
(6) This column includes the amounts shown in column (b) as well as the following amounts reported in the summary
compensation table for prior years:
Name
Andrew Witty
John F. Rex
Dirk C. McMahon
Brian R. Thompson
Marianne D. Short
David S. Wichmann
Amount
Previously
Reported
1,100,203
420,000
1,670,620
4,783,867
Executive Employment Agreements
We have entered into an employment agreement with each of the named executive officers. The table below and the
narrative that follows summarize the material terms of their respective employment agreements.
Summary of Compensation Components
Compensation Component
John F.
Rex
Andrew Witty
Long-term disability policy (2)(3)
✓
As defined in each executive officer's employment agreement, "Cause” means (a) material failure to follow the Company's
reasonable direction, or to perform any duties reasonably required on material matters; (b) material violation of, or
failure to act upon or report known or suspected violations of, the Company's Code of Conduct; (c) conviction of any
felony, commission of any criminal, fraudulent or dishonest act, or any conduct that is materially detrimental to the
Company's interests, or (d) material breach of the employment agreement. The Company must provide the executive
office with written notice of Cause within 120 days of discovery, and the executive will have 60 days to remedy the conduct,
if the conduct is reasonably capable of being remedied.
As defined in each executive officer's employment agreement, “Good Reason” exists if the Company (a) reduces the
executive officer's base salary or long- or short-term target bonus percentage other than in connection with a general
reduction affecting a group of similarly situated employees, (b) moves the executive officer's primary work location more
than 50 miles, or (c) makes changes that substantially diminish the executive officer's duties or responsibilities. For
Messrs. Witty, Rex and McMahon and Ms. Short, "Good Reason" also exists if the Company changes the executive
officer's reporting relationship. For Mr. Rex, "Good Reason" also exists if the Company makes changes resulting in Mr. Rex
no longer serving as both Chief Financial Officer of the Company and as a member of the Office of the Chief Executive
Officer. The executive officer must provide the Company with written notice of the circumstances constituting Good
Reason within 120 days of discovery, and the Company will have 60 days to remedy the circumstances, if they are
reasonably capable of being remedied.
Non-Solicitation, Non-Competition and Confidentiality Provisions
Each executive officer is subject to provisions prohibiting his or her solicitation of the Company's employees and
customers or competing with the Company during the term of the employment agreement and for two years following
termination of employment for any reason. In addition, each executive officer is prohibited at all times from disclosing
Company confidential information.
Please see the 2021 Summary Compensation Table for a description of Mr. Wichmann's employment agreement.
Potential Payments Upon Termination or Change in Control
The following table describes the potential payments to named executive officers upon termination of employment or a
change in control of the Company as of December 31, 2021, except for Mr. Wichmann because he was not employed by
the Company as of December 31, 2021. Please see the Summary Compensation Table for a description of the
payments to which Mr. Wichmann was entitled pursuant to the terms of his employment agreement. Amounts are
calculated based on the benefits available to the named executive officers under existing plans and arrangements,
including each of their employment agreements described under "Executive Employment Agreements" and "2021
Summary Compensation Table."
2022 Proxy Statement | Potential Payments Upon Termination or Change in Control 57
Board of
2
Directors
Corporate
Governance
Executive
3
4 Audit
Compensation
Annual
Meeting
6
Other
Information
Material Definitions
✓
without Cause, or if Mr. Rex terminates employment for Good Reason, Mr. Rex has the option to remain employed in an
advisory capacity for one year (at his then-current annual base salary and target bonus) following notification of
termination.
Meeting
Generally available employee benefit programs
✓
✓
(1) Any adjustments to base salary, actual bonuses payable and stock-based awards are at the discretion of the
Compensation and Human Resources Committee.
(2) Benefit provided at the Company's expense.
(3) Annual benefit covers 60% of eligible base salary in the event of a qualifying long-term disability, subject to the
terms of the policy.
Termination Provisions
Each employment agreement and each executive officer's employment may be terminated (a) by mutual agreement,
(b) by the Company with or without Cause, (c) by the executive officer, and (d) upon the executive officer's death or
disability that renders him or her incapable of performing the essential functions of his or her job, with or without reasonable
accommodation. Each executive officer may also terminate his or her employment agreement and employment at any
time for Good Reason. If the executive officer's employment is terminated by the Company without Cause or by the
executive officer for Good Reason, the Company will provide the executive officer with outplacement services consistent
with those provided to similarly situated executives and pay the executive officer severance compensation equal to the
sum of (a) 200% of his or her annualized base salary as of his or her termination date, (b) 200% of the average of
his or her last two calendar year bonuses, or if termination occurs within two years from the start of employment with
the Company, 200% of his or her target incentive, excluding any equity awards and any special or one-time bonus or
incentive compensation payments, and (c) $12,000 to offset the costs of benefit continuation coverage. The severance
compensation will be payable over a 24-month period. In addition, if the Company terminates Mr. Rex's employment
2022 Proxy Statement | Executive Employment Agreements 56
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Information
Brian R. Thompson
2,430,000 2,430,000 2,430,000
John F. Rex
The Committee engages with the Company's independent registered public accounting firm and the internal
auditors regarding the overall scope and plans for their respective audits. The Company's independent registered
public accounting firm is responsible for performing an independent audit of the Company's consolidated financial
statements in accordance with the standards of the Public Company Accounting Oversight Board (United States),
expressing an opinion as to the conformity of the consolidated financial statements with generally accepted
accounting principles ("GAAP") in the United States of America, and auditing management's assessment of the
effectiveness of internal control over financial reporting. The Committee's responsibility is to monitor and oversee
these processes and to oversee management's processes to identify and quantify material risks facing the Company,
including risks disclosed in the Company's Annual Report on Form 10-K. The Committee meets regularly with
the internal auditors and independent registered public accounting firm, with and without management present, to
discuss the results of their examinations, the evaluation of the Company's internal control over financial reporting
and the overall quality of the Company's accounting and reporting.
The Committee has adopted a Policy for Approval of Independent Auditor Services (the "Policy") outlining the
scope of services the independent registered public accounting firm may provide to the Company. The Policy sets
forth guidelines and procedures the Company must follow when retaining the independent registered public
accounting firm to perform audit, audit-related, tax and other services. The Policy also specifies certain non-audit
services that may not be performed by the independent registered public accounting firm under any circumstances.
Pursuant to these guidelines, the Committee approves fee thresholds annually for each of these categories, and
services within these thresholds are deemed pre-approved.
Management represented to the Committee that the Company's consolidated financial statements were prepared
in accordance with GAAP. The Committee has reviewed and discussed with management and Deloitte in separate
sessions the Company's consolidated financial statements for the years ended December 31, 2021, 2020 and 2019,
management's annual report on the Company's internal control over financial reporting and Deloitte's attestation.
The Committee discussed with management and Deloitte the process used to support certifications by the
Company's CEO and CFO as required by the SEC and the Sarbanes-Oxley Act of 2002 to accompany the
2022 Proxy Statement | Audit and Finance Committee Report
62
Board of
Directors
2
Corporate
Governance
Executive
Compensation
Annual
Other
4 Audit
Meeting
Information
Company's periodic filings with the SEC and the process used to support management's annual report on the
Company's internal controls over financial reporting.
The Committee discussed with Deloitte matters required to be discussed by the applicable Public Company
Accounting Oversight Board standards and Rule 2-07 of Regulation S-X. Deloitte provided to the Committee the
written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight
Board regarding Deloitte's communications with the Committee concerning independence, and the Committee
discussed with Deloitte the accounting firm's independence. In considering the independence of Deloitte, the
Committee took into consideration whether the provision of non-audit services is compatible with maintaining the
independence of Deloitte. In connection with its selection of Deloitte as the Company's independent registered
public accounting firm for the year ending December 31, 2022, the Committee conducted a performance
evaluation of Deloitte's services.
Based upon the Committee's review of the financial statements, its independent discussions with management
and Deloitte, and its review of the representation of management and the report of the independent registered
public accounting firm, and subject to the limitations of its role, the Committee recommended to the Board of
Directors that the audited consolidated financial statements for the years ended December 31, 2021, 2020 and
2019 be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed
with the SEC.
Members of the Audit and Finance Committee
F. William McNabb III, Chair
The Committee has responsibility for selecting and evaluating the independent registered public accounting firm,
which reports directly to the Committee, overseeing the performance of the Company's internal audit function, and
assisting the Board of Directors in its oversight of enterprise risk management, privacy, cyber security, data
protection, ethics and compliance. Management has primary responsibility for the Company's consolidated financial
statements and the overall reporting process, for maintaining adequate internal control over financial reporting
and, with the assistance of the Company's internal auditors, for assessing the effectiveness of the Company's
internal control over financial reporting. Deloitte & Touche LLP ("Deloitte") has served as the Company's independent
registered public accounting firm since 2002.
Michele J. Hooper
The Audit and Finance Committee (the “Committee”) of our Board of Directors is comprised of three non-
employee directors, all of whom are audit committee financial experts, as defined by the SEC. The Board of
Directors has determined all of the members of the Committee are independent within the meaning of the listing
standards of the NYSE, the rules of the SEC and the Company's Standards for Director Independence. The
Committee operates under a written charter adopted by the Board of Directors accessible in the corporate
governance section of our website at www.unitedhealthgroup.com/About/Corporate Governance.aspx.
Audit
5
6
Meeting
Information
PROPOSAL 2: Advisory Approval of the Company's Executive
Compensation
The Board of Directors recognizes the significant interest of shareholders in executive compensation matters. As
required by Section 14A of the Exchange Act, we are seeking shareholders' views on our executive compensation
philosophy and practices through an advisory vote on the following resolution at the Annual Meeting:
"Resolved, the shareholders approve, on an advisory basis, the compensation of the named executive officers, as
disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC, including the Compensation
Discussion and Analysis, the compensation tables and the related narrative disclosures."
The Compensation Discussion and Analysis, compensation tables and related narrative disclosures appear on
pages 32-61 of this proxy statement.
As discussed in the Compensation Discussion and Analysis, the Board of Directors believes our executive compensation
program attracts and retains highly qualified executives while linking executive compensation directly to Company-wide
performance and long-term shareholder interests. In deciding how to vote on this proposal, the Board of Directors asks
you to consider the key points with regard to our executive compensation program included in the Compensation
Discussion and Analysis and in the "Executive Summary" section on pages 29-31 of this proxy statement.
Following our 2021 say on pay vote, we sought feedback from shareholders to better understand what motivated their
votes and what actions we could take to address their concerns about our executive compensation program. We were
pleased to hear strong shareholder support of the overall design of our executive compensation program as well as the
Company's overall pay-for-performance. Shareholders overwhelmingly did not indicate a desire for broad changes to
our program design. For more information on our engagement program and changes made to respond to the 2021 Say
on Pay vote, please see pages 33-34 under the heading "Our 2021 Say on Pay Vote; Shareholder Engagement."
This advisory proposal, commonly referred to as a "Say on Pay" proposal, is not binding on the Board of Directors.
Although the voting results are not binding, the Board and the Compensation and Human Resources Committee will
review and consider them when evaluating our executive compensation program.
In addition to our annual advisory vote to approve the Company's executive compensation, we are committed to
ongoing engagement with our shareholders on executive compensation and corporate governance issues. These
engagement efforts take place throughout the year where appropriate through meetings, telephone calls and
correspondence involving our senior management, directors and representatives of our shareholders.
The Board of Directors recommends you vote FOR approval of the compensation of the named executive
officers, as disclosed in this proxy statement. Executed proxies will be voted FOR approval of the compensation of
the named executive officers unless you specify otherwise.
2022 Proxy Statement | PROPOSAL 2: Advisory Approval of the Company's Executive Compensation 61
Board of
Directors
2
Corporate
Governance
Executive
Compensation
4 Audit
Annual
Meeting
Other
Information
Audit and Finance Committee Report
4 Audit
Paul R. Garcia
Board of
Directors
25,664,000
1,002,000
26,666,000
2020
($)
16,992,000
8,324,000
25,316,000
1,536,000
163,000
27,015,000
(1) Audit fees for 2021 and 2020 include the audit of our consolidated financial statements and internal control over
financial reporting, quarterly reviews, other statutory and legal entity audits, and consultations on technical matters.
(2) Audit Related Fees for 2021 and 2020 include service organization controls (SOC) reports, benefit plan audits,
assurance services for one of our subsidiaries, and certain AICPA agreed upon procedures. Audit Related Fees for
2020 also included due diligence services.
(3) Tax Fees include tax compliance, planning and support services. In 2021 and 2020, approximately $166,000 and
$528,000, respectively, of Tax Fees were related to international tax services, approximately $598,000 and $719,000,
respectively, of Tax Fees were for tax operating model design services and audit support and approximately
$238,000 and $289,000, respectively, of Tax Fees were related to tax compliance (review and preparation of
corporate tax returns, review of the tax treatment for certain expenses and claims for refunds).
(4) All Other Fees include consulting fees.
Audit and Finance Committee's Consideration of Independence of
Independent Registered Public Accounting Firm
The Audit and Finance Committee has reviewed the nature of non-audit services provided by Deloitte and has concluded
these services are compatible with maintaining the firm's ability to serve as our independent registered public accounting
firm.
Audit and Non-Audit Services Approval Policy
The Audit and Finance Committee has adopted a Policy for Approval of Independent Auditor Services outlining the
scope of services Deloitte may provide to the Company. The Policy sets forth guidelines and procedures the Company
must follow when retaining Deloitte to perform audit, audit-related, tax and other services. The Policy also specifies certain
non-audit services which may not be performed by Deloitte under any circumstances. Pursuant to these guidelines,
the Audit and Finance Committee approves fee thresholds annually for each of these categories, and services within
these thresholds are deemed pre-approved. The Audit and Finance Committee has delegated authority to the Chair of
the Audit and Finance Committee to pre-approve permitted audit and non-audit services between regularly scheduled
quarterly Audit and Finance Committee meetings, provided such pre-approvals are presented to the Audit and Finance
Committee at its next scheduled meeting. All fees reported above were approved pursuant to the Policy. The services
provided by our independent registered public accounting firm and related fees are discussed with the Audit and
Finance Committee, and the Policy is evaluated and updated periodically by the Audit and Finance Committee.
2022 Proxy Statement | Independence of Independent Registered Public Accounting Firm | Audit and Non-Audit Services Approval Policy 64
Total(3)
7,897,000
2022 Proxy Statement | Audit and Finance Committee Report 63
17,767,000
2021
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
Disclosure of Fees Paid to Independent Registered Public Accounting Firm
Aggregate fees billed to the Company for the fiscal years ended December 31, 2021 and 2020, represent fees billed by the
Company's principal independent registered public accounting firm, Deloitte & Touche LLP, the member firms of
Deloitte Touche Tohmatsu, and their respective affiliates, which includes Deloitte Consulting (collectively, "Deloitte").
The Audit and Finance Committee pre-approved the audit and non-audit services provided in the years ended
December 31, 2021 and 2020, by Deloitte, as reflected in the table below.
Fee Category
Audit Fees (1)
Audit-Related Fees (2)
Total Audit and Audit-Related Fees
Tax Fees (3)
All Other Fees (4)
Total
($)
Other
Annual
Executive
Compensation
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
19,123,382 19,123,382 21,005,403 21,005,403
23,553,382 22,093,382 23,435,403 21,005,403
(1) Represents the maximum amount the Compensation and Human Resources Committee may in its discretion
determine, but is not required, to pay the executive officer (or the executive officer's estate, if applicable) based
upon a prorated portion of the award the executive officer would have received but for his death, disability or
retirement, calculated at the achievement of the maximum performance target, as more fully described in footnote
2 to the 2021 Grants of Plan-Based Awards table. For the purposes of this table, the potential amounts have not been
prorated because the table assumes a death, disability or retirement as of December 31, 2021.
(2) Represents the (i) unvested RSUs multiplied by the closing stock price on December 31, 2021 ($502.14), (ii) intrinsic
value of the unvested stock options, which is calculated based on the difference between the closing price of our
stock on December 31, 2021 ($502.14) and the exercise or grant price of the unvested stock options as of that date,
and (iii) the number of performance shares earned if target performance is achieved multiplied by the closing
stock price on December 31, 2021 ($502.14). If maximum performance is achieved for the performance shares,
the amounts for Continued Equity Vesting would be (a) for "For Good Reason or Not for Cause," $74,805,137 for
Mr. Witty; $50,214,245 for Mr. Rex; $57,831,821 for Mr. McMahon; $29,494,605 for Mr. Thompson; and $23,828,434
for Ms. Short; (b) for “Death” and “Disability,” $67,811,061 for Mr. Witty; $44,561,054 for Mr. Rex; $43,312,945 for
2022 Proxy Statement | Potential Payments Upon Termination or Change in Control 58
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
4 Audit
Annual
Other
6
Meeting
Annual
Information
Other
6
Name (a)
Andrew Witty
($)(5)
(e)
($)(4)
(d)
($)(1)(3)
(c)
(f)
($)(6)
Last FYE
Distributions
Balance at
Aggregate
Withdrawals/
Aggregate
Earnings
in Last FY
Registrant
Contributions
in Last FY
Aggregate
($)(1)(2)
(b)
Executive
Contributions
in Last FY
The following table presents information as of the end of 2021 regarding the non-qualified deferred compensation
arrangements for our named executive officers for fiscal year 2021.
2021 Non-Qualified Deferred Compensation
Information
Meeting
4 Audit
Mr. McMahon; $27,773,499 for Mr. Thompson; and $20,064,392 for Ms. Short; (c) for "Retirement," $57,831,821 for
Mr. McMahon; and $23,828,434 for Ms. Short; and (d) for "Change in Control,” $85,760,557 for Mr. Witty;
$59,079,930 for Mr. Rex; $57,831,821 for Mr. McMahon; $34,933,012 for Mr. Thompson; and $23,828,434 for
Ms. Short.
For "For Good Reason or Not for Cause," the amount includes the value of unvested equity awards held by the
named executive officer that will not immediately vest upon termination but will continue to vest through any
applicable severance period. For "Retirement,” the amount includes the value of certain unvested equity awards
granted in 2018, 2019, 2020 and 2021 that will continue to vest and be exercisable for a period of five years (but not
after the award's expiration date). The value of the awards that will not immediately vest is based on their intrinsic
values on December 31, 2021. However, because these awards would continue to vest after termination of
employment or retirement, the actual value the named executive officer would receive is not determinable. At
December 31, 2021, Mr. McMahon and Ms. Short had met the retirement eligibility provisions. For additional
information regarding termination provisions applicable to equity awards granted under our 2020 Stock Incentive
Plan, see footnote 3 to the 2021 Grants of Plan Based Awards table.
(3) Does not include the value of benefits, plans or arrangements that would be paid or available following termination
of employment that do not discriminate in scope, terms or operation in favor of our executive officers and that are
generally available to all salaried employees or accrued balances under any non-qualified deferred compensation
plan that is described above.
1 year
10+ years
25%
5-10 years
By Geography
27%
21%
Americas
(Non-U.S.)
65%
United
States
2-5 years
14%
Asia -
Pacific
2022 Proxy Statement | CEO Pay Ratio
60
Board of
2
Directors
Corporate
Governance
3
16%
1-2 years
Less than
11%
By Tenure
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing
the following information about the relationship between the annual total compensation of our median employee and the
annual total compensation of our CEO.
For purposes of reporting annual total compensation and the ratio of annual total compensation of our CEO to our
median employee, both the CEO and median employee's annual total compensation were calculated consistent with
the Summary Compensation Table executive compensation disclosure requirements, plus the value of employer-paid
health insurance contributions. Our median employee compensation was $61,379 and our CEO's compensation was
$18,448,785. Accordingly, our CEO to median employee pay ratio is 301:1. We made significant investments in our
employee population in 2021 and as a result we saw a meaningful (~10%) increase in the compensation of our
median employee.
Our enterprise-wide Company compensation philosophy is designed to attract and retain high-quality talent and provide
market-competitive total compensation opportunities that support our pay-for-performance culture. Actual pay practices
vary for employees by level and geographic location based on competitive market factors. The most significant difference
in the pay practices for our CEO versus our median employee is the use of variable/at-risk compensation.
We consistently applied total cash compensation as the measure to determine the median employee in our global
employee population as of October 1, 2021. That workforce population consisted of 333,499 global full-time, part-time,
temporary and seasonal employees employed on that date. 113,443 of those employees were located outside the United
States and we then applied the de minimis exemption to exclude 15,384 employees in Chile (4.6% of our global
employee population).
2022 Proxy Statement | CEO Pay Ratio 59
Board of
Directors
2
Corporate
Governance
Dirk C. McMahon
3
4 Audit
Annual
Other
6
Meeting
Information
We have a broad and diverse workforce with approximately 59% of the people represented in three key talent pillars
(38% clinicians, 12% customer-facing employees and 9% information and computer technologists). Our median employee
(one of our customer-facing employees) is a non-exempt, full-time employee who works within our operations function
as a customer service representative lead in the United States.
A summary of our workforce population is provided in the charts below:
21%
Executive
Compensation
Shareholders of Record. If your shares are registered in your name with our transfer agent, EQ Shareowner Services,
you are a shareholder of record with respect to those shares and the Notice of Internet Availability of Proxy Materials
("Notice”) or the proxy materials were sent directly to you by Broadridge Financial Solutions. A list of shareholders entitled
to vote at the Annual Meeting will be available for viewing during the Annual Meeting by those who log in at
www.virtualshareholdermeeting.com/UNH2022 and enter the control number provided on your proxy card, voting
instruction form or Notice.
The Company provides extensive public disclosure on its advocacy and political contributions.
The record date for the Annual Meeting is April 8, 2022. Only owners of record of shares of common stock of the
Company at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting, or at
any adjournments or postponements of the Annual Meeting. On April 8, 2022, there were 938,949,294 shares of common
stock issued, outstanding and entitled to vote. Each owner of record on the record date is entitled to one vote for each
share of common stock held.
Our shareholders are able to effectively express their views on our executive compensation through our annual say on
pay advisory vote and NYSE's requirement to seek shareholder approval of equity compensation plans. The proposal's
request for a shareholder vote on a specific component of the Company's executive compensation program is
duplicative of these opportunities and goes beyond what is already required by SEC and NYSE rules. As a result, this
proposal is unnecessary.
The proposal could put us at a competitive disadvantage in attracting and retaining highly qualified executives.
Calling a special meeting of shareholders to obtain approval of a severance arrangement would be expensive, time-
consuming and could place the Company at a competitive disadvantage in recruiting qualified candidates.
approximately 75% of total target compensation for our named executive officers in the aggregate. By encouraging
stock ownership and rewarding long-term growth, our compensation program focuses management on shareholder value
creation. Performance-based awards provide incentives to put forth maximum efforts for the Company's success. Our
executive compensation program has served our stakeholders well, as shown by sustained performance over time,
including total shareholder return of 947% from 2012 through 2021.
Information
Meeting
6
Other
Annual
4 Audit
Executive
Compensation
3
Corporate
Governance
For these reasons, the Board of Directors recommends you vote AGAINST the proposal. Executed proxies will be
voted AGAINST this proposal unless you specify otherwise.
2
2022 Proxy Statement | PROPOSAL 4: Shareholder Proposal Seeking Shareholder Ratification of Termination Pay 67
Equity awards are a fundamental component of executive compensation programs. Total target compensation granted
in 2021 to our named executive officers was weighted towards long-term equity compensation, which represents
Since the proposal would include the value of outstanding equity awards in the severance multiple, the Board believes
the proposal would effectively prevent the Company from using long-term equity in its compensation plans. This would
directly conflict with the objective of aligning shareholder and executive interests.
Shareholder interests are best protected by providing flexibility to the Compensation and Human Resources Committee
to assess the needs of the Company, the competition for talent and other relevant factors in making decisions regarding
benefits for executives - all within a clearly defined set of principles. The Compensation and Human Resources
Committee is composed entirely of independent directors and is advised regularly by an independent compensation
consultant. Our Board believes the Company's current executive compensation policies and practices align the interests
of our executives with those of our shareholders and provide appropriate limits on post-termination compensation.
The proposal prevents the Company from using long-term equity awards which are effective in maximizing
long-term shareholder value.
The proposal would restrict our ability to structure executive compensation effectively.
The benefits covered by the shareholder proposal include not only cash payments but also the value of outstanding
equity awards that accelerate upon a termination event. We do not offer accelerated vesting of equity awards when
termination is without cause or for good reason. We provide accelerated vesting of equity awards in the limited situations
of death, disability, or, in the event of a change of control of the Company, when an executive's termination is without
cause or for good reason (i.e., double-trigger). These limited acceleration provisions were approved by our shareholders
and are considered to be appropriate and consistent with market practices. These provisions do not penalize executives
or their families in the rare and unfortunate event of their disability or death. In the event of a change of control of the
Company, these provisions are designed to incent our executive officers to remain with the Company and maximize value
for our shareholders.
The Company offers executives accelerated vesting of equity awards only in very limited situations which are
consistent with market practices.
The proposal is unnecessary. The total estimated value of the cash severance benefits provided in employment
agreements with our executive officers is well below the 2.99x cap the proposal seeks.
The Company's termination policy and payment are appropriate.
The Board of Directors unanimously recommends a vote AGAINST the foregoing proposal for the following reasons:
We have carefully considered this proposal and have concluded it is unnecessary and not in the best interests of the
Company and its shareholders.
Board of Directors' Recommendation
Shareholder Ratification of Termination Pay - Proposal 4
Board of
Directors
2022 Proxy Statement | PROPOSAL 4: Shareholder Proposal Seeking Shareholder Ratification of Termination Pay 68
Board of
2
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | PROPOSAL 5: Shareholder Proposal Regarding Political Contributions Congruency Report 69
Shareholders request that UHG publish an annual report, at reasonable expense, analyzing the congruency of political,
lobbying, and electioneering expenditures during the preceding year against publicly stated company values and
policies, listing and explaining any instances of incongruent expenditures, and stating whether the identified
incongruencies have led to a change in future expenditures or contributions.
Resolved:
Proponents believe that UHG should establish policies and reporting systems that minimize risk to the firm's reputation
and brand by addressing possible missteps in corporate electioneering and political spending that contrast with its stated
healthcare and environmental objectives.
UHG has stated “Reducing carbon emissions has been a long-standing priority for our company." Yet it is a
member of the U.S. Chamber of Commerce, which has consistently lobbied to roll back climate regulations and
promote regulatory frameworks that would slow the transition towards a lower-carbon economy. Additionally, a
Bloomberg analysis found that between the 2018 midterms and October 2020, for every dollar UHG contributed
to climate-friendly members of Congress, it donated $1.67 to members characterized as "ardent obstructionists"
of proactive climate policy.
Although UHG offers insurance coverage for abortion to its clients, based on publicly available records, the
proponents estimate that in the 2016-20 election cycles, the company and its employee PAC have donated at
least $8.5 million to politicians and political organizations working to weaken women's access to abortion. This
includes $120,000 in the 2020 election cycle to the sponsors of Texas SB 8-which creates potential liability for
organizations that insure in-state abortions after approximately six weeks of pregnancy -and more than
$230,000 to the sponsors of restrictive abortion bills in 14 other states.
In the last three election cycles, UHG contributed over $200,000 to a 527 organization leading efforts to strike
down the Affordable Care Act, which made prescription drugs more affordable.
After the January 6, 2021 attack on the Capitol, UHG said it would pause political donations to federal candidates
"to ensure they continue to align with our company's values." Yet UHG made political donations of nearly
$300,000 in January-June 2021.
•
It is the policy of UnitedHealth Group ("UHG") to make political contributions "to advance policy solutions that focus on
achieving universal coverage, improving health care affordability, enhancing the health care experience, and achieving
better health outcomes." However, UHG's political expenditures appear to be misaligned with the company's values.
Whereas:
Proposal 5 - Political Contributions Misalignment
We have been informed the Educational Foundation of America intends to introduce the proposal set forth below at the
Annual Meeting. In accordance with SEC rules, the text of the proposal is printed verbatim from the submission. The
Company will provide to shareholders the address and reported holdings of the Company's common stock for the
proposal sponsor promptly upon receiving an oral or written request. The Board of Directors has recommended a vote
against this proposal for the reasons set forth following the proposal.
PROPOSAL 5: Shareholder Proposal Regarding Political Contributions
Congruency Report
Information
6
Other
Annual
Meeting
4 Audit
Executive
Compensation
3
Corporate
Governance
Directors
Please vote yes:
Executive
Compensation
A 2015 General Electric shareholder proposal similar to the FedEx proposal won 40% GE shareholder support with
2.2 billion votes in favor. This may have represented 51% support from the GE shares that had access to independent
proxy voting advice and are not forced to rely on the biased recommendations of management especially on issues of
management pay.
Information
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
65
2022 Proxy Statement | PROPOSAL 3: Ratification of Independent Registered Public Accounting Firm
The Board of Directors recommends you vote FOR ratification of the appointment of Deloitte as our independent
registered public accounting firm for the year ending December 31, 2022. Executed proxies will be voted FOR
ratification of this appointment unless you specify otherwise.
The Board of Directors has proposed that shareholders ratify the appointment of Deloitte at the Annual Meeting. If
shareholders do not ratify the appointment of Deloitte, the Audit and Finance Committee will reconsider the appointment
but is not obligated to appoint another independent registered public accounting firm. The Audit and Finance Committee
evaluates, at least every three years, whether to rotate our independent registered public accounting firm.
Representatives of Deloitte are expected to be present at the Annual Meeting, will have an opportunity to make a
statement and will be available to respond to appropriate questions from shareholders.
Based on its most recent evaluation of Deloitte, the members of the Audit and Finance Committee believe the continued
retention of Deloitte as the Company's independent registered public accounting firm is in the best interest of the
Company and its shareholders. Among the factors considered by the Audit and Finance Committee in reaching this
recommendation were the following: the quality and efficiency of Deloitte's historical and recent audit plans and
performance; Deloitte's capabilities and expertise in handling the breadth and complexity of the Company's U.S. and
global operations; external data on audit quality and performance, including recent PCAOB reports on Deloitte; the
appropriateness of Deloitte's fees for audit and non-audit services; Deloitte's independence and objectivity; and the
quality and candor of Deloitte's communications with management and the Audit and Finance Committee.
The Audit and Finance Committee is directly responsible for the appointment, evaluation, compensation, retention and
oversight of the independent registered public accounting firm retained to audit the Company's financial statements. The
Audit and Finance Committee has appointed Deloitte & Touche LLP as our independent registered public accounting
firm for the year ending December 31, 2022. Deloitte has been retained as our independent registered public accounting
firm since 2002. The Audit and Finance Committee is responsible for approving audit fees associated with the retention
of Deloitte. In order to assure continuing auditor independence, the Audit and Finance Committee periodically considers
whether there should be a rotation of our independent registered public accounting firm. Further, as part of the Audit and
Finance Committee's assessment of Deloitte and in conjunction with the mandated rotation of the audit firm's lead
engagement partner, in October 2020, the Audit and Finance Committee interviewed candidates to become Deloitte's
new lead engagement partner and following those interviews, selected the individual who became the new lead
engagement partner beginning in 2022.
Annual
Meeting
PROPOSAL 3: Ratification of Independent Registered Public
Accounting Firm
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 74
Information
Other
6
Information
Meeting
6
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | PROPOSAL 4: Shareholder Proposal Seeking Shareholder Ratification of Termination Pay 66
It is important to have this policy in place so that UnitedHealth management stays focused on improving company
performance as opposed to seeking a business combination to mostly to trigger a management golden parachute windfall.
This proposal is more important at UnitedHealth because of the tendency to overpay management or provide the
wrong management pay incentives. UNH management pay was rejected by 27% of shares in 2021 when a 5% rejection
is the norm. And Ms. Gail Wilensky on the management pay committee was rejected by up to 35-times the number of
negative votes compared to other UNH directors.
It is in the best interest of UnitedHealth shareholders to be protected from such lavish management termination packages
for one person.
For instance at one company if the CEO is terminated without cause, whether or not his termination follows a change in
control, he will receive $39 million in termination payments, nearly 7-times his base salary plus short-term bonus.
Generous performance-based pay can be good but shareholder ratification of "golden parachute" severance packages
with a total cost exceeding 2.99 times base salary plus target short-term bonus better aligns management pay with
shareholder interests.
The Board shall retain the option to seek shareholder approval after material terms are agreed upon.
"Estimated total value” includes: lump-sum payments; payments offsetting tax liabilities; perquisites or benefits not
vested under a plan generally available to management employees; post-employment consulting fees or office expense;
and equity awards if vesting is accelerated, or a performance condition waived, due to termination.
"Severance or termination payments" include cash, equity or other compensation that is paid out or vests due to a
senior executive's termination for any reason. Payments include those provided under employment agreements,
severance plans, and change-in-control clauses in long-term equity plans, but not life insurance, pension benefits, or
deferred compensation earned and vested prior to termination.
Shareholders request that the Board seek shareholder approval of any senior manager's new or renewed pay package
that provides for severance or termination payments with an estimated value exceeding 2.99 times the sum of the
executive's base salary plus target short-term bonus.
Rights
Shareholder
Shareholder Ratification of Termination Pay
-
FOR
We have been informed John Chevedden intends to introduce the proposal set forth below at the Annual Meeting. In
accordance with SEC rules, the text of the proposal is printed verbatim from the submission. The Company will provide
to shareholders the address and reported holdings of the Company's common stock for the proposal sponsor promptly
upon receiving an oral or written request. The Board of Directors has recommended a vote against this proposal for the
reasons set forth following the proposal.
PROPOSAL 4: Shareholder Proposal Seeking Shareholder Ratification
of Termination Pay
Annual Meeting
This proposal topic won 58% support at the 2021 FedEx annual meeting.
Annual
Proposal 4
4 Audit
8. What do I need to participate in the Annual Meeting?
Street Name Holders. If you hold your shares in a bank or brokerage account, you also may have the opportunity to
receive the proxy materials electronically. Please check the information provided in the proxy materials you receive from
your bank or broker regarding the availability of this service.
Shareholders of Record. If you vote at www.proxyvote.com, simply follow the prompts for enrolling in the electronic
proxy delivery service. You also may enroll in the electronic proxy delivery service at any time by going directly to
www.unitedhealthgroup.com/investors/annual-meeting and following the enrollment instructions.
Instead of receiving future copies of our proxy materials by mail, you can elect to receive an e-mail that will provide
electronic links to these documents. Opting to receive your proxy materials online will save the cost of producing and
mailing documents to your home or business, will give you an electronic link to the proxy voting site and will also help
preserve environmental resources.
Shareholders may access the proxy materials, which include the Notice of Annual Meeting of Shareholders, Proxy
Statement (including a form of proxy card) and Annual Report for the year ended December 31, 2021 at
www.unitedhealthgroup.com/proxymaterials. We will also provide a hard copy of any of these documents free of charge
upon request to: UnitedHealth Group Incorporated, 9900 Bren Road East, Minnetonka, Minnesota 55343, Attention:
Secretary to the Board of Directors.
7. How can I access the proxy materials for the Annual Meeting?
In order to conduct the Annual Meeting, holders of a majority of the shares issued and outstanding and entitled to vote
as of the close of business on the record date must be present in person or by proxy. This constitutes a quorum. Virtual
attendance at our Annual Meeting constitutes presence in person for purposes of quorum at the Annual Meeting. Your
shares are counted as present if you participate in the virtual Annual Meeting and vote electronically, or if you vote your
proxy before the Annual Meeting over the internet or by telephone or by mail. Abstentions and broker non-votes will be
counted as present for purposes of establishing a quorum. If a quorum is not present, we will adjourn the Annual Meeting
until a quorum is obtained.
6. How many shares must be present to hold the Annual Meeting?
Street Name Holders. If you hold your shares in an account at a bank or broker, then you are the beneficial owner of
shares held in "street name." The Notice or proxy materials were forwarded to you by your bank or broker, who is considered
the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to
direct your bank or broker on how to vote the shares held in your account or you may vote your shares electronically by
participating in the Annual Meeting.
Information
Meeting
6
Shareholders as of the record date may participate in, vote and submit questions at our Annual Meeting by logging in
at www.virtualshareholdermeeting.com/UNH2022. To log in, shareholders (or their authorized representatives) will need
the control number provided on their proxy card, voting instruction form or Notice. If you experience technical difficulties
during the check-in process or during the Annual Meeting, please call the technical support number posted on the Annual
Meeting website. If you are not a shareholder or do not have a control number, you may still access the meeting as a
guest, but you will not be able to participate.
Other
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 72
5. What is the difference between a shareholder of record and a shareholder who holds
stock in street name?
The Company's Board of Directors is soliciting proxies for use at the 2022 Annual Meeting of Shareholders. A proxy
statement is a document we give you when we are soliciting your vote pursuant to SEC regulations.
4. What is a proxy statement?
It is your legal designation of another person to vote the stock you own in the manner you direct. That other person is
called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a
proxy card. We have designated Rupert M. Bondy and Kuai H. Leong to serve as proxies for the 2022 Annual Meeting.
The Board of Directors will use the proxies at the 2022 Annual Meeting of Shareholders. The proxies also may be voted
at any adjournments or postponements of the meeting.
3. What is a proxy?
Annual
Shareholders as of our record date who participate in our Annual Meeting at
www.virtualshareholdermeeting.com/UNH2022 will have an opportunity to submit written questions live via the internet
during a designated portion of the Annual Meeting. In order to do so, shareholders must have available their control
number provided on their proxy card, voting instruction form or Notice.
Consistent with our past practice for in-person annual meetings, each shareholder will be limited to one question to
allow us to respond to as many shareholder questions as possible during the question-and-answer portion of the meeting.
11. What is the record date and what does it mean?
Other
The Notice is not a proxy card and cannot be used to vote your shares.
Electronically at the Annual Meeting. Shareholders who participate in the Annual Meeting should follow the instructions
at www.virtualshareholdermeeting.com/UNH2022 to vote during the meeting.
By Telephone or Internet. All shareholders of record can vote by telephone from the United States and Canada, using
the toll-free telephone number on the proxy card, or through the internet using the procedures and instructions described
on the Notice or proxy card. Street name holders may vote by internet or telephone if their bank or broker makes those
methods available, in which case the bank or broker will enclose the instructions with the proxy materials. The internet
and telephone voting procedures are designed to authenticate shareholders' identities, allow shareholders to vote their
shares and to confirm their instructions have been properly recorded.
By Written Proxy. All shareholders of record who received proxy materials by mail can vote by written proxy card. If
you received a Notice or the proxy materials electronically, you may request a proxy card at any time by following the
instructions on the Notice or on the voting website. If you are a street name holder, you will receive instructions on how
you may vote from your bank or broker, unless you previously enrolled in electronic delivery.
10. What different methods can I use to vote?
If you hold shares in our 401(k) savings plan and do not vote your shares or specify your voting instructions on your
proxy card, the administrators of the 401(k) savings plan will vote your 401(k) plan shares in the same proportion as the
shares for which they have received voting instructions. To allow sufficient time for voting by the 401(k)
administrators, your voting instructions must be received by 11:59 p.m. Eastern Time on June 1, 2022.
If you hold your shares in street name, you will receive one Notice or voting instruction form for each account you have
with a bank or broker. If you hold shares in multiple accounts, you may need to provide voting instructions for each
account.
in any Company benefit plan.
•
in book-entry form; and
in certificate form;
If you are a shareholder of record, you will receive only one Notice or proxy card for all the shares of common stock
you hold:
9. What shares are included on the Notice, proxy card or voting instruction form?
We will address substantially similar questions, or questions that relate to the same topic, in a single response. Questions
must comply with the Meeting Guidelines and Procedures which will be available at www.virtualshareholdermeeting.com/
UNH2022. Questions that do not comply with the Meeting Guidelines and Procedures, are not directly related to the
business of the Company and are not pertinent to the Annual Meeting matters will not be answered. We ask that all
shareholders provide their name and contact details when submitting a question through the virtual meeting platform so
that we may address any individual concerns or follow up matters directly.
Information
Meeting
Other
Annual
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 73
In addition to the business of the Annual Meeting, management of the Company will also give a business update.
Management, chairs of each standing Board committee and representatives of Deloitte will be available to respond to
appropriate questions from shareholders.
if properly presented, two shareholder proposals.
6
an advisory vote to approve our executive compensation (a “Say on Pay" vote);
Information
Meeting
6
Other
Annual
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2022 Proxy Statement | PROPOSAL 5: Shareholder Proposal Regarding Political Contributions Congruency Report 70
We are committed to transparency as we engage in public advocacy activities in furtherance of our mission. Our
lobbying activities are subject to extensive governmental regulation and public disclosure requirements, which require
the Company to file regular, publicly-available and detailed reports with the U.S. Senate and House of Representatives
The Company has articulated at length its public policy positions, which are the basis for its political expenditures. Our
comprehensive, actionable and timely policy solutions to achieve our mission focused on expanding access to care,
improving health care affordability, enhancing the health care experience and driving better health outcomes.
publicly articulated in The Path Forward, our Sustainability Report, and other documents accessible on our website.
Participation in the political process comes with the understanding we do not agree with all positions of all recipients on
all issues. We believe, however, these recipients are positioned to meaningfully address issues of importance to the
Company, our shareholders and those we serve. As we contemplate each political contribution, we consider several
factors, primarily candidates' positions, votes and actions on priority health care topics and related issues impacting our
business and customers.
― are
The Company engages in the political process to further its mission we seek to help people live healthier lives and
help make the health system work better for everyone. We believe it is important to engage meaningfully in a bipartisan
manner with Federal and State policy-makers to advance the interests of the Company, shareholders, customers, and
all of our stakeholders across the health care system.
Our engagement in the political process aligns with our mission.
The Company does not believe it should commit to any action in perpetuity regardless of value or cost. If the Company
is required to publish more and more granular reports on dozens of subjects, we would have to divert significant
energies from our core operations in support of our health-driven mission. This would make it difficult for the Company
to operate effectively for our those we serve, including shareholders.
The proposal requires the Company to publish a report annually in perpetuity regardless of value or cost.
The proposal requires the Company to publish a report annually in perpetuity without regard to utility. The proponent
asks the Company to report every expenditure - as little as one dollar - they are able to determine is incongruent with
a broad mission statement, regardless of value or cost. As further described below, the proposed report does not add
additional value because the Company's engagement in the political process and its existing political contribution reports
do align with our values and mission.
The Board of Directors unanimously recommends a vote AGAINST the foregoing proposal for the following reasons:
We have carefully considered this proposal and have concluded it is unnecessary and not in the best interests of the
Company and its shareholders.
Board of Directors' Recommendation
Proponents recommend that such report also contain management's analysis of risks to our company's brand, reputation,
or shareholder value of expenditures in conflict with publicly stated company values. "Expenditures for electioneering
communications” means spending, from the corporate treasury and from the PACs, directly or through a third party, at any
time during the year, on printed, internet or broadcast communications, which are reasonably susceptible to
interpretation as in support of or opposition to a specific candidate. This proposal aligns with the standards and
procedures set forth in the Center for Political Accountability's Model Code of Conduct.
Supporting Statement:
Information
ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm;
and
6
Meeting
disclosing advocacy activities undertaken on our behalf. Our advocacy disclosure reports filed with the U.S. Congress
are available at http://disclosures.house.gov/ld/ldsearch.
We also make a Political Contributions Report publicly available with further detail on our political contributions and
related activities. This report details contributions made to political candidates, parties and committees, including recipient
names and amounts given and includes a link to our lobbying disclosure reports filed with the U.S. Congress. An
archive of our political contribution reports - covering political expenditures for the last nine years — is available on the
Company's website.
-
UnitedHealth Group is recognized as a "Trendsetter" in the 2021 Center for Political Accountability-Zicklin Index of
Political Accountability.
•
•
UnitedHealth Group's bipartisan Political Action Committee is funded entirely by voluntary contributions from eligible
employees and has a long history of balanced political giving, prioritizing candidates that represent communities we
serve, serve in leadership positions and demonstrate support for policies of importance to the Company which help us
achieve our mission. Contributions are made on a non-partisan basis, are not made to candidates running for U.S.
president, and are never made on the basis of the personal political preferences of Company directors, officers or
employees.
election of eight directors named in this proxy statement;
•
At the Annual Meeting, shareholders will act upon the matters outlined in the Notice of Annual Meeting of Shareholders.
These include:
2. What is the purpose of the Annual Meeting?
We have determined that the 2022 Annual Meeting will be held in virtual format only. At our Annual Meeting, shareholders
will be able to participate in, vote and submit questions via the internet. Whether or not you plan to participate in the
Annual Meeting, we urge you to vote and submit your proxy in advance of the meeting by one of the methods described
in these proxy materials. Additional information can also be found at www.unitedhealthgroup.com/proxymaterials.
An archived copy of the Annual Meeting will be available on the "Investors” page of our website at
www.unitedhealthgroup.com/investors for 14 days following the Annual Meeting.
1. When and where is our Annual Meeting?
Questions and Answers About the Annual Meeting and Voting
Information
Meeting
6
We will be holding our Annual Meeting virtually on Monday, June 6, 2022, at 11:00 a.m., Eastern Time, at
www.virtualshareholdermeeting.com/UNH2022.
2
4 Audit
2022 Proxy Statement | PROPOSAL 5: Shareholder Proposal Regarding Political Contributions Congruency Report 71
Board of
Directors
For these reasons, the Board of Directors recommends you vote AGAINST the proposal. Executed proxies will be
voted AGAINST this proposal unless you specify otherwise.
Corporate
Governance
The Board fully supports accountability, appropriate transparency, and disclosure of the Company's political contributions
and advocacy activities and expenditures. The Company's political engagement and public policy activities are led by
our External Affairs function with active engagement throughout and across our businesses. Our Board's Governance
Committee, which oversees our overall strategy on environmental, social and governance (ESG) policies and practices,
has oversight of our advocacy and lobbying processes and activities, including key trade association and coalition
memberships, as well as reviewing the political contributions made by the Company and its political action committee.
The Board of Directors believes our existing political spending and advocacy policies, governance oversight and disclosure
in their current format are consistent with best practice.
Executive
Compensation
The Company's governance policies provide for effective oversight of its political activities.
Annual
Other
3
Executive
Compensation
6
Meeting
Information
Board of Directors. If we do not receive a shareholder proposal by the deadline described above, the proposal may be
excluded from our proxy statement for our 2023 Annual Meeting.
Other Shareholder Proposals for Presentation at the 2023 Annual Meeting (Advance Notice Provision). A shareholder
proposal that is not submitted for inclusion in our proxy statement for our 2023 Annual Meeting pursuant to Section 3.04
of our Bylaws or SEC Rule 14a-8 and is sought to be presented at the 2023 Annual Meeting must comply with the
"advance notice" deadlines in our Bylaws. As such, these shareholder proposals must be received no earlier than
February 6, 2023, and no later than the close of business on March 8, 2023. These shareholder proposals must be in
writing and received within the "advance notice" deadlines described above at our principal executive offices at
UnitedHealth Group Center, 9900 Bren Road East, Minnetonka, Minnesota 55343, Attention: Secretary to the Board of
Directors. These shareholder proposals must be in the form provided in our Bylaws and must include the information set
forth in the Bylaws. If we do not receive a shareholder proposal and the required information by the "advance notice"
deadlines described above, the proposal may be excluded from consideration at the 2023 Annual Meeting. The "advance
notice" requirement described above supersedes the notice period in SEC Rule 14a-4(c)(1) of the federal proxy rules
regarding the discretionary proxy voting authority with respect to such shareholder business.
Shareholder Solicitation of Director Nominations. In addition to satisfying the foregoing advanced notice requirements
under our Bylaws, to comply with the universal proxy rules under the Exchange Act, shareholders who intend to solicit
proxies in support of director nominees other than the Company's nominees must provide notice that sets forth the
information required by Rule 14a-19 under the Exchange Act no later than April 7, 2023.
Corporate
Governance
25. Where can I find more information about my voting rights as a shareholder?
We bear all expenses incurred in connection with the solicitation of proxies. We have engaged Morrow Sodali LLC to
assist with the solicitation of proxies for a base fee of $20,000 plus expenses. We will reimburse brokers, fiduciaries and
custodians for their costs in forwarding proxy materials to beneficial owners of common stock.
Our directors, officers and employees may also solicit proxies by mail, telephone and personal contact. They will not
receive any additional compensation for these activities.
The SEC has an informational website that provides shareholders with general information about how to cast their vote
and why voting should be an important consideration for shareholders. You may access that information at
www.investor.gov/research-before-you-invest/research/shareholder-voting or at www.investor.gov.
2022 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 78
Board of
Directors
Other
3
2
24. How are proxies solicited and what is the cost?
Annual
The Company expects all directors to participate in the Annual Meeting, absent a compelling reason.
Executive
Compensation
FOR the ratification of the appointment of Deloitte as the Company's independent registered public accounting
firm;
AGAINST the shareholder proposal seeking shareholder ratification of termination pay; and
•
Annual
•
AGAINST the shareholder proposal regarding the political contributions congruency report.
20. Are my shares voted if I do not submit a proxy?
If you are a shareholder of record and do not submit a proxy, you must participate in the Annual Meeting in order to
vote. If you hold shares through an account with a bank or broker, your shares may be voted by the bank or broker on
some matters if you do not provide voting instructions. Banks and brokers have the authority under NYSE rules to vote
shares for which their customers do not provide voting instructions on routine matters only. The ratification of Deloitte as
our independent registered public accounting firm is considered a routine matter. The other matters being voted on at
the Annual Meeting are not considered routine and banks and brokers cannot vote shares without instruction on those
matters. Shares that banks and brokers are not authorized to vote on non-routine matters are counted as "broker non-
votes."
21. How are abstentions and broker non-votes counted?
Abstentions have no effect on the election of directors. Abstentions have the effect of an “against❞ vote on the advisory
vote to approve our executive compensation, the ratification of the appointment of the Company's independent registered
public accounting firm and the shareholder proposals. Broker non-votes have no effect on the vote for any matter at
the meeting.
22. Does the Company have a policy about directors' attendance at the Annual Meeting of
Shareholders?
23. What are the deadlines for submitting director nominees and other shareholder proposals
for the 2023 Annual Meeting?
Shareholder Director Nominations for Inclusion in the Company's Proxy Materials (Proxy Access). To be considered
for inclusion in our proxy statement for our 2023 Annual Meeting, director nominations submitted pursuant to Section 3.04
of our Bylaws must be received at our principal executive offices at UnitedHealth Group Center, 9900 Bren Road East,
Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors, no earlier than November 23, 2022 and no
later than December 23, 2022, and must be submitted in accordance with Section 3.04 of our Bylaws. If we do not
receive the information required by our Bylaws by the deadline described above, the director nominee will be excluded
from our proxy statement for our 2023 Annual Meeting.
Other Shareholder Proposals to Be Considered for Inclusion in the Company's Proxy Materials (SEC Rule 14a-8). To
be considered for inclusion in our proxy statement for our 2023 Annual Meeting, shareholder proposals submitted pursuant
to SEC Rule 14a-8 must be received no later than December 23, 2022 and be submitted in accordance with Rule 14a-8.
These shareholder proposals must be in writing and received by the deadline described above at our principal executive
offices at UnitedHealth Group Center, 9900 Bren Road East, Minnetonka, Minnesota 55343, Attention: Secretary to the
2022 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 77
Board of
Directors
2
Corporate
Governance
3
4 Audit
Other
The Vanguard Group (1)
6
The following table provides information about shareholders known to us to beneficially own more than 5% of the
outstanding shares of our common stock, based solely on the information filed by such shareholders in 2022 for the
year ended December 31, 2021 on Schedule 13G under the Exchange Act.
Name and Address of Beneficial Owner
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
BlackRock, Inc. (2)
55 East 52nd Street
New York, New York 10055
FMR LLC (3)
245 Summer Street
Boston, Massachusetts 02210
Amount and Nature of
Beneficial Ownership
Percent of Class
(%)
79,483,862
69,275,884
48,646,794
5.165
•
8.44
7.40
Security Ownership of Certain Beneficial Owners and Management
4 Audit
Other Information
Meeting
Meeting
Information
Householding Notice
We have adopted “householding” procedures allowing us to deliver one Notice or single copies of proxy statements and
annual reports to any household at which two or more shareholders reside who share the same last name or whom
we believe to be members of the same family. Each registered shareholder living in that household will receive a separate
proxy card if the householded proxy materials are received by mail.
If you participate in householding but wish to receive a separate copy of the Notice, this proxy statement or our 2021
Annual Report for the year ended December 31, 2021, please notify us at: UnitedHealth Group Center, 9900 Bren Road
East, Minnetonka, Minnesota 55343, Attn: Secretary to the Board of Directors, telephone (877) 536-3550. Upon
written or oral request, we will deliver promptly, to any shareholder that elects not to participate in householding, a
separate copy of the Notice of Internet Availability and, if a shareholder requests printed versions by mail, this proxy
statement and the Annual Report on Form 10-K for the year ended December 31, 2021. You may opt-in or opt-out of
householding at any time by contacting our transfer agent, EQ Shareowner Services, at P.O. Box 64854, St. Paul,
Minnesota 55164-0854, telephone (800) 468-9716. Your householding election will apply to all materials mailed more than
30 days after your request is received.
Your participation in the householding program is encouraged. As an alternative to householding, you may choose to
receive documents electronically. Instructions for electing electronic delivery are described in Question 7 of the "Questions
and Answers About the Annual Meeting and Voting" section of this proxy statement.
We have been notified that some banks and brokers will household proxy materials. If your shares are held in "street
name" by a bank or broker, you may request information about householding from your bank or broker.
Other Matters at Meeting
In accordance with the requirements of advance notice described in our Bylaws, no shareholder nominations or
shareholder proposals other than those included in this proxy statement will be presented at the 2022 Annual Meeting.
We know of no other matters that may come before the Annual Meeting. However, if any matters calling for a vote of the
shareholders, other than those referred to in this proxy statement, should properly come before the meeting, the
persons named as proxies will vote on such matters according to their individual judgment.
2022 Proxy Statement | Householding Notice | Other Matters at Meeting 79
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
6
Information
FOR the advisory approval of our executive compensation;
if a shareholder makes a written comment on the proxy card or otherwise communicates his or her vote to
management; or
FOR the election of all director nominees;
voting electronically at the Annual Meeting; or
notifying the Secretary to the Board of Directors in writing before the Annual Meeting.
Street name holders may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
submitting new voting instructions in the manner provided by your bank or broker; or
voting electronically at the Annual Meeting.
13. Are votes confidential? Who counts the votes?
We hold the votes of all shareholders in confidence from directors, officers and employees except:
•
as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company;
in the case of a contested proxy solicitation;
voting again over the internet or by telephone prior to 11:59 p.m., Eastern Time, on June 5, 2022;
to allow the independent inspectors of the election to certify the results of the vote.
14. How may I confirm my vote was counted?
We are offering our shareholders the opportunity to confirm their votes were cast in accordance with their instructions.
Vote confirmation is consistent with our commitment to sound corporate governance standards and an important means
to increase transparency. Beginning May 23, 2022 and for up to two months after the Annual Meeting, you may confirm
your vote beginning 24 hours after your vote is received, whether it was cast by proxy card, electronically or telephonically.
To obtain vote confirmation, log onto www.proxyvote.com using your control number (located on your Notice or proxy
card) and receive confirmation on how your vote was cast. If you hold your shares through a bank or brokerage account,
the ability to confirm your vote may be affected by the rules of your bank or broker and the confirmation will not confirm
whether your bank or broker allocated the correct number of shares to you.
2022 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 75
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
We have retained Broadridge Financial Solutions to tabulate the votes. We have retained CT Hagberg LLC to act as
independent inspector of the election.
signing another proxy card with a later date and delivering it to an officer of the Company before the Annual
Meeting;
•
.
2
Board of
Directors
(1) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by The Vanguard
Group on February 10, 2022. The Vanguard Group reported having shared voting power over 1,492,432 shares, sole
dispositive power over 75,680,661 shares and shared dispositive power over 3,803,201 shares.
Corporate
Governance
3
Executive
Compensation
4 Audit
Annual
Other
6
Meeting
Information
The record date was established by our Board of Directors as required by the Delaware General Corporation Law.
Owners of record of common stock at the close of business on the record date are entitled to:
•
receive notice of the Annual Meeting; and
vote at the Annual Meeting and any adjournments or postponements of the Annual Meeting.
12. If I submit a proxy, may I later revoke it and/or change my vote?
Shareholders of record may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
•
4 Audit
Annual
Other
6
The Board of Directors recommends a vote FOR each of the director nominees named in this proxy statement.
The Board of Directors recommends a vote FOR advisory approval of the Company's executive compensation.
The Board of Directors recommends a vote FOR ratification of the appointment of Deloitte & Touche LLP as
our independent registered public accounting firm.
The Board of Directors recommends a vote AGAINST the shareholder proposal seeking shareholder ratification
of termination pay.
The Board of Directors recommends a vote AGAINST the shareholder proposal regarding the political
contributions congruency report.
2022 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 76
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
4 Audit
Annual
Other
6
Meeting
Information
19. What if I do not specify a choice for a matter when returning a proxy?
Shareholders should specify their choice for each matter in the manner described in the Notice or on their proxy card. If
no specific instructions are given, proxies that are signed and returned will be voted:
•
•
•
•
.
Meeting
Information
15. What are my choices when voting for director nominees and what vote is needed to elect
directors?
In the vote on the election of director nominees, shareholders may:
.
vote in favor of a nominee;
vote against a nominee; or
abstain from voting with respect to a nominee.
A director nominee will be elected if the number of votes cast "for" the nominee exceeds the number of votes cast
"against" the nominee. Our Principles of Governance require our directors to tender an irrevocable offer to resign, which
becomes effective if he or she fails to receive a majority of the votes cast for such director's election at the annual
meeting and our Board accepts his or her resignation. In the event a director receives a majority "against” vote, and
prior to any such action by the Board, the Governance Committee will consider the tendered resignation offer and
recommend to the Board whether or not to accept it. Absent a compelling reason not to accept the resignation offer, as
determined by the Board in its discretion, the Governance Committee will recommend, and the Board will accept the
resignation. The Board will act on the Governance Committee's recommendation within 90 days following certification
of the shareholder vote. The text of this policy appears in our Principles of Governance, which is available on our website
at www.unitedhealthgroup.com/who-we-are/corporate-governance.
16. What are my choices when voting on each of the other proposals considered at the
Annual Meeting?
For each of the other proposals, shareholders may:
vote for the proposal;
•
vote against the proposal; or
•
abstain from voting on the proposal.
17. What vote is needed to approve each of the other proposals?
The proposal to ratify the appointment of Deloitte as our independent registered public accounting firm and the
shareholder proposals must be approved by a majority of the voting power of the shares of common stock present in
person or represented by proxy and entitled to vote at the Annual Meeting in order to pass. Virtual attendance at our
Annual Meeting constitutes presence in person for purposes of quorum at the meeting. For the advisory vote to approve
our executive compensation, there is no minimum approval necessary since it is an advisory vote; however, the Board
of Directors will consider the results of the advisory vote when considering future decisions related to such proposal.
18. What is the Board's recommendation with regard to each proposal?
The Board of Directors makes the following recommendation with regard to each proposal:
•
(2) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by BlackRock, Inc.
on February 1, 2022. BlackRock, Inc. reported having sole voting power over 60,804,177 shares and sole
dispositive power over 69,275,884 shares.
91,715
2022 Proxy Statement | Security Ownership of Certain Beneficial Owners and Management 80
•
•
Indemnification and advancement of expenses made pursuant to the Company's Certificate of Incorporation or
Bylaws or pursuant to any agreement or instrument.
Interests arising solely from the ownership of a class of the Company's equity securities, if all holders of that
class of equity securities receive the same benefit on a pro rata basis.
Any transactions with another corporation or organization with respect to which a related person's only
relationship is as a director or trustee.
Any transaction that involves the providing of compensation to a director or executive officer in connection with
his or her duties to the Company or any of its subsidiaries, including the reimbursement of business expenses
incurred in the ordinary course.
Under the policy, the Company determines whether a transaction falls under the definition of a related-person transaction
requiring review by the Governance Committee. In determining whether to approve a related-person transaction, the
Governance Committee will consider, among other things, whether the terms of the related-person transaction are fair
to the Company and on terms at least as favorable as would apply if the other party was not an affiliate; the business
reasons for the transaction; whether the transaction could impair the independence of a director under the Company's
Standards for Director Independence; and whether the transaction would present an improper conflict of interest for any
director or executive officer of the Company. Any member of the Governance Committee who has an interest in the
transaction under discussion will abstain from voting on the approval of the related-person transaction, but may, if so
requested by the Chair of the Governance Committee, participate in some or all of the Governance Committee's
discussions of the related-person transaction. Any related-person transaction that is not approved will be voided,
terminated or amended, or other actions will be taken in each case as determined by the Governance Committee so as
to avoid or otherwise address any resulting conflict of interest.
As required under SEC rules, transactions in which the Company was or is to be a participant since the beginning of
the Company's last fiscal year and the amount involved exceeds $120,000, and in which any related person had or will
have a direct or indirect material interest, are disclosed below.
•
2022 Proxy Statement | Certain Relationships and Transactions 82
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
Board of
Directors
6
Related-person transactions under the policy do not include:
Transactions exceeding $120,000 in which a director, executive officer or 5% shareholder (or their immediate
family member), and the Company or its subsidiaries participate; or
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
6
Transactions exceeding $1.00 in which a director actively participates in their capacity as an executive officer of
another entity.
Meeting
(9) Includes 6,791 shares held indirectly in a trust.
(10) Includes 3,500 shares held indirectly by a spouse and 23,500 shares held indirectly in a trust.
(11) Includes the indirect holdings included in footnotes 3, 4, 5, 6, 7, 8, 9 and 10.
Certain Relationships and Transactions
Approval or Ratification of Related-Person Transactions
The Board of Directors has adopted a written Related-Person Transactions Approval Policy, which is administered by
the Governance Committee. A copy of the policy is available on our website at
www.unitedhealthgroup.com/about/corporate-governance. Under the policy, "related-person" transactions are prohibited
unless approved by the Governance Committee. In general, a related-person transaction is any transaction or series
of transactions (or amendments thereto) meeting one of the following categories:
Transactions exceeding $1.00 in which both a director (or their immediate family member) and an executive
officer participate; or
Information
Meeting
Information
Related-Person Transactions
Adjusted net earnings attributable to UnitedHealth Group common
shareholders
18,181
16,221
GAAP diluted earnings per share
18.08
16.03
Intangible amortization per share
1.24
(262)
1.12
(0.30)
(0.27)
Adjusted diluted earnings per share
19.02
16.88
(a) Adjusted net earnings per share is a non-GAAP financial measure. Non-GAAP financial measures should be
considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with
GAAP.
Adjusted net earnings per share excludes from the relevant GAAP metric, as applicable, intangible amortization
and other items, if any, that do not relate to the Company's underlying business performance. Management believes
that the use of adjusted net earnings per share provides investors and management useful information about the
earnings impact of acquisition-related intangible asset amortization. As amortization fluctuates based on the size and
timing of the Company's acquisition activity, management believes this exclusion provides a more useful comparison
of the Company's underlying business performance and trends from period to period. While intangible assets
contribute to the Company's revenue generation, the intangible amortization is not directly related. Therefore, the
related revenues are included in adjusted earnings per share.
2022 Proxy Statement | Appendix A - Reconciliation of Non-GAAP Financial Measure 84
Tax effect per share of intangible amortization
(288)
Tax effect of intangible amortization
1,080
Transactions with 5% Shareholders
BlackRock, Inc. beneficially owned approximately 7.40% of our common stock as of December 31, 2021. The Company
paid BlackRock $10.7 million for investment management fees in 2021. BlackRock maintains a self-funded health
insurance plan through the Company and paid the Company $4.5 million for administrative services in 2021.
FMR LLC beneficially owned approximately 5.165% of our common stock as of December 31, 2021. Fidelity Investments
("Fidelity"), a wholly owned subsidiary of FMR LLC, received from the Company and its employees approximately
$2.0 million for benefits management fees and approximately $234,800 for cash management, capital markets and
investment management fees in 2021. Fidelity paid the Company approximately $16.8 million for premium payments,
approximately $15.7 million for administrative fees, and approximately $1.7 million for wellness services in 2021.
(3) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by FMR LLC on
February 9, 2022. FMR LLC reported having sole voting power over 7,158,989 shares and sole dispositive power over
48,646,794 shares.
In 2021, Andrew Witty and his wife purchased from the Company a corporate condominium located in Washington, D.C.
The purchase price of $2,426,000 represented the fair market value of the condominium, which was appraised by an
independent third party. The contract for purchase was based upon a standard template for similar real estate transactions
in the Washington, D.C. area and the contractual terms included customary, arms-length standards for comparable
real estate transactions.
2022 Proxy Statement | Certain Relationships and Transactions 83
Appendix A - Reconciliation of Non-GAAP Financial Measure
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(in millions, except per share data)
(unaudited)
ADJUSTED NET EARNINGS PER SHARE(a)
Year Ended
December 31, 2021
($)
Year Ended
December 31, 2020
($)
GAAP net earnings attributable to UnitedHealth Group common
shareholders
17,285
15,403
Intangible amortization
1,184
Board of
Directors
2022 Proxy Statement | Security Ownership of Certain Beneficial Owners and Management 81
Sale of Condominium
(7) Includes 328.3633 shares held in trust pursuant to our 401(k) plan. Pursuant to the terms of the 401(k) plan, a
participant has sole voting power over their shares; however, the plan trustee votes all unvoted shares in the same
proportions as the actual proxy votes submitted by plan participants.
Ownership of
Common Stock
1,372,987(2)(3)
10,097(2)(4)
2,705(2)(5)
1,829,816(2)(6)(7)
Number of Shares
Deemed Beneficially
Owned as a Result
of Equity Awards
Exercisable or Vesting
Within 60 Days of
April 8, 2022
Percent of
Common
Stock
Outstanding
Total(1)
John H. Noseworthy, M.D.
(%)
*
10,097
*
2,705
*
1,829,816
*
37,220(2)
1,372,987
Valerie C. Montgomery Rice, M.D.
F. William McNabb III
Michele J. Hooper
(8) Includes 43,735 shares held indirectly in a trust.
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
The following table provides information about the beneficial ownership of our common stock as of April 8, 2022, by
each director and nominee for director, each current named executive officer, and by all of our current directors, executive
officers and director nominees as a group. As of April 8, 2022, there were 938,949,294 shares of our common stock
issued, outstanding and entitled to vote.
Name of Beneficial Owner or
Identity of Group
Richard T. Burke
Timothy P. Flynn
Paul R. Garcia
37,220
*
Stephen J. Hemsley
11,170
*
3,037
28,243
*
All current directors, executive officers and director
nominees as a group (15 individuals)
3,727,016 (11)
3,757,797
91,715(10)
25,206
0.40%
Less than 1%.
(1) Unless otherwise noted, each person and group identified possesses sole voting and dispositive power with
respect to the shares shown opposite such person's or group's name. Shares not outstanding but deemed
beneficially owned by virtue of the right of an individual to acquire them within 60 days of April 8, 2022, are treated
as outstanding only when determining the amount and percent owned by such individual or group.
(2) Includes the following number of vested DSUs which are considered owned under the Company's stock ownership
guidelines for directors: Mr. Burke — 26,792; Mr. Flynn — 6,597; Mr. Garcia — 169; Mr. Hemsley - 3,981;
Ms. Hooper - 33,800; Mr. McNabb — 4,740; Dr. Montgomery Rice - 3,799; Dr. Noseworthy - 3,381; and
Dr. Wilensky - 23,748.
(3) Includes 1,222,500 shares held indirectly in a limited liability partnership.
(4) Includes 2,000 shares held indirectly in a trust.
(5) Includes 168 shares held indirectly in a trust.
11,170(2)
(6) Includes 169,116 shares held in charitable foundations.
*
Brian R. Thompson
25,781
*
*
3,865(2)
Dirk C. McMahon
3,865
*
3,381(2)
3,381
Gail R. Wilensky, Ph.D.
68,425(2)(8)
68,425
*
141,646(9)
Andrew Witty
John F. Rex
93,117
22,744
115,861
*
*
141,646
72 22
Audit and Finance Committee Report
Overview
Corporate Governance
Communication with the Board of Directors
Director Compensation . . .
17
17
2023 Director Compensation Table
Disclosure of Fees Paid to Independent Registered
Public Accounting Firm.
22
60
61
62
67
67
69
20
Audit and Finance Committee's Consideration of
Independence of Independent Registered Public
16
Accounting Firm
2222 222
Annual Board and Committee Evaluations
56
16
69
Executive Employment Agreements
58
&g
57
PROPOSAL 1: Election of Directors
4
Potential Payments Upon Termination or Change in
4
Control
Audit....
Director Nomination Process
CEO Pay Ratio
Board Leadership Structure.
12
Pay vs. Performance
Director Independence
13
Board Committees
14
PROPOSAL 2: Advisory Approval of the Company's
Executive Compensation
Board Meetings and Annual Meeting Attendance
8
22
2023 Grants of Plan-Based Awards
69
Executive Summary
31
Other Matters at Meeting
81
Compensation Discussion and Analysis.
35
Compensation and Human Resources Committee
Report
Other Information
82
49
81
49
Security Ownership of Certain Beneficial Owners and
Management
Interlocks and Insider Participation
2023 Summary Compensation Table .
Outstanding Equity Awards at 2023 Fiscal Year-End.. 55
2650
49
Certain Relationships and Transactions
སྐྱ$
82
4
Compensation and Human Resources Committee
Audit and Non-Audit Services Approval Policy
Householding Notice
71
Code of Conduct: Our Principles of Ethics &
Integrity. .
24
PROPOSAL 3: Ratification of Independent Registered
Public Accounting Firm.
Compliance and Ethics.
24
Shareholder Engagement
24
Annual Meeting
71
74
22
Risk Oversight
25
PROPOSAL 4: Shareholder Proposal Requiring a
Alignment of Our Sustainability Priorities with Our
Political Contributions Congruency Report
Long-Term Strategy.
28
Executive Compensation
31
quiring moving....
70
Board of Directors
Questions and Answers About the Annual Meeting
and Voting . .
2023 Option Exercises and Stock Vested
• Collaboration
• Consumer Excellence
• Modern Technology
.
.
Integrity
Compassion
• Inclusion
Relationships
• Innovation
• Performance
UNITEDHEALTH GROUP
Dear Fellow Shareholders:
April 22, 2024
Building on our momentum, UnitedHealth Group remains dedicated in 2024 to serving more people with high-quality,
affordable care to advance our mission of helping people live healthier lives and helping the health system work better
for everyone. In so doing, we will continue to create long-standing, durable shareholder value for the decades ahead.
Our differentiated, long-term growth is rooted in two core ambitions: advancing value-based care and empowering
health care consumers.
Accelerating the U.S. health system's transition to a value-based model that aligns incentives across care providers,
health plans and consumers can deliver the highest quality outcomes at the lowest cost. At the same time, we are
working to become America's leading consumer health care destination by building a more connected, coordinated and
transparent health system. Our innovative health plan designs, modernized payment capabilities, and best-in-class
digital and technology platforms position us to fundamentally change the way people engage with the health system.
This ambition is underpinned by our five strategic growth priorities.
•
•
•
•
Value-based care: Integrating in-clinic, in-home, behavioral and virtual care delivery capabilities designed to
comprehensively serve more people with higher-quality outcomes at a lower cost.
Health Benefits: Providing consumers with innovative plan designs that prioritize simplicity, affordability and
better health outcomes.
Guided by our values:
Powered by essential capabilities:
Pharmacy Services
•
84
UNITEDHEALTH GROUP
2024 | Proxy Statement
Our Story
UnitedHealth Group is a health care and well-being company with a mission to help people live healthier lives and
help make the health system work better for everyone.
We have approximately 400,000 colleagues in two distinct and complementary businesses working to help build a
modern, high-performing health system through improved access, affordability, outcomes and experiences. Through
our five strategic growth priorities — value-based care, health benefits, health technology, health financial services and
pharmacy services - we collaborate with a diverse array of stakeholders to make value-based care a reality for as
many people as possible throughout the health system.
Optum combines clinical expertise, technology and data to empower people, partners and providers with the
information, tools and assistance they need to achieve better health. UnitedHealthcare offers a full range of health
benefits, enabling affordable coverage, simplifying the health care experience and delivering access to high-quality care.
We work with governments, employers and providers to care for more than 150 million individuals sharing a vision of
a value-based system of care that provides compassionate and equitable care.
At UnitedHealth Group, our mission calls us, our values guide us and our diverse culture connects us as we seek to
improve care for the people and communities we are privileged to serve.
We Are
Called by our mission:
Health Technology: Using clinical data and intelligence to simplify administrative processes, support clinical
decision-making, and improve transparency, efficiency and quality across the health system.
Help people live healthier lives and help make the health
system work better for everyone.
Focused on our strategic growth
priorities:
• Expanding access to care
• Improving health care affordability
•
•
Enhancing the health care experience
Achieving better health outcomes
• Value-Based Care
• Health Benefits
• Health Technology
• Health Financial Services
Committed to helping build a modern,
high-performing health system by:
Health Financial Services: Streamlining payment processes, driving speed, reliability and trust to provide
greater convenience and transparency for consumers and care providers.
Pharmacy Services: Innovating across pharmaceutical care and service offerings to lower the cost of drugs
while seamlessly integrating direct-to-consumer offerings with medical, pharmacy, behavioral and community
health capabilities.
Informed by our deep clinical expertise, these strategies present opportunities for innovation and collaboration at
Optum and UnitedHealthcare - and support our long term earnings per share growth rate objective.
Proposal 2: Conduct an advisory vote to approve the compensation
paid to the Company's named executive officers as disclosed in the
attached proxy statement (Say-on-Pay) vote.
Proposal 3: Ratify the appointment of Deloitte & Touche LLP as the
independent registered public accounting firm for the Company for the
year ending December 31, 2024.
Proposal 4: Consider the shareholder proposal set forth in the
attached proxy statement, if properly presented at the Annual Meeting.
Items of business may also include transacting any other business that
properly come before the Annual Meeting or any adjournments or
postponements of the meeting. Proxy materials are first being mailed to our
shareholders and made available at https://www.unitedhealthgroup.com/
investors/annual-reports.html on or about April 22, 2024. Website addresses
included throughout this proxy statement are for reference only. The
information contained on our website is not incorporated by reference into
this proxy statement.
Access to the Annual Meeting
The 2024 Annual Meeting will be held in virtual format only. If you plan to
participate in the Annual Meeting, please see the “Questions and Answers
About the Annual Meeting and Voting" section in the attached proxy
statement. Shareholders will be able to participate in, vote and submit
questions from any location.
Proxy Voting
Important. Even if you plan to participate in the Annual Meeting, we still
encourage you to submit your proxy by internet, telephone or mail prior to the
meeting. If you later choose to revoke your proxy or change your vote, you
may do so by following the procedures under Question 12 of the "Questions
and Answers About the Annual Meeting and Voting" section in the attached
proxy statement.
Date
June 3, 2024
11:00 a.m. Eastern Time
•
Location
www.virtualshareholder
meeting.com/UNH2024.
Record Date
April 5, 2024
Only shareholders of record of
the Company's common stock
at the close of business on the
record date are entitled to
receive notice of, and to vote
at, the Annual Meeting and any
adjournments or postponements
of the meeting.
IMPORTANT NOTICE
REGARDING AVAILABILITY OF
PROXY MATERIALS FOR THE
ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
VIRTUALLY VIA THE INTERNET
ON JUNE 3, 2024.
The Notice of Internet
Availability of Proxy Materials,
Notice of Annual Meeting of
Shareholders, Proxy Statement
and Annual Report are available
at https://www.unitedhealth
group.com/investors/annual-
reports.html.
Table of Contents
Proxy Summary
1
Our Annual Meeting can
be accessed virtually at
2023 Non-Qualified Deferred Compensation.
•
. Proposal 1: Elect the ten nominees set forth in the attached proxy
statement to the Company's Board of Directors.
Board updates
-
In 2023, UnitedHealth Group appointed Charlie Baker, former governor of Massachusetts, a prominent former health
care executive and the current president of the National Collegiate Athletic Association. Having served as CEO of
Harvard Pilgram Health Care and in multiple cabinet positions under two Massachusetts governors prior to being
elected governor himself, he brings decades of health care policy, finance and leadership experience in both the public
and private sectors. He serves on our Audit and Finance and Health and Clinical Practice Policies Committees.
With his appointment, our Board has 10 directors, providing a good balance of size, skills and backgrounds.
UnitedHealth Group's Board of Directors is 30% female and 30% racially/ethnically diverse and our average board
tenure is approximately 7 years.
Change Healthcare update
When a malicious and unprecedented cyberattack against America's health system and Change Healthcare caused
disruptions earlier this year, we responded quickly, in collaboration with public and private partners, to restore our
systems and services and ensure people could access the care they need. As of April 20, we advanced more than $6
billion in an ongoing effort to support care providers whose cash flows were disrupted by the cyberattack.
The incident underscores the need for greater cybersecurity vigilance, and it has reinforced our commitment to build a
health system that is resilient, responsive and adaptable.
Our ongoing commitment to sustainability
We are committed to operating as a sustainable enterprise - socially, economically, environmentally and ethically.
Sustainability especially of the health system — is ingrained in our business strategy, as our products and services
deliver intrinsic social value by helping to build a health system that is more affordable and accessible, and that
delivers better outcomes for everyone.
Our sustainability commitments, policies and practices are overseen by the Board of Directors' Governance Committee.
Our Chief Sustainability Officer is responsible for developing a comprehensive strategy and long-term sustainability
commitments in partnership with our businesses and leaders across UnitedHealth Group.
Shareholder meeting details
•
We cordially invite you to participate in our 2024 Annual Meeting of Shareholders to be held on Monday, June 3,
2024, at 11:00 a.m. Eastern Time. We will once again hold our meeting virtually.
On behalf of UnitedHealth Group's Board and management team, we appreciate your continued trust and support.
Sincerely,
Andrew Witty
Andrew Witty
Chief Executive Officer
Stephen Hemsley
Stephen Hemsley
Chair of the Board
2024 Notice of Annual Meeting
Items of Business
Attached you will find a notice of meeting and proxy statement containing information about the items upon which you
will be asked to vote and the meeting itself, including different methods you can use to vote your proxy, including by
internet, telephone and mail. Every shareholder vote is important, and we encourage you to vote as promptly as
possible. Instructions on how to participate in the Annual Meeting are included in the proxy statement.
50
2024 Director Nominees
Reconciliation of Non-GAAP
3
Executive
Compensation
4 Audit
Board of Directors
5
Annual
Other
6
Meeting
Information
PROPOSAL 1: Election of Directors
Our Board of Directors has nominated ten directors for election at the 2024 Annual Meeting to hold office until the next
annual meeting and the election of their successors. All nominees are currently directors and have agreed to be named in
this proxy statement and to serve if elected.
In accordance with our Principles of Governance, each nominee has also tendered an irrevocable offer to resign as a
director, which will become effective if the director fails to receive a majority vote for election at the Annual Meeting and
our Board accepts the director's offer to resign. Please see the "Corporate Governance" section of this proxy statement
for additional details on this policy. All nominees are expected to attend the 2024 Annual Meeting. All then-current directors
attended the 2023 Annual Meeting. We ask for your voting support for each of the director nominees at our 2024
Annual Meeting.
2024 Director Nominees
The following is a brief biographical description of each director nominee. A matrix listing the skills and areas of
expertise held by each director and which, in part, led the Board to conclude each respective director should continue
to serve as a member of the Board, is included on page 9.
The Board of Directors recommends you vote FOR the election of each of the nominees. Executed proxies will be
voted FOR the election of each nominee unless you specify otherwise.
Director
Corporate
Governance
Age
2
3
Details
1
Election of Ten Directors
FOR
Page 4
2 Advisory Approval of Executive Compensation
FOR
Page 66
3
Ratification of Independent Registered Public Accounting Firm
FOR
Page 70
4
Shareholder Proposal Requiring a Political Contributions
Congruency Report
AGAINST
Page 71
2024 Proxy Statement | Proxy Summary
Board of
Directors
Primary Occupation
Director Since
Charles Baker
F. William McNabb III
67
Former Chairman and CEO, The Vanguard Group, Inc.
2018
Valerie Montgomery Rice, M.D.
62
President and CEO, Morehouse School of Medicine
2017
John Noseworthy, M.D.
72
Former CEO and President, Mayo Clinic
Andrew Witty
59
CEO, UnitedHealth Group
2019
2021
2024 Proxy Statement | Proposal 1: Election of Directors | 2024 Director Nominees
4
2007
President and CEO, The Directors' Council
72
Michele Hooper
67
President, National Collegiate Athletic Association
2023
Timothy Flynn
Paul Garcia
Kristen Gil
Stephen Hemsley
67
Board's
Recommendation
Former Chair, KPMG International
71
Retired Chair and CEO, Global Payments, Inc.
2021
52
71
Former Vice President and Business Finance Officer, Alphabet, Inc.
Chair, UnitedHealth Group
2022
2000
2017
Items of Business
Appendix A
Our executive compensation program uses a mix of base salary, annual cash incentives, stock compensation
awards and broad-based benefits to attract and retain highly qualified executives and maintain a strong alignment
between executive pay and Company performance. Information regarding our named executive officers' compensation
in 2023 is described in the “Executive Compensation" section. Shareholders expressed strong support for our
executive compensation program at our 2023 Annual Meeting of Shareholders, with 96% of the votes cast in favor of
our Say-on-Pay proposal.
Total shareholder return was 123% for the five-year period ended 2023.
Awards and Recognition
1
•
•
•
•
We were the top ranked company in the insurance and managed care sector on Fortune's 2024 "World's Most
Admired Companies" list. This is the 14th consecutive year we have ranked No. 1 overall in the sector. The
Company ranked No. 1 on all nine key attributes of reputation;
Voting Matters and Vote Recommendations
We have been named to both the Dow Jones Sustainability World and North America Indices every year since
1999;
We received a score of 100 on the Human Rights Campaign Foundation's Corporate Equality Index 2023,
earning the distinction of one of the "Best Places to Work for LGBTQ Equality";
In 2023, the Civic 50, a Points of Light initiative, recognized UnitedHealth Group as one of the 50 most community-
minded organizations, UnitedHealth Group has received this honor every year since the initiative began in
2012;
• We were named to Forbes' list of America's 500 Best Large Employers for 2023;
•
We were named one of Fortune's Most Innovative Companies for 2023;
•
•
cash dividend rate of $6.60 per share since the second quarter of 2022; and
•
The annual cash dividend rate increased to $7.52 per share, representing a 14% increase over the annual
Fully diluted earnings per share increased 13% to $23.86 per share from $21.18 in 2022. Adjusted earnings
per share increased 13% to $25.12 per share from $22.19 per share in 2022;
Financial Measure.
53
86
Proxy Summary
Business Results
UnitedHealth Group is a health care and well-being company with a mission to help people live healthier lives and
help make the health system work better for everyone.
We have approximately 400,000 colleagues in two distinct and complementary businesses working to help build a
modern, high-performing health system through improved access, affordability, outcomes and experiences.
Optum combines clinical expertise, technology and data to empower people, partners and providers with the
information, tools and assistance they need to achieve better health. UnitedHealthcare offers a full range of health
benefits, enabling affordable coverage, simplifying the health care experience and delivering access to high-quality
care.
Financial
•
•
•
•
•
•
Revenues increased 15% to $371.6 billion in 2023 from $324.2 billion in 2022;
to $32.4 billion; and cash flow from operations increased 11% year-over-year to $29.1 billion in 2023;
Return on equity at 27.0% in 2023 compared with 27.2% in 2022;
•
Net earnings increased 11% year-over-year to $22.4 billion; operating earnings increased 14% year-over-year
The Disability Equality IndexⓇ named the Company one of the best places to work for disability inclusion in
2023;
We do not have a shareholder rights plan, commonly
referred to as a "poison pill".
Shareholder Special Meeting and Written Consent
Rights
Shareholders hold the right to call a special meeting and
to act by written consent.
Prohibition on Short Sales, Hedging and Pledging
Transactions in Company Securities
Our insider trading policy prohibits all directors, executive
officers and employees from engaging in short sales and
hedging transactions relating to our common stock.
Additionally, our insider trading policy prohibits directors
and executive officers from engaging in pledging
transactions.
Stock Ownership Guidelines
All of our executive officers and directors complied with
our stock ownership guidelines as of April 5, 2024.
Stock Retention Policy
Clawback Policies
We maintain a clawback policy for the recovery of
erroneously awarded compensation in accordance with
SEC and NYSE rules. Additionally, we have a clawback
policy which entitles the Board to seek cash or stock
compensation reimbursement from our senior executives if
they are directly involved in fraud or misconduct causing
a material restatement, material detrimental conduct
or violate non-compete, non-solicit or confidentiality
provisions.
Political Contributions Disclosure
We publicly disclose our political contributions and public
advocacy efforts and the contributions of our federal and
state political action committees.
See the “Corporate Governance" portion of this proxy statement for further information on our governance practices.
2024 Proxy Statement | Proxy Summary
2
Executive Compensation
The Business Group on Health honored UnitedHealth Group with a "Best Employers: Excellence in Health & Well-
Being" award for 2023. The award recognizes companies for advancing employee well-being through
innovative, inclusive benefits and initiatives;
Our Board provides robust oversight over sustainability
topics, as codified in our Board Committee charters.
Absence of Rights Plan
Sustainability Oversight
We require executive officers to hold, for at least one year,
one-third of the net shares acquired upon vesting or
exercise of any stock compensation award. Our directors
are required to hold all stock compensation awards granted
until completion of service on the Board, or until they
have met our stock ownership requirements.
Chief Executive Officer Succession Planning
We were ranked Top Ten in the nation on the 2023 Military FriendlyⓇ Employers list and we were also a Top
Ten 2023 Military Spouse FriendlyⓇ Employer; and
Our succession plan, which is reviewed annually by our
Board, addresses both an unexpected loss of our CEO and
longer-term succession.
The United Health Foundation, our not-for-profit private foundation dedicated to improving health and health
care, has been recognized as a Healthy People 2030 Champion by the Office of Disease Prevention and Health
Promotion, within the U.S. Department of Health and Human Services.
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for a
reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
2024 Proxy Statement | Proxy Summary
Corporate Governance
UnitedHealth Group is committed to meeting high standards of ethical behavior, corporate governance and business
conduct. Our company, our Board of Directors (the Board) and our people are committed to the shared cultural values of
integrity, compassion, inclusion, relationships, innovation and performance. Through our annual engagement program, we
seek insights from shareholders and other stakeholders as we continue to evolve our governance practices.
Board Structure and Composition
1
Our directors are elected annually by a majority vote of
our shareholders. Each nominee tenders an irrevocable
offer to resign in case they do not receive a majority vote
from shareholders at the annual meeting. We separate the
positions of Chair of the Board and CEO. We have a
Lead Independent Director, and eight of our ten director
nominees are independent.
Public Company Board Service Limits
Our directors may serve on no more than three other
public company boards and our CEO may serve on no
more than one other public company board.
One Share, One Vote
The Company does not have a dual-class share structure.
Each share of Company common stock is entitled to one
vote.
Proxy Access
A shareholder or group of shareholders who have owned
at least 3% of our common stock for at least three years,
and who comply with specified procedural and disclosure
requirements, may include in our proxy materials
shareholder-nominated director candidates representing
up to 20% of the Board.
Diverse, Experienced and Refreshed Board
Our Board has undergone substantial refreshment over
the last several years. Of our ten current directors, five have
been appointed since 2019, including the addition of
Charlie Baker in October 2023.
(331)
(392)
Tax effect of intangible amortization
20,120
1,578
GAAP net earnings attributable to UnitedHealth Group common shareholders
Intangible amortization
22,381
Adjusted net earnings attributable to UnitedHealth Group common shareholders
1,292
23,567
(0.42)
GAAP diluted earnings per share
23.86
21.18
Intangible amortization per share
1.68
1.36
Tax effect per share of intangible amortization
(0.35)
($)
Adjusted diluted earnings per share
21,081
December 31, 2022
Executive
Compensation
Year Ended
December 31, 2023
($)
25.12
Board of
Directors
2
Corporate
Governance
3
Annual
Other
4 Audit
6
Meeting
Year Ended
Information
Employment of Family Members of Directors and Executive Officers
Andrew Witty's daughter, Sarah Witty, Erin McSweeney's stepdaughter, Calli Pappas, and Tim Flynn's son, Tyler Flynn,
were each employed by the Company during 2023. Erin McSweeney's brother, David McSweeney, was employed by RVO
Health, a joint venture in which the Company owns a 50% interest, during 2023. The compensation paid to Sarah,
Calli and Tyler is consistent with the Company's overall compensation principles based on the employees' years of
experience, performance and positions within the Company. The compensation paid to David is consistent with RVO
Health's overall compensation principles based on the employee's years of experience, performance and position within
the company.
Transactions with 5% Shareholders
The Vanguard Group beneficially owned approximately 9.07% of our common stock as of December 31, 2023. The
Company and its employees paid Vanguard approximately $6.1 million for benefits program management fees in 2023.
2024 Proxy Statement | Certain Relationships and Transactions 85
Appendix A - Reconciliation of Non-GAAP Financial Measure
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
(in millions, except per share data)
(unaudited)
ADJUSTED NET EARNINGS PER SHARE(a)
Related-Person Transactions
22.19
BlackRock beneficially owned approximately 7.80% of our common stock as of December 31, 2023. The Company
paid BlackRock $6.6 million for investment management fees and $146,254 for medical/pharmacy rebates in 2023.
BlackRock maintains a self-funded health insurance plan through the Company and paid the Company $3.8 million for
administrative services in 2023.
Adjusted net earnings per share excludes from the relevant GAAP metric, as applicable, intangible amortization
and other items, if any, that do not relate to the Company's underlying business performance. Management believes
that the use of adjusted net earnings per share provides investors and management useful information about the
earnings impact of acquisition-related intangible asset amortization. As amortization fluctuates based on the size and
timing of the Company's acquisition activity, management believes this exclusion provides a more useful comparison
of the Company's underlying business performance and trends from period to period. While intangible assets
contribute to the Company's revenue generation, the intangible amortization is not directly related. Therefore, the
related revenues are included in adjusted earnings per share.
(a) Adjusted net earnings per share is a non-GAAP financial measure. Non-GAAP financial measures should be
considered in addition to, but not as a substitute for, or superior to, financial measures prepared in accordance with
GAAP.
UNITEDHEALTH GROUP
4. Click on link to your financial institution's website to enroll.
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2. Type in the 16-digit control number included in your enclosed voting card (in
the box marked by the arrow) and click Submit.
Proxy materials and other shareholder communications will be sent to the email
address provided. E-delivery will begin with the next communication. Your enrollment
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86
2024 Proxy Statement | Appendix A - Reconciliation of Non-GAAP Financial Measure
1. Go to www.proxyvote.com
Richard Burke
Independent
Search Firm
Shareholders
Directors
•
Source Candidate
Pool from
Prior to the appointment of any new independent director, the Governance Committee considers a wide slate of
potential candidates, including qualified women and diverse candidates from underrepresented communities. We also
engage an independent search firm to identify and evaluate potential candidates. Each eventual nominee was selected
due to his or her overall skills and experience.
The Governance Committee screens and recommends candidates for nomination by the full Board and maintains an
active director candidate pipeline, which reflects our continuing commitment to diversity in life, cultural and business
experience among director nominees. The Governance Committee will also consider recommendations submitted by
shareholders for director candidates. Recommendations should be directed to the Corporate Secretary.
(1) Andrew first joined the Board as an independent director in August 2017, stepped down in March 2018 to serve as
CEO of Optum and rejoined the Board in connection with his appointment as the Company's CEO in February 2021.
For this year's election, the Board has nominated ten individuals. All are incumbent directors who collectively bring
tremendous diversity to the Board in their professional experience, perspectives, skills and background, as well as
diversity of nationality, race and gender. Each nominee is a strategic thinker and has varying, specialized experience in
the areas relevant to the Company and its businesses. Moreover, their collective experience covers a wide range of
industries, including health care and clinical practice, insurance, consumer products, technology, capital markets and
financial services, and roles in academia, corporate governance, government and intergovernmental organizations.
The ten director nominees range in age from 52 to 72, three of the ten director nominees are women, two are African
American, one is Hispanic, one is a citizen of Canada and one is a citizen of the United Kingdom.
Search Process for New Directors
Gail Wilensky, Ph.D.
David Wichmann
Glenn Renwick
2022
William Ballard, Jr.
Charles Baker
Kristen Gil
Andrew Witty (1)
2023
In-Depth Review by the
Committee
Other
Information
Meeting
6
Paul Garcia
Departures
• Consider skills matrix
Screen qualifications
Consider diversity
Review independence
and potential conflict
Nominate Director
•
Information
Meeting
6
Other
Annual
4 Audit
Executive
Compensation
3
Corporate
Governance
The Audit and Finance Committee has responsibility for the selection and retention of the independent registered
public accounting firm and oversees financial reporting, internal controls and public disclosure. The Audit and
Finance Committee reviews and assesses the effectiveness of the Company's policies, procedures and resource
commitments in the areas of compliance, ethics, privacy and cybersecurity. Additionally, the Audit and Finance
Committee has oversight of the Company's artificial intelligence framework, including oversight of the
Company's governance mechanisms to monitor, identify, and mitigate potential risks associated with the
deployment of artificial intelligence. The Audit and Finance Committee also oversees management's processes
to identify and quantify material risks facing the Company, management's investing and financing policies and
practices, sustainability investment criteria, and assurance of sustainability disclosures. The Audit and Finance
Committee establishes procedures concerning the receipt, retention and treatment of complaints regarding
accounting, internal accounting controls and auditing matters. The Audit and Finance Committee operates as a
direct line of communication between the Board of Directors and our independent registered public accounting
firm, as well as our internal audit, compliance and legal personnel.
2
2024 Proxy Statement | Director Nomination Process 11
The Board of Directors formed the Nominating Advisory Committee in 2006 to provide the Governance Committee with
additional input from shareholders and others regarding desirable characteristics of director candidates and the
composition of the Board of Directors. The key features of the skills matrix are also discussed with members of our
Nominating Advisory Committee
5 directors have
joined the Board
since 2019
Annual
Review by
Full Board
Recommend
Selected
Candidate for
Appointment
by Our Board
Meet with director
•
Board of
Directors
5
4 Audit
2021
Additions
Tenure of Director Nominees
Information
Meeting
6
4 Audit
Other
Annual
Executive
Compensation
3
Our Governance Committee strives to maintain a balance of tenure on the Board. Long-serving directors bring valuable
experience with our Company and familiarity with the successes and challenges the enterprise has faced over the years,
while newer directors contribute fresh perspectives.
Corporate
Governance
Board of
Directors
2024 Proxy Statement | Director Nomination Process 9
Witty
M.D.
Noseworthy,
Montgomery
Rice, M.D.
III
Hemsley Hooper
Flynn Garcia Gil
2
John Noseworthy,
M.D.
1 director
20+ years
15-20 years
2020
2019
Recent Changes in Board Membership
Nominating Advisory Committee and their feedback is considered by the Governance Committee when it updates the
skills matrix. The Governance Committee considers, but is not bound by, input provided by the Nominating Advisory
Committee. According to the committee description, the Nominating Advisory Committee is expected to include
approximately five individuals who are or represent a shareholder of the Company who holds a significant number of
shares or who are representatives of the medical community. Members of the Nominating Advisory Committee do not
receive any compensation from the Company for serving on the Nominating Advisory Committee. The Nominating Advisory
Committee met once in 2023. A description of the Nominating Advisory Committee, including a description of how the
members of the Nominating Advisory Committee are nominated and selected, can be found on our website at
https://www.unitedhealthgroup.com/people-and-businesses/standards.html.
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
1 director
2024 Proxy Statement | Director Nomination Process 10
30%
Director nominees
are female
30%
UnitedHealth Group embraces and encourages a culture of diversity and inclusion. Valuing diversity makes good
business sense and helps to ensure our future success. Our Board does not establish specific goals with respect to
diversity but the Board's diversity is a consideration in the director nomination process and is assessed annually when
the Board evaluates its overall effectiveness. We are committed to actively seeking director candidates from
underrepresented communities. We currently have two female directors in Board leadership roles. The Governance
Committee maintains an active recruiting pipeline of potential director candidates based upon skills identified in our skills
matrix and includes diverse candidates.
Board Diversity
5 directors
3-7 years
of the Board
-7 years
Average tenure
3 directors
0-2 years
Director nominees
are racially diverse
Shareholder Director Candidates for Inclusion in our Proxy Statement (Proxy Access)
Our Bylaws provide a shareholder or group of shareholders (of up to 20) who have owned at least 3% of our common
stock for at least three years the ability to include in our proxy statement shareholder-nominated director candidates for up
to 20% of the Board. To be eligible to use this right, the shareholder(s) and the candidate(s) must satisfy the
requirements specified in our Bylaws. Our Bylaws are available at https://www.unitedhealthgroup.com/people-and-
businesses/standards.html. For the 2025 Annual Meeting, director nominations submitted under these Bylaw provisions
must be received at our principal executive offices, directed to the Corporate Secretary, no earlier than November 23,
2024 and no later than December 23, 2024.
Our Board separates the positions of CEO and Chair of the Board. The Board believes this separation is appropriate
for the Company at this time because it allows for a division of responsibilities, sharing of ideas between individuals having
different perspectives and to maintain appropriate checks and balances. The Board considered numerous factors in
making this decision, including the Company's strategy and prevailing governance practices. The Board evaluates its
structure on an ongoing basis.
Our shareholders may also nominate candidates for election to the Board at our annual meeting of shareholders,
instead of including the director candidate in our proxy statement, by submitting timely written notice to the Corporate
Secretary in accordance with our Bylaws. The notice must include the information required by our Bylaws, which are
available at https://www.unitedhealthgroup.com/people-and-businesses/standards.html. For the 2025 Annual Meeting,
this notice must be received at our principal executive offices, directed to the Corporate Secretary, no earlier than
February 3, 2025 and no later than March 5, 2025.
C FE
Valerie Montgomery Rice, M.D.
John Noseworthy, M.D.
Andrew Witty
✓ Member FE Financial Expert
C Chair
C
C
C
Michele Hooper is our Lead Independent Director and an ex-officio member of all Board committees. As an
ex-officio member, Michele has a standing invitation to attend each committee meeting but does not count for
quorum purposes or vote on committee matters.
Audit and Finance Committee
Committee Members:
F. William McNabb III (Chair), Charles Baker, Paul Garcia and Kristen Gil
Primary Responsibilities:
Meetings Held in 2023: 10
Other
Annual
Executive
Compensation
3
Corporate
Governance
✓ FE
Baker
✓ FE
F. William McNabb III
4 Audit
5
6
Meeting
Information
licenses and subscriptions in 2023. The Company paid Morehouse School of Medicine approximately $1,000,000
for services as a network care provider in 2023. Total amounts paid by the Company to Morehouse School of
Medicine during 2023 were substantially less than 1% of Morehouse School of Medicine's total revenues for 2023.
Valerie was not directly involved in these relationships.
Board Committees
The Board of Directors has established four standing committees as listed in the table below. These committees help
the Board fulfill its responsibilities and assist the Board in making informed decisions. Each committee operates under a
written charter and evaluates its charter and committee performance annually.
The following table identifies the members of each committee as of April 5, 2024:
2
*
Governance
Health and Clinical
Practice Policies
✓ FE
Director
Charles Baker
Timothy Flynn
Paul Garcia
Kristen Gil
Stephen Hemsley
Michele Hooper*
Compensation and
Audit and Finance Human Resources
Board of
Directors
2024 Proxy Statement | Director Independence 13
Valerie Montgomery Rice is President and Chief Executive Officer of Morehouse School of Medicine. Morehouse
School of Medicine paid the Company approximately $550,906 for claims software, equipment, maintenance
•
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
•
3
2
Board of
Directors
2024 Proxy Statement | Board Leadership Structure 12
serving as the principal liaison between the independent directors and the Chair of the Board;
•
Our Principles of Governance outline the specific duties of the Lead Independent Director, including:
Our Board of Directors believes having independent Board leadership is an important component of our governance
structure because independent leadership is vital in considering the needs of our business and long-term interests of our
shareholders objectively. As such, our Bylaws require the Company to have either an independent Chair of the Board
or a Lead Independent Director. In October 2021, Michele Hooper was appointed Lead Independent Director. The Board
believes that Ms. Hooper's extensive board experience and expertise in corporate governance qualifies her to provide
robust independent oversight of the Board's governance.
Board Leadership Structure
In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules adopted
by the Securities and Exchange Commission (SEC), shareholders who intend to solicit proxies in support of director
nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 of the
Securities Exchange Act of 1934, as amended (Exchange Act).
Corporate
Governance
Shareholder Nominations of Director Candidates at an Annual Meeting
•
•
To determine independence, and following the Company's Standards for Director Independence, the Board of Directors
considered, among other factors, the business relationships between the Company and our directors and nominees,
their immediate family members (as defined by the NYSE) and their affiliated companies. The Board of Directors
considered whether any director or any nominee was a director, partner, significant shareholder or executive officer of an
organization that has a relationship with the Company, and also considered charitable contributions the Company or its
affiliates made to organizations with which such directors or nominees are or have been associated. In particular, the
Board of Directors evaluated the following relationships and determined such relationships were in the normal course
of business and did not impair the directors' ability to exercise independent judgment:
Our Board of Directors has determined director nominees Charles Baker, Timothy Flynn, Paul Garcia, Kristen Gil,
Michele Hooper, F. William McNabb III, Valerie Montgomery Rice, M.D., and John Noseworthy, M.D., are each independent
under the NYSE rules and the Company's Standards for Director Independence and have no material relationships
with the Company that would prevent the directors from being considered independent.
Our Board of Directors has adopted the Company's Standards for Director Independence, which are available at
https://www.unitedhealthgroup.com/people-and-businesses/standards.html. The Standards for Director Independence
align with the independence standards set by the NYSE.
Director Independence
where appropriate, supporting the Company in interactions with shareholders and regulators in consultation with
the Chief Executive Officer and Chair of the Board; and interviewing, along with the Chair of the Governance
Committee, all Board candidates and making director candidate recommendations to the Governance Committee.
meeting periodically with individual independent directors to discuss Board and committee performance,
effectiveness and composition; and
communicating to the Chair of the Board any decisions reached, suggestions, views or concerns expressed by
Independent Directors in executive sessions or outside of Board meetings;
assisting the Chair of the Governance Committee in reviewing and reporting on the results of the Board and
committee performance self-evaluations;
coordinating the preparation of agendas and materials for executive sessions of the Board's Independent
Directors, if any;
•
meeting individually with the Chair of the Board after each regularly scheduled Board meeting;
serving as an ex officio member of each Board committee of which the Lead Independent Director is not a
member and working with the Board Committee Chairs on the performance of their designated roles and
responsibilities;
facilitating discussion and open dialogue among the independent directors during Board meetings, executive
sessions and outside of Board meetings;
calling meetings of the independent directors as appropriate and, in coordination with the Chair of the Board, all
members of the Board;
presiding at all meetings of the Board at which the Chair of the Board is not present and at executive sessions of
the Board's independent directors;
•
.
•
.
•
working with the Chair of the Board to approve the agendas and meeting schedules for Board meetings;
working with the Chair of the Board on the appropriateness (including quality and quantity) and timeliness of
information provided to the Board;
McNabb
Annual
Two or More Races or
United Airlines Holdings, Inc.
Current Outside Public
Directorships:
None
Age: 72
Committees:
Director since: 2007
F. William McNabb served as Chairman of The Vanguard Group, Inc. from
2010 until his retirement in 2018 and served as CEO from 2008 to 2017. He
joined Vanguard in 1986. In 2010, he became Chairman of the Board of
Directors and the Board of Trustees of the Vanguard group of investment
companies. Earlier in his career, Bill led each of Vanguard's client facing
business divisions. Bill served as the Chairman of the Investment Company
Institute's Board of Governors from 2013 to 2016. He serves on the
Wharton Leadership Advisory Board and the Columbia Law School's
Millstein Center Advisory Board. Bill is a board member of CECP: The CEO
Force for Good.
F. William McNabb III
Michele Hooper is Lead Independent Director of the Board of Directors of
UnitedHealth Group and has served in this capacity since October 2021.
Michele is President and CEO of The Directors' Council, a private company
she co-founded in 2003 that works with corporate boards to increase their
independence, effectiveness and diversity. She was President and CEO of
Voyager Expanded Learning, a developer and provider of learning programs
and teacher training for public schools, from 1999 until 2000. She previously
served as President and CEO of Stadtlander Drug Company, Inc., a provider
of disease-specific pharmaceutical care, from 1998 until its acquisition in
1999. Michele is a nationally recognized corporate governance expert. In the
past five years, Michele was also a director of PPG Industries, Inc.
Michele Hooper
None
Current Outside Public
Directorships:
None
Director since: 2000
Age: 71
Committees:
Stephen Hemsley is non-executive Chair of the Board of UnitedHealth
Group and has served in this capacity since November 2019. Steve
previously served as Executive Chair of the Board from September 2017 to
November 2019, Chief Executive Officer from November 2006 to
August 2017, President from May 1999 to November 2014, and Chief
Operating Officer from November 1998 to November 2006. He joined the
Company in 1997 and has been a member of the Board of Directors since
2000. Steve is a director of Cargill, Inc.
Stephen Hemsley
None
Current Outside Public
Directorships:
Audit and Finance
Age: 52
Committees:
Director since: 2018
Age: 67
Committees:
Audit and Finance (Chair)
Governance
Current Outside Public
Directorships:
Health and Clinical Practice
Policies (Chair)
Age: 62
Committees:
Director since: 2017
John Noseworthy was the former Chief Executive Officer and President of
Mayo Clinic until his retirement in December 2018. John joined Mayo Clinic
in 1990 and served in various capacities, including as Chairman of Mayo
Clinic's internal Board of Governors, member of the Board of Trustees,
Professor of Neurology at Mayo Clinic College of Medicine & Science, Chair
of Mayo's Department of Neurology, medical director of the Department of
Development and Vice Chair of the Mayo Clinic Rochester Executive Board.
John also served as editor-in-chief of Neurology, the official journal of the
American Academy of Neurology, from 2007 to 2009. John was a Health
Governor of the World Economic Forum from 2012 to 2018 and, in the past
five years, also served as a director of Merck & Co.
John Noseworthy, M.D.
Valerie Montgomery Rice is President and Chief Executive Officer of the
Morehouse School of Medicine, a medical school in Atlanta, Georgia. She
has been President since 2014 and Chief Executive Officer since 2021. She
was Dean of the Morehouse School of Medicine from 2011 to 2021 and
Executive Vice President from 2011 to 2014. She was Dean of the School of
Medicine and Senior Vice President of Health Affairs at Meharry Medical
College from March 2006 to June 2009, and director of the Center for
Women's Health Research from 2005 to 2011. Valerie also served
previously as a Council Member of the National Institute of Health and
National Center for Advancing Translational Science, and on the National
Institute of Health's Minority Health and Health Disparities and Office of
Research on Women's Health advisory councils, and the Association of
American Medical Colleges Council of Deans administrative board. Valerie
is a member of the National Academy of Medicine and a renowned infertility
specialist and women's health researcher.
Valerie Montgomery Rice, M.D.
Other
Information
Meeting
Director since: 2022
6
Annual
Executive
Compensation
3
Corporate
Governance
2
2024 Proxy Statement | Board Committees 14
6
2024 Proxy Statement | 2024 Director Nominees
International Business
Machines Corp.
4 Audit
Kristen Gil served as Vice President, Business Finance Officer at Alphabet,
Inc. until January 2024. She held numerous senior positions at Alphabet
since joining the company in 2007, including in business operations,
strategy, and finance for Google Search, Maps, Research & Al, and
Sustainability. Prior to joining Alphabet in 2007, Kristen worked at Marketron
International and McKinsey & Company. Kristen formerly served on the
board of directors of Proofpoint, a cybersecurity company.
Kristen Gil
Other
Information
Committees:
Age: 67
Director since: 2017
Timothy Flynn was Chairman of KPMG International (KPMG), a global
professional services organization that provides audit, tax and advisory
services, from 2007 until his retirement in 2011. From 2005 until 2010, he
served as Chairman and from 2005 to 2008 as CEO of KPMG LLP in the
U.S., the largest individual member firm of KPMG. Prior to serving as
Chairman and CEO of KPMG LLP, Tim was Vice Chairman, Audit and Risk
Advisory Services, with operating responsibility for Audit, Risk Advisory and
Financial Advisory Services practices at KPMG LLP. He previously served
as a trustee of the Financial Accounting Standards Board, a member of the
World Economic Forum's International Business Council, and as a director
of Alcoa and the International Integrated Reporting Council.
Timothy Flynn
None
Current Outside Public
Directorships:
Health and Clinical Practice
Policies
Audit and Finance
Compensation and Human
Resources (Chair)
Age: 67
Committees:
Charles Baker is President of the National Collegiate Athletic Association, a
nonprofit organization dedicated to the well-being and success of college
athletes, and has served in that role since March 1, 2023. He was the
Governor of the Commonwealth of Massachusetts from January 8, 2015 to
January 2, 2023. Prior to his tenure as Governor, Charlie had a distinguished
career in business, non-profit, and government administration. Immediately
preceding his role as Governor, he served as Executive in Residence at
General Catalyst Partners, where he served as an advisor to a variety of
companies. Earlier in his career, Charlie also served as CEO of Harvard
Pilgrim Health Care, a health benefits provider.
Charles Baker
Other
Information
6
Annual
Meeting
4 Audit
Executive
Compensation
3
Corporate
Governance
Director since: 2023
Compensation and Human
Resources
Governance
JPMorgan Chase & Co.
(Retiring from the board on
May 20, 2024)
Walmart Inc.
Meeting
6
4 Audit
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Current Outside Public
Directorships:
5
Repay Holdings Corp.
Deluxe Corp.
Current Outside Public
Directorships:
Audit and Finance
Committees:
Age: 71
Director since: 2021
Paul Garcia is the retired Chairman and Chief Executive Officer of Global
Payments Inc., a publicly traded, leading provider of electronic payment
processing services, and served in that capacity from 1999 to 2014. Prior to
his role at Global Payments, Paul served as President & CEO of NaBanco,
an electronic credit card processor, from 1982 to 1995. He served on the
board of directors of Global Payments Inc. and MasterCard International
and, in the past five years, as a director of The Dun & Bradstreet
Corporation, West Corporation, Truist Financial Corporation and Payment
Alliance International, Inc.
Paul Garcia
2024 Proxy Statement | 2024 Director Nominees
Ethnicities
Current Outside Public
Directorships:
Director since: 2019
TIIT
Skills & Expertise
Director Nominees
Optimal Mix of Skills, Expertise and Background Information of Director Nominees
The matrix provides the optimal skills and experience the Board as a whole should have. The following table displays
these skills and areas of expertise of each nominee, along with background attributes for each director.
Information
Meeting
6
Other
Annual
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
8
2024 Proxy Statement | Director Nomination Process
All director nominees were elected by our shareholders at the 2023 Annual Meeting except Charlie Baker, who was
appointed unanimously by the Board in October 2023. With respect to that appointment, the Governance Committee
considered a number of potential candidates and Charlie emerged as the finalist due to his overall skill set and experience.
Each of our independent director nominees has satisfied all the core director criteria.
Corporate Governance
$
Finance
Health Care Industry
White
Hispanic or Latinx
African American or Black
Female
Male
Background
Capital Markets
Policy/Regulatory
Political/Health Care
Ability to work collegially and collaboratively with other directors and management.
Clinical Practice
00
Technology / Business
Organizations
Large Complex
Diversity
Marketing
Social Media /
Markets
Direct Consumer
Processes
Understanding of and experience with complex public companies or like organizations; and
Ability to oversee risks within the individual director's particular skill set;
.
Corporate
Governance
2
Board of
Directors
7
2024 Proxy Statement | 2024 Director Nominees
None
Current Outside Public
Directorships:
None
Committees:
3
Age: 59
Andrew Witty has been Chief Executive Officer of UnitedHealth Group since
February 2021. He was President of UnitedHealth Group from
November 2019 to February 2021, Chief Executive Officer of Optum from
July 2018 to April 2021, and a UnitedHealth Group director from
August 2017 to March 2018. Prior to joining UnitedHealth Group, he was
Chief Executive Officer and a board member of GlaxoSmithKline, a global
pharmaceutical company, from 2008 to April 2017.
Andrew Witty
None
Current Outside Public
Directorships:
Governance (Chair)
Health and Clinical Practice
Policies
Compensation and Human
Resources
Committees:
Age: 71
Director since: 2021
23andMe Holding Co.
Executive
Compensation
4 Audit
•
•
Standing and reputation in the individual director's field;
•
High integrity and ethical standards;
•
Service on no more than three other public company boards; with our Chief Executive Officer limited to no more
than one other public company board;
Independence under the Company's Standards for Director Independence, subject to waiver by the Governance
Committee and New York Stock Exchange (NYSE) corporate governance rules (other than the CEO and Chair of
the Board);
•
Other
.
-
The skills matrix has two sections
Our Board's Governance Committee assesses the optimal skills and experiences the Board should have to align it with
our Company's long-term strategic plan and the interests of our shareholders and stakeholders.
Criteria for Nomination to the Board
Director Nomination Process
Information
Meeting
6
5
- the core skills and experiences every member of the Board should have and the
background attributes the Board has collectively. This core director criteria includes:
Board of
Directors
Board of
Directors
2
6
35,393
6,040
496
940
8,040
110
Deferred
Stock Units
John Noseworthy, M.D.
Valerie Montgomery Rice, M.D.
F. William McNabb III
Michele Hooper
Stephen Hemsley
Kristen Gil
Paul Garcia
Timothy Flynn
Charles Baker
Name
As of December 31, 2023, our non-employee directors held outstanding DSU awards as follows:
Information
Meeting
6,162
4,838
4,746
(5) In 2023, the Company matched charitable contributions made by the following directors to charitable organizations
selected by the directors pursuant to the Company's Board Matching Program: $15,000 for Tim, Paul, Steve,
Michele, Valerie, and John. In 2023, the Company also paid $9,112, $9,180, $9,244, and $558 in health care
premiums on behalf of Tim, Steve, Bill, and Michele, respectively.
• Bylaws
• Certificate of Incorporation
Corporate Governance Documents
We are committed to high standards of corporate governance and ethical business conduct. Important documents
reflecting this commitment are listed below.
Overview
Corporate Governance
Other
Information
Meeting
6
6
Annual
4 Audit
Executive
Compensation
3
Corporate
Governance
Directors
2
Board of
21
2024 Proxy Statement | 2023 Director Compensation Table
5
. Principles of Governance
5
Other
95
50,618
314
158,732
684
345,722
298
150,628
40
150,628
21,574
($)
Amount
of Cash
John Noseworthy, M.D.
Valerie Montgomery Rice, M.D.
F. William McNabb III
Stephen Hemsley
Timothy Flynn
Charles Baker
Name
Deferred
Stock Units
(#)
298
(3) Directors converted some or all of cash compensation payable to such director into shares of common stock as
follows:
Name
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2024 Proxy Statement | 2023 Director Compensation Table 20
(4) The amounts reported: (a) include the value of DSUs issued upon conversion of annual cash retainers as described
in footnote 2 above; (b) include the value of shares issued upon conversion of annual cash retainers as described
in footnote 3 above; and (c) reflect the aggregate grant date fair value of the stock awards granted on January 3,
April 3, July 3 and October 3, 2023 computed in accordance with FASB ASC Topic 718, based on the closing
price of our common stock on the grant date. For a description of the assumptions used in computing the aggregate
grant date fair value, see Note 11 to the Consolidated Financial Statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2023.
204
100,000
249
125,000
249
125,000
(#)
($)
Shares of
Stock
Amount
of Cash
Valerie Montgomery Rice, MD
Kristen Gil
Paul Garcia
4 Audit
(1) Charlie was appointed as a member of the Board on October 30, 2023.
(2) Directors converted some or all of cash compensation payable to such director into DSUs as follows:
• Board of Directors Committee Charters
• Director Conflict of Interest Policy
Annual Review of Compensation
Program
Say-on-Pay Results
Align Management Incentive Structures with Long-Term Strategy
Board oversight over sustainability strategy as codified in Board Committee
charters; Company appointed Chief Sustainability Officer
Full disclosure of corporate governance policies and practices
Board members are expected to receive relevant continuing governance
education each year. Education topics included cybersecurity, risk oversight,
corporate governance, succession planning and financial oversight
Directors routinely meet in executive sessions without management present
To avoid potential conflicts of interest, a director is required to seek
approval of the Governance Committee if the director or his/her
immediately family member proposes to engage in a transaction or activity
in the health care field
Independent directors may serve on no more than three other public
company boards and our CEO may serve on no more than one other public
company board. All directors have been evaluated and comply with this
policy
Active Board succession plan; five Board members added since 2019
Directors attended 97% of combined total Board and applicable committee
meetings in 2023 and all then-current directors attended the 2023 Annual
Meeting
30% of our director nominees are ethnically diverse, 30% are women and
20% are African American; two female directors hold Board leadership roles
Annual Board and Committee evaluation conducted by independent
consultant and led by the Chair of Governance Committee
Executive Compensation program received 96% shareholder support in our
2023 Say-on-Pay vote
80% of our Board members are independent
Disclosure
Conflicts of Interest
Executive Sessions
Director Education
Director Time Commitment Policy
Attendance
Board Succession Planning
Board and Committee Evaluations
Diversity
Sustainability Oversight
Compensation and Human Resources Committee annually reviews and
approves incentive program design, goals and objectives for alignment with
compensation and business strategies
2024 Proxy Statement | Overview 23
Board of
Directors
Shareholder Engagement
We strongly and broadly encourage and train employees to raise ethics and compliance concerns, including concerns
about accounting, internal controls, auditing, legal, regulatory or other policy matters. We offer several channels for
employees and third parties to report ethics and compliance concerns or incidents, including by telephone or online. We
prohibit retaliation against anyone who in good faith raises concerns or questions regarding ethics and compliance
matters, reports suspected violations or cooperates in an investigation. We educate all employees regarding how they
may report possible ethics or compliance issues and their affirmative responsibility to report possible issues.
Compliance and Ethics
Any waiver of the Code for the Company's executive officers, senior financial officers or directors may be made only by
the Board or a committee of the Board. We will publish any amendments to the Code, as well as any waivers of the Code
for an executive officer or director, on our website. Our entire global workforce, including applicable contractors and part-
time employees, receives periodic training on our Code and other ethical standards.
The Company's Code of Conduct (Code), adopted by the UnitedHealth Group Board of Directors, sets expectations for
ethical conduct across our company, including but not limited to, integrity, accountability, fair competition and fair
dealing, privacy and information security, our assets and the environment, government interactions, communications
and marketing and a safe and supportive work environment. The Code also describes the process to report potential
misconduct, whistleblower protections, non-retaliation policies and the repercussions for violation of the Code (including
termination and possible legal action). The Code is available on the Company's website.
Code of Conduct: Our Principles of Ethics & Integrity
A portion of our annual incentive award is dependent upon the achievement
of goals of customer, provider and employee satisfaction, which are viewed
to be important to achieving long-term success for the Company
Clawback policy entitling the Board to seek cash or stock compensation
reimbursement from our senior executives if they are directly involved in
fraud or misconduct causing a material restatement, material detrimental
conduct or violate non-compete, non-solicit or confidentiality provisions. An
additional clawback policy adopted in 2023 that complies with new SEC
and NYSE rules
Annual and long-term incentive programs are designed to reward financial
and operational performance that furthers short and long-term strategic
objectives
Clawback Policies
Non-Financial Performance Goals
Incentive Programs Linked to
Strategy
Align Management Incentive Structures with Long-Term Strategy
Information
6
Other
Annual
Meeting
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Independence
• Standards for Director Independence
Adopt Structures and Practices Enhancing Board Effectiveness
Lead Independent Director with clearly defined and robust duties
Board considers appropriateness of its leadership structure at least
annually
No shareholder rights plan (commonly referred to as a poison pill)
Any director may be removed at any time, with or without cause, by a
majority of shareholders
Shareholders have the rights to call a special meeting and act by written
consent
Majority voting in uncontested director elections; directors tender an
irrevocable offer to resign if they do not receive majority vote and the Board
will accept such offer to resign absent a compelling reason
All directors stand for election by majority vote annually
Proxy access with market terms
Removal of Directors
No Poison Pill
Special Meeting / Written Consent
Rights
Irrevocable Offer to Resign
Majority Voting Standard/
Shareholder Voting Rights in Proportion to Economic Interests
One Share, One Vote
Proxy Access
Board Accountability to Shareholders
Commitment to Effective Corporate Governance
You can access these documents at https://www.unitedhealthgroup.com/people-and-businesses/standards.html to learn
more about our corporate governance practices. We will also provide copies of these documents without charge upon
written request to the Company's Corporate Secretary.
• Nominating Advisory Committee Description
Corporate Environmental Policy
• Political Contributions Policy
• Board of Directors Communication Policy
• Related-Person Transactions Approval Policy
• Code of Conduct: Our Principles of Ethics & Integrity
Annual Election
No Supermajority Requirements
No dual class structure; each share of common stock is entitled to one vote
No supermajority shareholder approval requirements
Board Responsiveness to Shareholders / Proactive Understanding of Shareholder Perspectives
Separate CEO and Chair of the Board. All directors other than the Chair
and the CEO are independent
Disclosure
Committee Membership
Annual Review
Lead Independent Director
Board Leadership
Strong Independent, Board Leadership Structure
Information
6
Other
Annual
Meeting
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2024 Proxy Statement | Overview 22
Shareholder engagement topics included Board composition, leadership
and refreshment, executive compensation program, diversity, equity and
inclusion, sustainability, climate change, cybersecurity, artificial intelligence,
human capital and other environmental, social and governance topics
Management and Board members met with key shareholders as part of our
shareholder outreach program
Shareholder Engagement Process
Independent Committee Chairs with clear charters and oversight mandates
Proxy discloses why Board believes current leadership structure is
appropriate
391,050
15,000
376,050
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2024 Proxy Statement | Board Meetings and Annual Meeting Attendance | Annual Board and Committee Evaluations 16
The Board and each Committee
consider the results and ways in
which the Board and Committee
processes and effectiveness may
be enhanced, and changes to the
Board's and each Committee's
practices and agenda topics are
implemented as appropriate. The
Board monitors proposed actions
to assure that agreed upon
improvements are implemented
and effective.
Respond to Director Input
Annual
The feedback received from the
interviews is compiled
anonymously and reviewed and
discussed by the Board and each
Committee in executive sessions
at their meetings held in the first
quarter of each year and, as
appropriate, addressed with
management.
development; and agenda topics
for future meetings.
succession planning and talent
results and operations;
oversight of business strategy,
Each director completes a written
evaluation annually and is
interviewed every third year by an
independent consultant who also
reviews feedback and provides a
report in the other years. Topics
for both written evaluations and
interviews include Board and
Committee performance; Board
and Committee operations,
structure, and performance;
Evaluation Elements
The Board uses a written
evaluation, supplemented by
facilitated interviews conducted
by an independent consultant
every third year. The 2023 Board
and Committee evaluations were
done in writing.
Evaluation Format
The Governance Committee oversees the Board and Committee evaluation process. In addition, the Chair of the Board
and the Lead Independent Director meet regularly with individual directors to discuss Board and Committee
performance, effectiveness and composition.
Review Feedback
Annual Board and Committee Evaluations
Other
Meeting
Other
Information
Meeting
6
5
4 Audit
Annual
Executive
Compensation
3
Corporate
Governance
6
2
2024 Proxy Statement | Communication with the Board of Directors | Director Compensation 17
We compensate our non-employee directors fairly and competitively for work required for a company of our size,
complexity and scope and to align their interests with the long-term interests of our shareholders. Director compensation
reflects our desire to attract, retain and benefit from the expertise of highly qualified people with backgrounds and
experience relevant to our business and those we serve. The Compensation and Human Resources Committee annually
reviews the compensation of our non-employee directors and makes recommendations to the Board of Directors. In
August 2023, the Compensation and Human Resources Committee, with the advice of its independent compensation
consultant, undertook a review of the structure, philosophy and overall mix of the director compensation program as
compared to the Company's compensation peer group and also the five large publicly traded managed care, health care
and services companies included in the peer group. The Compensation and Human Resources Committee
recommended no changes to director compensation.
Director Compensation
The policy, including information on how to contact the Board of Directors, may be found in the corporate governance
section of our website, https://www.unitedhealthgroup.com/people-and-businesses/standards.html.
Appropriate matters to raise in communications to the Board include Board composition; Board and CEO succession
planning process; executive compensation; uses of capital; and general Board oversight, including sustainability, human
capital management, corporate governance, accounting, internal controls, auditing and other related matters.
The Board of Directors values the input and insights of our shareholders and other interested parties and believes
effective communication strengthens the Board's role as an active, informed and engaged fiduciary. The Board has
adopted a Board of Directors Communication Policy to facilitate communication between shareholders and other
interested parties and the Board. Under this policy, the Board has designated the Company's Corporate Secretary as its
agent to receive and review communications. The Corporate Secretary will not forward to the directors communications
received which are of a personal nature or not related to the duties and responsibilities of the Board, including, without
limitation, mass mailings, business solicitations, routine customer service complaints, new product or service suggestions
and opinion surveys.
Communication with the Board of Directors
As part of director feedback received through the annual evaluation process, the Board continues to place a focus on
Board and executive leadership succession and development, engaging with management on achievement of the
Company's long-term strategies and direction, executive leadership, sustainability, diversity, equity and inclusion, and
risk management topics.
Information
Board of
Directors
Directors are required to attend at least 75% of Board meetings and their respective committee meetings, and the
Annual Meeting of Shareholders. All nominees are expected to attend the 2024 Annual Meeting. During 2023, the Board
of Directors held 10 meetings. All current directors attended at least 75% of the meetings, including 97% of all regularly
scheduled meetings. All then current directors attended last year's annual meeting.
Board Meetings and Annual Meeting Attendance
Each of the Health and Clinical Practice Policies Committee members is an independent director under the
NYSE listing standards.
Governance Committee
Each of the Compensation and Human Resources Committee members is an independent director under the
NYSE listing standards, and a non-employee director under the SEC rules.
Independence:
The Compensation and Human Resources Committee is responsible for overseeing (i) our policies and practices
related to total compensation for executive officers, (ii) the administration of our incentive and stock
compensation based plans, (iii) the risk associated with our compensation practices and plans, and (iv) human
capital management, including diversity, equity and inclusion initiatives. The Compensation and Human
Resources Committee establishes employment arrangements with our CEO and other executive officers,
conducts an annual performance review of the CEO, and reviews and monitors director compensation programs
and the Company's stock ownership guidelines.
Meetings Held in 2023: 7
Timothy Flynn (Chair), Valerie Montgomery Rice, M.D. and John Noseworthy, M.D.
Primary Responsibilities:
Committee Members:
Compensation and Human Resources Committee
Each of the Audit and Finance Committee members is an independent director under the NYSE listing
standards. The Board of Directors has determined Bill McNabb, Charlie Baker, Paul Garcia and Kristen Gil are
audit committee financial experts as defined by the SEC rules.
Committee Members:
Meetings Held in 2023: 10
Audit and Finance Committee
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
4 Audit
5
Annual
Meeting
Independence:
John Noseworthy, M.D. (Chair), Timothy Flynn and F. William McNabb III
Primary Responsibilities:
Meetings Held in 2023: 4
The Governance Committee's duties include (i) identifying and nominating individuals to be proposed as
nominees for election as directors at each annual meeting of shareholders or to fill Board vacancies,
(ii) conducting the Board evaluation process, (iii) evaluating the categorical standards which the Board of
Directors uses to determine director independence, (iv) providing oversight over sustainability policies and
practices, including identifying key sustainability topics and how the Board and its committees provide oversight
of sustainability areas, (v) monitoring and evaluating corporate governance practices, and (vi) reviewing and
recommending changes to the Company's Political Contributions Policy, reviewing political contributions at least
semi-annually, monitoring the Company's advocacy lobbying processes and activities, including key trade
associations and coalition memberships, and overseeing the Company's public policy and government relations
activities and external relations functions and activities. The Governance Committee also oversees Board
processes and corporate governance related risk.
Independence:
The Health and Clinical Practice Policies Committee is responsible for assisting the Board of Directors in fulfilling
its responsibilities relating to (i) oversight of management's initiatives to improve health care affordability, clinical
care and patient safety, enhance health care experience, achieve better outcomes, advance health equity and
reduce disparities, (ii) policy oversight, including the identification, evaluation and monitoring of the
implementation of legislative, regulatory and policy issues, both domestic and international, that affect or could
affect the Company's business reputation, business activities and performance, and ensuring consistency of
policies and positions with the Company's public policy priorities, and (iii) overseeing the responsible and ethical
application of artificial intelligence in support of modernizing and improving the health care system.
Meetings Held in 2023: 4
Valerie Montgomery Rice, M.D. (Chair), Charles Baker and John Noseworthy, M.D.
Primary Responsibilities:
Committee Members:
Health and Clinical Practice Policies Committee
Other
Information
6
Annual
Meeting
5
4 Audit
Executive
Compensation
Governance
3
2
Corporate
Board of
Directors
15
2024 Proxy Statement | Board Committees
Each of the Governance Committee members is an independent director under the NYSE listing standards.
Independence:
The following table highlights the material elements of our director compensation program:
Compensation Element
Annual Cash Retainer
Annual Chair of the Board Cash Retainer
($)(4)
Total
All Other
Compensation
Stock
Awards
($)(2)(3)
Fees Earned or
Paid in Cash
John Noseworthy, M.D.
Valerie Montgomery Rice, M.D.
F. William McNabb III
($)(5)
Michele Hooper
Kristen Gil
Paul Garcia
Timothy Flynn
Charles Baker
Name(1)
2023 Director Compensation Table
Information
6
Other
Stephen Hemsley
($)
59,327
59,327
391,050
15,000
376,050
392,883
9,244
383,639
441,519
15,558
225,961
200,000
595,348
24,180
571,168
351,800
351,800
366,800
15,000
351,800
400,162
24,112
376,050
Annual
Meeting
Other
Information
4 Audit
3
Non-employee directors receive annual grants of DSUs under the 2020 Stock Incentive Plan having an aggregate fair
value of $225,000. The grants are issued quarterly in arrears on the first business day following the end of each fiscal
quarter and prorated if the director did not serve the entire quarter. The number of DSUs granted is determined by dividing
$56,250 (the quarterly value of the annual stock compensation award) by the closing price of our common stock on
the grant date, rounded up to the nearest share. The grants are in consideration of general service and responsibilities
and required meeting preparation and serve to align the interests of our directors with those of our shareholders.
The DSUs immediately vest upon grant and must be retained until completion of the director's service on the Board or
until they have met our stock ownership requirements. Upon completion of service, the DSUs convert into an equal
number of shares of the Company's common stock. A director may defer receipt of the shares for up to ten years
after completion of service pursuant to the Director Deferral Plan. Non-employee directors who have met their stock
ownership requirements may elect to receive common stock in lieu of DSUS and/or in-service distributions on pre-
selected dates.
Cash retainers are payable on a quarterly basis in arrears on the first business day following the end of each fiscal
quarter and are subject to pro rata adjustment if the director did not serve the entire quarter. Directors may elect to receive
deferred stock units (DSUs) or common stock (if the director has met the stock ownership guidelines) in lieu of their
cash compensation or may defer receipt of their cash compensation to a later date pursuant to the Directors' Compensation
Deferral Plan (Director Deferral Plan). The cash retainers are in consideration of general service and responsibilities
and required meeting preparation.
225,000 aggregate fair value in deferred stock units
At the director's election, cash compensation may be
converted into DSUs, or if the director has met the
stock ownership guidelines, into common stock
75,000
25,000
25,000
25,000
32,500
220,000
If directors elect to convert their cash compensation into common stock or DSUs, such conversion grants are made on
the day the eligible cash compensation becomes payable to the director. The director receives the number of shares of
common stock or DSUs, as applicable, equal to the cash compensation foregone, divided by the closing price of our
common stock on the date of grant, rounded up to the nearest share. The DSUs immediately vest upon grant. Directors
may only elect to receive common stock if they have met the stock ownership guidelines.
125,000
Cash Compensation
Stock Compensation Conversion Program
Annual Stock Compensation Award
Annual Lead Independent Director Cash Retainer
Annual Health and Clinical Practice Policies
Committee Chair Cash Retainer
Annual Governance Committee Chair Cash Retainer
Annual Compensation and Human Resources
Committee Chair Cash Retainer
Retainer
Annual Audit and Finance Committee Chair Cash
Compensation Value ($)
The Company pays dividend equivalents in the form of additional DSUs on all outstanding DSUs. Dividend equivalents
are paid at the same rate and at the same time that dividends are paid to Company shareholders and are subject to the
same vesting conditions as the underlying grant.
2024 Proxy Statement | Director Compensation 18
Board of
Directors
Corporate
Governance
2
Board of
Directors
2024 Proxy Statement | Director Compensation 19
The following table provides information for the year ended December 31, 2023, relating to compensation paid to or
accrued by us on behalf of our non-employee directors who served in this capacity during 2023.
Our corporate aircraft use policy generally prohibits personal use of corporate aircraft by any independent director.
Because there is no incremental cost to the Company, we permit on occasion a director's family member to accompany
the director on a business flight on Company aircraft provided a seat is available.
We reimburse directors for any reasonable out-of-pocket expenses incurred in connection with service as a director. We
also provide health care coverage to directors if the director is not eligible for subsidized coverage under another
group health care benefit program. Health care coverage is provided on the same terms and conditions as current
employees. Upon retirement from the Board, directors may continue to obtain health care coverage under benefit
continuation coverage, and after the lapse of such coverage, under the Company's post-employment medical plan.
The Company maintains a program through which it will match up to $15,000 of charitable donations made by each
director for each calendar year. The directors do not receive any financial benefit from this program because the charitable
income tax deductions accrue solely to the Company. Donations under the program may not be made to family trusts,
partnerships or similar organizations.
Other Compensation
Under the Director Deferral Plan, subject to compliance with applicable laws, non-employee directors may elect
annually to defer receipt of all or a percentage of their compensation. Amounts deferred are credited to a bookkeeping
account maintained for each director participant that uses a predetermined collection of unaffiliated mutual funds as
measuring investments. The Director Deferral Plan does not provide for matching contributions by the Company.
Under our stock ownership guidelines, we require non-employee directors to own shares of the Company's common
stock (excluding stock options, but including vested DSUs and vested restricted stock units) having a fair market value
equal to five times the directors' annual base cash retainer. Non-employee directors must comply with the stock ownership
guidelines within five years of their appointment to the Board. All of our non-employee directors have met the stock
ownership requirements or have served as a director for fewer than five years. Our directors are required to hold all DSU
awards granted until completion of service on the Board or until they have met our stock ownership requirements.
Director Deferral Plan
Stock Ownership and Retention Guidelines
Information
Meeting
6
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Executive
Compensation
Stock-Based Compensation
Our shareholder engagement program is focused on developing and maintaining relationships with our shareholders so
we can better understand their perspectives and priorities. The feedback received from these engagements helps
shape our practices. Our broad outreach and engagement with shareholders include in-person meetings, calls, and
written correspondence throughout the year with a more robust engagement schedule ahead of the annual meeting of
the shareholders. Among other topics, key shareholder engagement topics have included Board composition and oversight,
leadership and refreshment, executive compensation program, diversity, equity and inclusion, sustainability, climate
change, cybersecurity, artificial intelligence, human capital and other environmental, social and governance topics. We
have taken actions responsive to shareholder feedback in these areas.
2024 Proxy Statement | Code of Conduct | Compliance and Ethics | Shareholder Engagement 24
Our compensation program is designed to attract and retain highly qualified executives and to maintain a strong link
between pay and the achievement of enterprise-wide goals. We emphasize and reward teamwork and collaboration
among executive officers, which we believe fosters Company growth and performance, optimizes the use of
enterprise-wide capabilities, drives efficiencies and integrates products and services for the benefit of our customers
and other stakeholders.
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
6
Meeting
Information
Sustainability Governance
We have a longstanding commitment to sustainability supported by our Board and senior leaders. The following shows
the hierarchy and outlines roles and responsibilities of our sustainability governance model.
Governance
Committee
Oversight: Sustainability
policies and practices,
climate change initiatives
and corporate citizenship.
Board of Directors
Audit and Finance
Committee
Health and Clinical
Practice Policies
Committee
2024 Proxy Statement | Alignment of Our Sustainability Priorities with Our Long-Term Strategy 29
Our 2022 Sustainability Report, available at 2022-sustainability-report.pdf (unitedhealthgroup.com), summarizes the
steps the Company is taking to build a health system that works better for everyone through the organization's
environmental, social and governance efforts. We also attached our EEO-1 report as an exhibit to the Sustainability
Report. We have mapped our disclosures to the Sustainability Accounting Standards Board (SASB) standards.
Committing to supplier diversity by developing a supplier base that reflects the communities and customers we
are privileged to serve.
• Partnering with suppliers to maximize value in our supply chain to help ensure we buy the right goods and
services from the right suppliers for the right price, in a timely manner.
2024 Proxy Statement | Alignment of Our Sustainability Priorities with Our Long-Term Strategy 28
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
6
Oversight: Sustainability
investment criteria and
disclosures.
Meeting
Our People and Culture
• Advancing a diverse, equitable and inclusive environment where all team members feel welcomed, valued and
heard in order to reach their full potential.
Improving employee health and well-being by making it easier for all team members to pursue better health.
Developing and growing our talent with our employee-centered culture, transparency and mobility, and a
comprehensive approach to talent stewardship aligned to our business strategy.
• Building healthier communities by combining our knowledge, experience, and passion to support the
communities where we live and work through employee giving and volunteering.
Responsible Business Practices
• Maintaining strong and effective corporate governance to drive sustained shareholder value and respond to the
interests of our shareholders.
Adhering to our values through compliance and ethics principles that guide our behavior and help us remain a
trusted partner.
• Maintaining data privacy and enhancing cybersecurity, recognizing our obligation to build and maintain the trust
and confidence of our stakeholders and customers and ensuring we can protect the information of all those we
serve.
• Utilizing machine learning and artificial intelligence to ensure technology is developed, deployed and monitored
ethically and responsibly and is aligned with our mission.
Information
Oversight: Initiatives to
improve health care
access, affordability,
quality and equity.
Compensation and
Human Resources
•
•
•
•
•
Revenues increased 15% to $371.6 billion in 2023 from $324.2 billion in 2022;
Net earnings increased 11% year-over-year to $22.4 billion; operating earnings increased 14% year-over-
year to $32.4 billion; and cash flow from operations increased 11% year-over-year to $29.1 billion in 2023;
Fully diluted earnings per share increased 13% to $23.86 per share from $21.18 in 2022. Adjusted earnings
per share² increased 13% to $25.12 per share from $22.19 per share in 2022;
Return on equity at 27.0% in 2023 compared with 27.2% in 2022;
The annual cash dividend rate increased to $7.52 per share, representing a 14% increase over the annual
cash dividend rate of $6.60 per share since the second quarter of 2022; and
Total shareholder return was 123% for the five-year period ended 2023.
Awards and Recognition
•
•
•
•
We were the top ranked company in the insurance and managed care sector on Fortune's 2024 "World's
Most Admired Companies" list. This is the 14th consecutive year we have ranked No. 1 overall in the sector.
The Company ranked No. 1 on all nine key attributes of reputation;
We have been named to both the Dow Jones Sustainability World and North America Indices every year
since 1999;
We received a score of 100 on the Human Rights Campaign Foundation's Corporate Equality Index 2023,
earning the distinction of one of the "Best Places to Work for LGBTQ Equality";
In 2023, the Civic 50, a Points of Light initiative, recognized UnitedHealth Group as one of the 50 most
community-minded organizations, UnitedHealth Group has received this honor every year since the initiative
began in 2012;
We were named to Forbes' list of America's 500 Best Large Employers for 2023;
Financial
In determining 2023 executive compensation, the Compensation and Human Resources Committee considered the
Company's strong growth, operating performance and financial results, all of which were achieved in an uncertain
environment, as well as individual executive performance. Some of our key business results and awards and
recognition included:
Overview
Executive Summary
Committee
Oversight: Human capital
strategies; diversity, equity
and inclusion.
CEO and Executive Team
Decision-making body for sustainability priorities, policies and practices. Monitors performance against goals.
Chief Sustainability Officer
Oversees sustainability initiatives and performance.
Sustainability Steering Committee
Advises on sustainability strategy and overall enterprise objectives.
Sustainability Team and Sustainability Working Groups
Supports day-to-day sustainability agenda in partnership with businesses.
Business Partners and Functions
Partners to implement sustainability priorities.
• Diverting waste from landfills and ensuring efficient use of water.
2024 Proxy Statement | Alignment of Our Sustainability Priorities with Our Long-Term Strategy 30
Corporate
2
3
Directors
Governance
Executive
Compensation
4 Audit
Annual
Meeting
Other
Information
Executive Compensation
Board of
• Reducing our paper usage and advocating for the reduction of paper across the health system to the greatest
extent possible over the coming years.
• Leading a coordinated health care sector effort to reduce the carbon footprint of the U.S. health system.
Committing to the Science Based Targets initiative (SBTi) Net-Zero Standard.
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
a discussion of the risks associated with the particular item under consideration. Our Board and Board committees also
have authority to retain independent advisers. Our Board's and committee's respective processes for managing
cybersecurity risk oversight, artificial intelligence oversight, quality and patient safety oversight and incentive compensation
risk are set forth below.
Cybersecurity Risk Oversight
We manage cybersecurity and data protection through a continuously evolving framework. The framework allows us to
identify, assess and mitigate the risks we face, and assists us in establishing policies and safeguards to protect our
systems and the information of those we serve.
The Audit and Finance Committee of the Board has oversight of our cybersecurity program and is responsible for
reviewing and assessing the Company's cybersecurity and data protection policies, procedures and resource commitment,
including key risk areas and mitigation strategies. As part of this process, the Audit and Finance Committee receives
regular updates from management on critical issues related to our information security risks, cybersecurity strategy,
supplier risk and business continuity capabilities.
The Company's framework includes an incident management and response program that continuously monitors the
Company's information systems for vulnerabilities, threats and incidents; manages and takes action to contain incidents
that occur; remediates vulnerabilities; and communicates the details of threats and incidents to management. Pursuant
to the Company's incident response plan, incidents are reported to the Audit and Finance Committee, appropriate
government agencies and other authorities, as deemed necessary or appropriate, considering the actual or potential
impact, significance and scope.
To ensure that our program is designed and operating effectively, our infrastructure and information systems are
audited periodically by internal and external auditors. We have obtained various certifications from industry-recognized
certifying organizations as a result of certain external audits. We also perform regular vulnerability assessments and
penetration tests to improve system security and address emerging security threats. Our internal audit team
independently assesses security controls against our enterprise policies to evaluate compliance and leverages a
combination of auditing and security frameworks to evaluate how leading practices are applied throughout our enterprise.
Audit results and remediation progress are reported to and monitored by senior management and the Audit and
Finance Committee. We also periodically partner with industry-leading cybersecurity firms to assess our cybersecurity
program. These assessments complement our other assessment work by evaluating our cybersecurity program as a
whole.
In February 2024, we detected that cybercrime threat actors had gained access to certain systems of the Company's
Change Healthcare subsidiary. The Audit and Finance Committee will continue to review this incident, including root
cause, lessons learned and corrective action to enhance cybersecurity protections, along with the full Board.
Artificial Intelligence Risk Oversight
The use of artificial intelligence and machine learning continues to evolve within the health care industry. Our approach
to the responsible use of Al is centered around a comprehensive governance structure to help ensure solutions are
designed and used fairly, ethically and safely.
Our Board plays a critical role in overseeing our use of artificial intelligence. In 2023, the Board amended the charters
of our Audit and Finance Committee and the Health and Clinical Practice Policies Committee to expressly bring the
oversight of Al governance and use under their respective purviews. The Audit and Finance Committee has oversight
of our Al framework, including oversight of our governance mechanisms to monitor, identify and mitigate potential risks
associated with the deployment of Al. The Audit and Finance Committee also reviews reports on privacy and data security
matters (including, as appropriate, those relating to Al systems or products). These reports include updates on our
privacy program, risk management, and relevant legislative, regulatory, and technical developments. The Health and
Clinical Practice Policies Committee oversees the responsible and ethical application of Al in support of modernizing and
improving the health care system.
2024 Proxy Statement | Risk Oversight 26
Board of
Directors
2
Board of
Directors
2024 Proxy Statement | Risk Oversight 25
The Health and Clinical Practice Policies Committee oversees (i) management's initiatives to improve health care
affordability, clinical care and safety, enhance the health care experience, achieve better health outcomes, advance
health equity and reduce disparities, (ii) in cooperation with management, the identification, evaluation and
monitoring of the implementation of legislative, regulatory and policy issues, both domestic and international, that
affect or could affect the Company's business reputation, business activities and performance, and (iii) the responsible
and ethical application of artificial intelligence in support of modernizing and improving the health care system.
Our Board oversees the work of its various committees by receiving regular reports from the Committee Chairs regarding
their work. In addition, discussions about the Company's culture, strategic plan, consolidated and segment business
results, capital structure, merger and acquisition-related activities and other business discussed with the Board include
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
2
Meeting
Risk Oversight
Enterprise-Wide Risk Oversight
Our Board oversees management's enterprise-wide risk management activities and ensuring that risk matters are
appropriately brought to the Board and/or its committees for review. Risk management activities include assessing and
taking actions necessary to manage risk incurred in connection with the long-term strategic direction and operation of our
business. Our enterprise-wide risk management program has a strong partnership with senior business leaders, who
actively drive key risk identification and estimates. We maintain robust internal processes to identify key short-term,
intermediate, and long-term risks and document underlying risk drivers, focusing management's risk assessment and
mitigation activities against those drivers. Risk drivers are evaluated based on their immediacy, the industry to which
they are specific and the nature of the risk. Both the Principles of Governance and the Board's leadership structure
facilitate our Board's oversight of risk and communication with management regarding these activities.
Each director on our Board is required to have risk oversight ability for each skill and attribute the director possesses as
reflected in the collective skills section of our director skills matrix described on page 9. Each of our Board's committees
is responsible for oversight of risk management practices for categories of risks relevant to their functions. Specifically, our
Board uses its committees to assist in its risk oversight function as follows:
•
•
•
The Audit and Finance Committee oversees management's internal controls and compliance activities. The Audit
and Finance Committee also oversees management's processes to identify and quantify material risks facing the
Company, including risks disclosed in the Company's Annual Report on Form 10-K. The enterprise risk
management function assists the Company in identifying and assessing the Company's material risks. The
Company's General Auditor, who reports to the Audit and Finance Committee, assists the Company in evaluating
risk management controls and methodologies. The Audit and Finance Committee receives periodic reports on the
enterprise risk management function and the Company's cybersecurity efforts and meets periodically with
management to review the Company's significant risks and the steps management has taken to monitor, control or
mitigate such risks. The Audit and Finance Committee has oversight of the Company's artificial intelligence
framework, including oversight of the Company's governance mechanisms to monitor, identify, and mitigate potential
risks associated with the deployment of artificial intelligence. The Audit and Finance Committee also oversees
our compliance activities and receives periodic reports from our Chief Compliance Officer. In connection with its
risk oversight role, the Audit and Finance Committee regularly meets privately with representatives from the
Company's independent registered public accounting firm and the Company's Chief Financial Officer, Chief
Accounting Officer, General Auditor and Chief Legal Officer. The Audit and Finance Committee also reviews and
discusses with the Company's senior management our Forms 10-K and 10-Q, including their evaluation of the
Company's disclosure controls and procedures and internal controls;
The Compensation and Human Resources Committee oversees risks associated with our compensation policies,
practices and plans and human capital management practices;
The Governance Committee oversees Board processes and corporate governance-related risk, public policy,
government relations and external relations activities, community and charitable activities and overall strategy on
sustainability policies and practices; and
Information
2
Corporate
Governance
Executive
Compensation
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
Alignment of Our Sustainability Priorities with Our Long-Term Strategy
What Sustainability Means to Us
Sustainability serves as our foundation for strategic long-term growth, embedded in our businesses and intrinsically
linked to our mission to help people live healthier lives and help make the health system work better for everyone. We
believe our success is based on creating enduring, long-term value for both our shareholders and society at large.
We are dedicated to earning the opportunity to serve more people and drive shareholder and societal value by focusing
on the following key topics determined through broad stakeholder engagement and approval from our senior leaders
and Board.
Helping to Create a Modern, High-Performing Health System
•
Helping people live healthier lives: We are accelerating the transition to value-based care that delivers better
health outcomes at a lower overall cost.
• Helping the health system work better for everyone: We are focused on enhancing the consumer experience
through transparent pricing, choice, and simplicity.
• Advancing health equity: By focusing on data, organizational strategy, programmatic response and community
partnerships, our work to advance health equity is rooted in our mission, embedded in our enterprise strategy
and connected to the growth of our business.
Our 2024 Sustainability Report will include the racial and ethnic disparities identified among our Medicare
Advantage customers. We will engage stakeholders to identify the measures that we will include in our reporting,
and subsequent Sustainability Reports will include reporting on the multi-year impacts of targeted interventions.
We will also consider expanding the reporting on racial and ethnic disparities to the rest of the business streams,
as soon as practicable.
Healthy Environment
2
Board of
Directors
2024 Proxy Statement | Risk Oversight 27
The Compensation and Human Resources Committee also receives an annual report on the Company's compliance
with its stock compensation award program controls.
Annual
Other
4 Audit
5
6
Meeting
Information
The complementary roles of these Board Committees help to ensure that the Board has oversight over all critical
aspects of our development, governance, deployment and use of Al solutions.
At an operational level, the Company's Responsible Use of Al program is governed by the following:
•
3
•
The Machine Review Learning Board performs a risk-based review, confirms that appropriate and acceptable bias
testing has been performed and that any identified issues are addressed appropriately. It is also the forum in
which the Company evaluates the potential consequences of an Al model on key stakeholders, such as patients,
members, providers, and employees.
The Internal Executive Advisory Council supports the overall alignment of the Responsible Use of Al Program with
our mission and enables cross-functional perspectives and expertise from across the enterprise to be represented.
The External Executive Advisory Board contributes Al expertise and healthcare community perspectives to ensure
our policies and practices with respect to Al align with industry standards.
For more information on the Company's Responsible Use of Artificial Intelligence Program, see the upcoming 2023
Sustainability Report.
Board Oversight of Quality and Patient Safety
Our Board provides oversight of our clinical quality and patient safety (QPS) efforts. Specifically, our Health and Clinical
Practice Policies Committee receives regular updates on clinical quality and patient safety trends, as well as our
initiatives to mitigate risk and continuously enhance the quality of health care we provide. In light of the Company's
commitment to delivering high-quality care, the Board and management have regularly discussed the Company's
dedication of significant resources to promote an enterprise-wide culture of quality and patient safety, identify potential
risks in advance and to reinforce systems of accountability for managing clinical quality and patient safety.
In further support of our QPS program, we have formed an enterprise QPS council, including accountable quality
leaders and chief medical officers from each business segment, allowing us to establish, review and monitor QPS
performance and priorities across business lines consistently and quickly. The council facilitates connectivity for QPS
between businesses and supports rapid transfer of learnings and best practices.
Our Health and Clinical Practice Policies Committee also oversees management's efforts to drive a culture of quality
and safety, build knowledgeable internal champions of psychological safety, develop manager and staff training to support
consistency in response to events and drive continuous improvement of measures of patient, consumer, and employee
experience.
Incentive Compensation Risk Assessment
Our Compensation and Human Resources Committee requested management to conduct an annual risk assessment
of the Company's enterprise-wide compensation programs. The risk assessment reviewed both cash incentive
compensation plans and individual cash incentive awards paid in 2023 for the presence of potential design elements
that could motivate employees to incur excessive risk. The review included the ratio and level of incentive to fixed
compensation, the amount of manager discretion, the level of compensation expense relative to the business units'
revenues, and the presence of other design features which serve to mitigate excessive risk-taking, such as the Company's
clawback policies, stock ownership and retention guidelines, multiple performance measures and similar features.
After considering the results of the risk assessment, management concluded the level of risk associated with the
Company's enterprise-wide compensation programs is not reasonably likely to have a material adverse effect on the
Company. The results of the risk assessment were reviewed with the Compensation and Human Resources Committee
at its February 2024 meeting. Please see "Compensation Discussion and Analysis" for a discussion of compensation
design elements intended to mitigate excessive risk-taking by our executive officers.
•
•
•
Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for
$250
We were named one of Fortune's Most Innovative Companies for 2023;
$150
$100 ☑
$50
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among UnitedHealth Group, the S&P 500 Health Care Index,
the Dow Jones US Industrial Average Index and the S&P 500 Index
$0
12/18
12/19
UnitedHealth Group
UnitedHealth Group
12/20
12/21
12/22
* S&P 500 Health Care
12/23
- Dow Jones US Industrial Average
The following performance graph compares the cumulative five-year total return to shareholders on our common
stock relative to the cumulative total returns of the S&P Health Care Index, the Dow Jones US Industrial Average
Index and the S&P 500 Index for the five-year period ended December 31, 2023. The comparisons assume the
investment of $100 on December 31, 2018 in our common stock and in each index, and the reinvestment of
dividends when paid.
--AS&P 500
Performance Graph
Meeting
•
No repricing of stock options and stock appreciation rights or cash buyouts without shareholder approval.
•
No discounted stock options or stock appreciation right awards.
.
No reload of stock options.
No hedging and pledging transactions by directors and executive officers.
Neither stock options nor unvested performance shares count towards executive stock ownership guidelines.
2024 Proxy Statement | Executive Summary
33
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
4 Audit
Other
Information
12/2018
12/2019
12/2020
125.34
137.53
166.34
154.92
180.00
100.00
131.49
155.68
200.37
164.08
207.21
S&P Health Care Index
Dow Jones US Industrial Average
S&P 500 Index
The stock price performance included in this graphic is not necessarily indicative of future stock price performance.
The preceding stock performance graph shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except to the extent that the Company specifically incorporates such information by reference and
shall not otherwise be deemed filed under such Acts.
Our market capitalization has declined 2% over the one year period, and has grown 47% and 103% over the three-
year and five-year periods, respectively, for the period ended December 31, 2023.
2024 Proxy Statement | Executive Summary 34
100.00
172.99
169.51
172.89
12/2021
12/2022
12/2023
($)
($)
($)
($)
($)
No excise tax gross-ups and limited executive-only perquisites.
($)
119.99
145.43
211.18
225.85
227.65
100.00
120.82
137.07
100.00
•
$200
Provide for the direct retention by the Compensation and Human Resources Committee of its independent
compensation consultant, Pay Governance, who performs no other consulting or other services for the
Company.
Base salary
Non-qualified
stock options
Annual cash
Non-qualified
stock options
Annual cash
6%
8%
21%
incentive award
19%
incentive award
12%
16%
Restricted
CEO
Compensation
Mix
stock units
21%
Base salary
Restricted
stock units
The Compensation and Human Resources Committee believes total compensation for the executive officers listed
in the 2023 Summary Compensation Table (the named executive officers or NEOs) should be heavily weighted
toward long-term performance-based compensation and long-term incentive compensation. In 2023, long-term
compensation represented approximately (i) 82% of the total target compensation granted to our CEO and (ii) 76%
of the total target compensation granted to our other NEOs in aggregate, as reflected in the charts below. The
elements of compensation for our CEO and other NEOs have not changed since 2020.
We were ranked Top Ten in the nation on the 2023 Military FriendlyⓇ Employers list and we were also a Top
Ten 2023 Military Spouse FriendlyⓇ Employer; and
a reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
2024 Proxy Statement | Executive Summary 31
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
Meeting
Information
•
•
What We Don't Do
The Business Group on Health honored UnitedHealth Group with a "Best Employers: Excellence in Health &
Well-Being" award for 2023. The award recognizes companies for advancing employee well-being through
innovative, inclusive benefits and initiatives;
The Disability Equality IndexⓇ named the Company one of the best places to work for disability inclusion in
2023;
The United Health Foundation, our not-for-profit private foundation dedicated to improving health and health
care, has been recognized as a Healthy People 2030 Champion by the Office of Disease Prevention and Health
Promotion, within the U.S. Department of Health and Human Services.
19%
.
82% Long-term
•
•
.
Have a Compensation and Human Resources Committee consisting entirely of independent Board members.
Deliver more than 90% of compensation to our executive officer as annual and long-term incentives, of
which 50% of the long-term incentives is in the form of performance-based stock compensation awards.
Use performance-based compensation arrangements, including performance-based stock compensation
awards, which use a balanced set of performance measures (including human capital measures), with different
metrics used for annual and long-term incentive plans.
Have double-trigger accelerated vesting of stock compensation awards, requiring both a change in control
and a qualifying employment termination, which is our only change in control consideration.
Have a policy setting forth that we will not provide cash severance exceeding 2.99x the sum of base salary
and bonus to executive officers.
• Provide that all long-term incentive awards are denominated and settled in stock.
•
.
•
•
Have clawback policies for the recovery of erroneously awarded compensation in accordance with SEC and
NYSE rules and an additional compensation clawback policy that entitles our Board to seek cash or stock
compensation reimbursement from our senior executives if they are directly involved in fraud or misconduct
causing a material restatement, material detrimental conduct and a senior executive's violation of non-
compete, non-solicit or confidentiality provisions.
Have a stock retention policy that generally requires executive officers to hold, for at least one year, one-third
of the net shares acquired upon vesting or exercise of any stock compensation award.
Each of our executive officers and directors complied with our stock ownership guidelines as of April 5,
2024.
Conduct an annual advisory shareholder vote to approve the Company's executive compensation.
Other NEOS
Compensation
Mix
What We Do
We endeavor to maintain strong governance standards in the oversight of our executive compensation programs,
including the following policies and practices in effect during 2023:
.
Information
incentives
Strong Oversight and Pay Practices
40%
Performance
shares*
38%
Performance
76% Long-term
incentives
Performance shares represented 50% of the long-term incentives granted in 2023 to our named executive
officers. The value shown for our CEO suggests a lower percentage relative to other long-term incentives
because of rounding to the nearest whole percentage point.
2024 Proxy Statement | Executive Summary 32
shares*
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
Board of
Directors
4 Audit
Meeting
Determination of Compensation
Board of
Directors
35
2024 Proxy Statement | Compensation Discussion and Analysis
oversees the Company's risks,
policies, and philosophy related
to total compensation for
executive officers.
Respective Roles of Management and the Compensation and Human Resources Committee
The Compensation and Human Resources Committee oversees the Company's risks, policies and philosophy related to
total compensation for executive officers. Management recommends appropriate enterprise-wide financial and
non-financial performance goals for use in incentive compensation. The Compensation and Human Resources
Committee reviews and approves the compensation for the named executive officers based on its own evaluation, input
from the Chair of the Board, our CEO (for all executive officers except himself), internal pay equity considerations, the
tenure, role and performance of each named executive officer, input from its independent consultant and market data.
The Compensation and Human Resources Committee's Use of an Independent Compensation
Consultant
• The Compensation and Human
Resources Committee reviews
and approves the
compensation for the named
executive officers based on its
own evaluation, input from the
Chair of the Board, our CEO
(for all executive officers except
himself), internal pay equity
considerations, the tenure, role,
and performance of each
named executive officer, input
from its independent consultant
and market data.
2
• The Compensation and Human
Resources Committee
Information
Corporate
Governance
Information
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
evaluate competitive compensation trends. Pay Governance does not provide any other services to the Company and
does not perform any work for management. The Compensation and Human Resources Committee has assessed the
independence of Jon Weinstein and of Pay Governance, specifically considering, in accordance with SEC rules, whether
Jon Weinstein and Pay Governance had any relationships with the Company, our officers or our Board members that
would impair their independence. Based on this evaluation, the Compensation and Human Resources Committee
concluded Jon Weinstein and Pay Governance are independent and their work for the Compensation and Human
Resources Committee does not raise any conflict of interest.
Peer Group
This section summarizes the processes followed by the Compensation and Human Resources Committee to select
competitive compensation benchmark data and how the Compensation and Human Resources Committee uses these
data.
provide standard employee benefits
and have limited executive-only
benefits or perquisites.
3
• Provide standard benefits. We
Executive
Compensation
• Enhance the long-term value of the
business. Our executive pay system
is weighted toward long-term
compensation to promote long-term
shareholder value creation and avoid
excessive risk-taking.
At the request of the Compensation and Human Resources Committee, Pay Governance conducts an annual review of
the Company's compensation peer group. This review ensures the peer group companies remain appropriate from a
business and talent perspective. This occurs at the second quarter Compensation and Human Resources Committee
meeting, because recent financial and compensation data are available at this time.
Board of
Directors
2
Corporate
Governance
3
The Compensation and Human Resources Committee retains an independent compensation consultant, Jon Weinstein
of Pay Governance, to advise the Compensation and Human Resources Committee on executive and director
compensation matters, assess total compensation program levels and program elements for executive officers and
4 Audit
Annual
Meeting
Other
6
Information
Compensation Discussion and Analysis
The following table sets forth the Company's compensation program and philosophy, core principles that reinforce our
philosophy and process for determining compensation.
Program Philosophy
and Objectives
• Align the economic interests of
our executive officers with
those of our shareholders.
• Reward performance that
advances our mission of
helping people live healthier
lives and helping make the
health system work better for
everyone.
• Reward performance that
emphasizes teamwork and
close collaboration among
executive officers while also
recognizing individual
performance.
• Reward performance that
supports the Company's
values.
• Foster an entrepreneurial spirit
with innovative thinking and
action that leverages the
ingenuity of our employees.
• Attract and retain highly
qualified executives.
Compensation Program Principles
• Pay-for-performance. A large majority
of our executive officers' total
compensation is at risk and only
earned based on achievement of
enterprise-wide goals.
• Reward long-term growth and focus
management on sustained success
and shareholder value creation.
Compensation of our executive
officers is heavily weighted toward
stock compensation, and we require
significant stock ownership and
share retention by our management
team. This encourages sustained
performance and positive
shareholder returns.
The Compensation and Human Resources Committee uses the following screening methodology, which formulates a
peer group focused on the characteristics and industries most relevant to the Company:
**
The 50 largest U.S. companies by revenue.
Further improve our consolidated operating cost ratio after considering the impact of changes in business mix.
With respect to these initiatives, Optum achieved double digit percentage revenue and operating earnings growth, and
added new patients in value-based care arrangements. The Company exceeded its targets for people served by
UnitedHealthcare. UnitedHealthcare demonstrated continued excellence in its Medicare plans by maintaining its
long-term goal of members in 4-Star rated plans above 80%. The Company achieved or made substantial progress on
all other initiatives listed above.
Further enhance customer service and continue to increase the Company's NPS across all business platforms;
and
Continue to build on our culture of quality and performance and drive continuous improvement in measures of
patient, consumer and employee experience;
•
•
Deliver ever more effective and comprehensive clinical management, and continue expanding value-based
elements in our network;
•
• Continue to innovate in commercial benefit products, services, and distribution;
• Continue to enhance the quality and operations of our public-sector businesses;
Growth in the number of people served by UnitedHealthcare;
Revenues for 2023 grew 15% from the prior year, while operating income grew 14% and cash flow from operations
increased 11%.
•
Meeting
6
4 Audit
Other
Annual
Executive
Compensation
Governance
3
2
Corporate
Information
Non-financial performance measures were between threshold and target performance levels for EXI and both NPS
measures (absolute and relative). Diluted earnings per share and adjusted earnings per share³ both increased 13% in
2023.
While the Company uses defined performance measures and weightings to determine an overall funding level for the
Company's bonus pool, individual annual cash incentive awards are not purely formulaic. In determining the amount of
the actual annual incentive award to be paid to each officer, the Compensation and Human Resources Committee
considers the CEO's recommendations for executive officers, the business performance underlying each of the
performance measures, macroeconomic factors impacting business performance, individual executive performance,
market positioning, and related matters. The Compensation and Human Resources Committee retains discretion to pay
an annual incentive award higher or lower than the performance level achieved based on these considerations if
threshold performance is achieved on any performance measure. However, the overall pool cannot be exceeded.
John Rex
Andrew Witty
Name
The target percentages for annual cash incentive awards to our named executive officers and the actual 2023 annual
cash incentive awards paid are set forth in the table below.
objectives. The Compensation and Human Resources Committee considered the 2023 business results discussed
above and other performance considerations. As a result, the Compensation and Human Resources Committee exercised
negative discretion.
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2024 Proxy Statement | Compensation Discussion and Analysis 41
3 Adjusted earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for a
reconciliation of adjusted earnings per share to the most directly comparable GAAP measure.
The Compensation and Human Resources Committee evaluated the Company's 2023 performance against the
performance goals set forth above, overall business results, economic and market conditions and individual performance
The target opportunities established for the named executive officers are intended to increase collaboration, teamwork
and accountability across the enterprise, to recognize the skills and versatility of each executive officer and to reflect
relative contributions to the success of the overall enterprise. At the end of the fiscal year, the Compensation and
Human Resources Committee reviews the Company's performance against the goals set at the beginning of the year
and determines annual cash incentive awards. The Compensation and Human Resources Committee has limited annual
cash incentive payouts to executive officers to not more than two times the target amount.
At the beginning of each year, the Compensation and Human Resources Committee approves an annual cash incentive
target opportunity for each executive officer as a percentage of the executive officer's base salary.
Determination of 2023 Annual Cash Incentive Award Opportunities
Board of
Directors
Dirk McMahon
2024 Proxy Statement | Compensation Discussion and Analysis 40
At the beginning of 2023, the Compensation and Human Resources Committee believed achievement of the annual
incentive goals required substantial performance on a broad range of initiatives contained in the 2023 business plan.
These initiatives included the following:
$32.0 billion
$37.6 billion
$32.7 billion
$27.8 billion
30%
Operating Income*
$371.6 billion
$383.4 billion
$365.1 billion
$346.8 billion
Cash Flow from
30%
2023
Performance
Maximum
Performance
Target
Performance
Threshold
Performance
Weight
Measure
2023 Performance
The following table sets forth the performance measures and goals established for 2023, as well as 2023 performance
results:
Information
Meeting
Revenue*
15%
$23.8 billion
$28.0 billion
The 2023 non-financial performance measures were based on survey results and, at target levels, represented levels at
or above 2022 performance. These measures were viewed to be important to longer-term financial success, customer
satisfaction and employee welfare in ways that might not be immediately reflected in annual financial results. The
Compensation and Human Resources Committee believes that the breadth of financial and non-financial performance
measures for the 2023 annual cash incentive award would motivate executive officers to achieve results that contribute to
value creation for our shareholders on a long-term basis, reward performance advancing the Company's mission and
values, and avoid excessive risks.
The 2023 financial performance measures at target level represented, respectively, year-over-year growth in revenues
of $40.9 billion, or 13%; year-over-year growth in operating income of $4.2 billion, or 15%; and year-over-year growth in
operating cash flow of $1.8 billion or 7%.
Context for the 2023 Annual Cash Incentive Plan Performance Goals
The Company's annual incentive plan allows for adjustments to the Company's reported results for the impact of
changes in accounting principles, extraordinary items and unusual or non-recurring gains or losses, including
significant differences from the assumptions contained in the financial plan upon which the incentive targets were
established. Adjustments to reported results are intended to better reflect executives' line of sight, align award
payments with growth of the Company's business, avoid artificial inflation or deflation of awards due to unusual or
non-recurring items in the applicable period and emphasize the Company's preference for long-term and
sustainable growth. The Compensation and Human Resources Committee adjusted 2023 revenue, operating
income and cash flow from operations to exclude impacts from non-recurring and other items over which management
had no control and which were not contemplated in the 2023 plan. These adjustments had the net effect of
negatively affecting the amount of executive compensation paid.
target for EXI
1.0 point below
1.0 point above
threshold for NPS
Index (absolute);
1.0 point below
target for NPS
Market Gap
(relative);
$29.1 billion
3.6 points above
2022 results for
NPS Market Gap
(relative); 4.4 points
above 2022
results for EXI
5.8 points above
2022 results for
NPS Index
(absolute);
$32.2 billion
NPS Index
(absolute); at 2022
results for NPS
Market Gap
(relative); at 2022
results for EXI
2.3 points above
2022 results for
3.7 points below
2022 results for
NPS Market Gap
(relative); 4.8 points
below 2022
results for EXI
1.2 points below
2022 results for
NPS Index
(absolute);
Employee Experience Index (EXI)
.
25%
• NPS Market Gap (relative)
• NPS Index (absolute)
Stewardship:
*
Operations*
. Execute on Optum's growth and innovation initiatives, with major focus areas including further expansion of
patients served in value-based care arrangements and the continued build-out of care delivery capabilities,
technology-enabled services, and advancing the scope of pharmacy care services offerings;
Brian Thompson
Rupert Bondy
2023 Annual Cash Incentive Awards
Information
Long-Term Awards
2021-2023 Long-Term Goals and Context
The long-term performance share program creates financial incentives for achieving or exceeding three-year financial
goals for the enterprise. The table below shows the goals for the 2021-2023 plan, as well as the Company's actual
performance against plan:
2021-2023
Performance Measure
Cumulative Adjusted Earnings Per Share
Return on Equity
Threshold
Weight Performance
50%
$60.41
50%
22.9%
26.9%
Target
Maximum
2021-2023
Performance Performance Performance
$63.90
$68.77
$64.37
24.9%
Meeting
25.8%
Key assumptions and elements of the 2021-2023 long-term business plan were:
•
•
•
•
•
Continued expansion of the Optum Health care delivery platform, capabilities and patients served in value-based
care arrangements;
Medicaid, Medicare Advantage, Medicare Supplement and Global growth in people served in all years;
Commercial risk-based and fee-based health benefits growth in people served over the three-year period,
leveraging enhanced products, services, and distribution including a continued focus on diversification into ancillary
businesses;
An expectation that medical cost trends would be consistent with historical levels, excluding the impacts of
COVID-19;
The performance measures and goals for the 2021-2023 performance period were established during the second
quarter of 2021 based on the Company's long-term business plan.
6
5
4 Audit
Award Type and Vesting
Terms
Performance Share Award*
(3-year performance period with
cliff vesting)
RSU Award*
(4-year ratable vesting**)
And
Stock Option Award*
(4-year ratable vesting)
Termination Provisions
Unvested performance share awards will vest if, within two years of a change in
control, an executive officer terminates employment for Good Reason or is
terminated without Cause (i.e., "double trigger" vesting), as these terms are
defined in the award agreement. The number of performance awards that vest
will be dependent upon the performance vesting criteria that have been satisfied.
If the executive officer is retirement-eligible, upon retirement, the number of
performance shares earned at the end of the performance period based on
actual performance, if any, will vest as if the executive officer had been
continuously employed throughout the entire performance period, provided the
executive officer served for at least one year of the performance period.
Upon termination of employment for Good Reason or without Cause (as these
terms are defined in the executive officer's employment agreement), the
executive officer will receive at the end of the applicable performance period, a
pro rata number of performance shares that are earned, if any, based on the
number of full months employed plus the number of months for any severance
period.
Upon death or disability, the executive officer will receive at the end of the
applicable performance period, the number of performance shares that are
earned, if any.
Unvested awards will vest in full if, within two years of a change in control, an
executive officer terminates employment for Good Reason or is terminated
without Cause (i.e., double trigger vesting), as these terms are defined in the
award agreement.
If the executive officer is retirement-eligible, upon retirement, unvested awards
will continue to vest on the regular scheduled vesting schedule subject to
continued compliance with the terms and conditions of the award agreement
including restrictive covenants (which include non-competition provisions).
Unless the executive officer is retirement-eligible, awards are subject to forfeiture
upon termination of employment unless the termination of employment is for
Good Reason or without Cause (as these terms are defined in the executive
officer's employment agreement) in which case unvested awards continue to vest
during any severance period.
Unvested awards will vest in full upon death or disability.
An executive officer will forfeit all or a portion of his or her awards or be required to repay the Company for the
value realized in respect of all or a portion of the awards if (1) for all awards, the executive officer violates the
Company's clawback policy or the restrictive covenants (which include non-competition provisions) set forth in the
award agreement; and (2) in the case of performance share awards, the executive officer's share awards constitute
erroneously awarded compensation as defined in the Company's clawback policy.
Except as provided in footnote 4 to the Outstanding Stock Compensation Awards at 2023 Fiscal Year-End table.
2024 Proxy Statement | Compensation Discussion and Analysis 43
Board of
Directors
•
2
3
Governance
Executive
Compensation
Annual
Other
Modest US economic growth with a gradual increase in interest rates, and a more rapidly growing economy in
Brazil, with a stable Brazilian Real — U.S. Dollar exchange rate;
•
Delivery of more effective and comprehensive clinical management;
• Continued growth and enhancement of the quality and operations of our public-sector businesses;
$1,181,250
135%
60%
$1,200,000
$2,000,000
200%
60%
$1,440,000
$2,400,000
200%
60%
$1,440,000
$2,400,000
200%
60%
$1,800,000
$3,000,000
200%
Paid Award
(% of Target)
Actual Award Paid
($)
Target Award Value
($)
(% of Salary)
Target Percentage
$ 708,750
6
60%
Long-Term Incentive Compensation
•
•
•
•
Continued growth in technology-enabled services and pharmacy services, driving distinctive revenue, margin,
and earnings performance;
Accelerate insights and advanced technologies to enable more intelligent and more connected experiences for
people;
Ongoing improvements to our consolidated operating cost ratio on a comparable business mix basis; and
Effective cross-enterprise collaboration among various business units for the benefit of customers and our overall
reputation and performance.
To achieve maximum performance for the performance share plan, the Company would have had to achieve cumulative
three-year adjusted earnings per share (AEPS) performance of $68.77 and an average return on equity (ROE) of
26.9%. These maximum performance levels corresponded to a compound annual growth rate in AEPS of 16% over the
three-year period. For long-term compensation purposes (see adjustments described below), the Company generated
cumulative AEPS and ROE between target and maximum performance levels. This represented a compound annual
AEPS growth rate of 14% over the three-year performance period, consistent with the Company's projected long-term
growth rate of 13% to 16%.
2024 Proxy Statement | Compensation Discussion and Analysis 44
6
Other
Annual
Meeting
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2024 Proxy Statement | Compensation Discussion and Analysis 42
Performance share grants were selected to ensure a strong pay-for-performance alignment of the Company's
compensation program with drivers of shareholder value, specifically weighted equally between cumulative earnings
per share and average return on equity for the three-year performance period. Participants can earn between 0% and
200% of the target performance share award based upon actual results. The performance share payouts are determined
formulaically, subject to the authority of the Compensation and Human Resources Committee to make appropriate
adjustments to account for events not contemplated when the performance targets were set. RSU grants were selected
because they are full value shares with time vesting (typically, ratably over four years) and, as such, provide added
retention value. Non-qualified stock options were selected because they have value only if the Company's stock price
increases and, as such, provide incentives for sustained long-term stock price appreciation. Non-qualified stock options
typically vest ratably over four years. Our stock compensation award types, vesting terms, and termination provisions
are summarized in the chart below.
The Compensation and Human Resources Committee determined that long-term stock-based compensation for 2023
should include grants of performance shares, RSUs, and non-qualified stock options to achieve balance and effectiveness
in our stock-based compensation and to align the interests of our executive officers and our shareholders. The mix of
stock-based compensation granted in 2023 was as follows, based on the grant date fair value of the total award: 50%
performance shares, 25% RSUs, and 25% non-qualified stock options.
Long-term incentive compensation, consisting solely of stock compensation awards in 2023, represents the largest
portion of executive officer compensation. The combination of long-term incentives we employ provides a compelling
performance-based compensation opportunity, aids in aligning and retaining the senior management team, and
accelerates the advancement of business unit capabilities across the enterprise.
The Compensation and Human Resources Committee did not make specific assessments of, quantify or otherwise
assign relative weightings to the factors listed above as it reached its decisions with respect to any of the named executive
officers. See the "2023 Summary Compensation Table" and other related compensation tables below for details
regarding 2023 total compensation for the named executive officers.
5
Corporate
Other
$266B
AAPL
CVS
GOOGL
MCK
75th
Percentile
ELV
COR
CAH
CI
MSFT
92nd
Percentile
$372B
AMZN
Annual Revenue*
$159B
50th
Percentile
HUM
CNC
Minimum
$58B
C JNJ
WFC
WBA
BAC
UnitedHealth
Group
Maximum
$575B
Market Capitalization*
UnitedHealth
Group
75th
Percentile
$406B
GOOGL
79th Percentile
AMZN MSFT
JPM
AAPL
Employees*
$130B
50th
Percentile
Minimum
$23B
CVS
HUM
BAC
PFE
CI
CNC
IBM
JNJ
C
COR MCK
WFC
ELV
WBA
CAH
JPM
PFE
IBM
In general, the Compensation and Human Resources Committee's goal is to achieve target total compensation for the
named executive officers as a group that falls within a range of the 50th to 75th percentiles of the market data for our peer
group, which was the case for 2023. The Compensation and Human Resources Committee believes this range is an
appropriate reflection of the Company's relative size in comparison to our peer group, although we are above the peer
75th percentile on all key scope measures. Specifically, the Company is positioned above the 75th percentile of our peer
group on key measures such as revenue (92nd percentile), market capitalization (79 th percentile), and employees
(95th percentile), as shown below. Relative to the median of the peers, we are 2.3 times the median on revenues, 3.7 times
the median on market capitalization, and 2.6 times the median in terms of employees. Thus, we are significantly larger
than most of our peers as reflected below (data as of December 31, 2023):
The Compensation and Human Resources Committee believes total compensation for the named executive officers
should be heavily weighted toward long-term performance-based compensation such as performance shares and stock
options, but it does not target a specific mix of annual and long-term compensation or cash and stock compensation.
The Company is also distinctive in terms of the diversity and complexity of its businesses, which include health care
benefits spanning both private and public payors, health care delivery, pharmacy services and health technology. The
limited pool of executives with the ability to address the wide range of regulatory and policy issues presented by the
different businesses is another factor the Compensation and Human Resources Committee considers when making
compensation decisions.
Pfizer (PFE)
Microsoft Corporation (MSFT)
McKesson Corporation (MCK)
JPMorgan Chase & Co. (JPM)
CVS Health Corporation (CVS)
Citigroup Inc. (C)
Cigna Corporation (CI)
Centene Corporation (CNC)
Cencora, Inc. (COR)
Cardinal Health, Inc. (CAH)
Bank of America Corporation (BAC)
Apple Inc. (AAPL)
Amazon.com, Inc. (AMZN)
Alphabet Inc. (GOOGL)
.
- Technology
- Financial Services
- Pharma/Life Sciences
- Healthcare
- Managed Healthcare
Apply an industry screen that selects companies in sectors most relevant to the Company within this large
company group:
•
4 Audit
International Business Machines (IBM)
$487B
Walgreens Boots Alliance, Inc. (WBA)
Wells Fargo & Company (WFC)
Elevance Health Inc. (ELV)
Competitive Positioning
individual performance, internal stock compensation, the CEO's recommendations and other relevant business
performance that may not be adequately captured by the Company and individual officer goals.
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2024 Proxy Statement | Compensation Discussion and Analysis 36
In addition, the Compensation and Human Resources Committee takes into consideration the individual officer's
tenure in such position, Company performance against previously established performance goals, each officer's
At the first quarter Compensation and Human Resources Committee meeting, the Compensation and Human
Resources Committee determines pay opportunities for each officer using the market competitiveness assessment
from the previous fourth quarter as a reference point.
At the fourth quarter Compensation and Human Resources Committee meeting, Pay Governance presents an
annual review of the market competitiveness of the Company's executive compensation levels for the Company's
executive officers. The review compares the compensation opportunities provided to the Company's executive
officers to peer group companies on a position-by-position basis and on an aggregate basis.
•
•
•
Once the process is concluded and peer group companies are selected, the Compensation and Human Resources
Committee generally uses the market data as follows:
Humana Inc. (HUM)
Johnson & Johnson (JNJ)
Maximum
$2,994B
Include the Company's 5 largest managed care competitors, even if they do not all meet the screening criteria.
This screening process resulted in the 20 companies set forth below.
*
Rupert Bondy
Brian Thompson
Dirk McMahon
John Rex
Andrew Witty
Name
The Compensation and Human Resources Committee generally determines base salary levels for our named executive
officers early in the fiscal year. The Compensation and Human Resources Committee did not increase the salary of
any named executive officer in 2023. The 2023 base salaries of the named executive officers are shown below.
Base Salary
Annual Compensation
Information
Annual Cash Incentive Awards
Meeting
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2024 Proxy Statement | Compensation Discussion and Analysis 38
6
2023 Annual Incentive Plan Performance Goals
2022 Base Salary
1,500,000
2023 Base Salary % Change
Annual
Executive
Compensation
UnitedHealth
Group
3
Corporate
Governance
2
2024 Proxy Statement | Compensation Discussion and Analysis 39
We assess our progress toward enhancing customer experiences using the Net Promoter System (NPS), which
holistically measures the experiences we deliver to our customers, including how likely a person is to recommend our
Company to others. Similarly, listening to our team members is one of the key ways we help build and reinforce a culture
of inclusion and encourage employee engagement. We recognize that improved employee sentiment leads to greater
retention and to more satisfied and productive employees. We have measured employee sentiment annually for well over
a decade. We use our human capital management metric tailored to the Company - the Employee Experience Index
(EXI) to measure an employee's sense of commitment and belonging to the Company, establishing a direct link
between our executive compensation program and our commitment to human capital management. For 2023, our
enhanced evaluations split the measure equally between an NPS Index that measures absolute NPS performance relative
to targets, and a relative NPS that measures Company NPS performance relative to select health care competitors.
We believe NPS and EXI are meaningful measures of executive performance.
Annual cash incentive awards are based on three financial metrics (revenue, operating income and cash flow from
operations), NPS (absolute and relative) and employee engagement (EXI) and may be paid if our Company meets or
exceeds annual performance goals established for the year as determined by the Compensation and Human Resources
Committee. In establishing the performance measures for the 2023 annual cash incentive awards, the Compensation
and Human Resources Committee sought to align the compensation of our executive officers with key elements of the
Company's 2023 business plan. Development of the Company's 2023 business plan was a robust process that involved
input from all of the Company's business units and was reviewed by the Board on multiple occasions. These
performance goals are based on enterprise-wide metrics because the Compensation and Human Resources Committee
believes the named executive officers share responsibility to support the goals and performance of the Company as
key members of our leadership team.
0%
875,000
875,000
0%
1,000,000
1,000,000
0%
1,200,000
1,200,000
0%
1,200,000
1,200,000
0%
1,500,000
To promote the health, well-being, and physical and financial security of employees,
including executive officers; constitutes the smallest part of total compensation.
Performance shares to link executive pay to sustained financial performance and
growth and potentially assist executives in building ownership in the Company.
RSUs to retain executive officers and align with long-term interests of shareholders.
Non-qualified stock options to encourage sustained stock price appreciation.
Board of
Directors
To encourage and reward executive officers for achieving annual corporate financial,
human capital and customer-oriented goals and individual performance results.
95th
Maximum
Percentile 1,525,000
440,000
AMZN
JPM
IBM
WBA
CVS
75th
Percentile
243,319
WFC
50th
Percentile
171,751
44,000
Chart includes NYSE and Nasdaq ticker symbols of our peer group. Please refer to Peer Group chart for
corresponding company name.
ELV
BAC
JNJ
CI
MCK
Minimum
C
CAH CNC
AAPL GOOGL
COR
PFE
To motivate and retain executive officers and align their long-term interests with
shareholders through the use of:
HUM
2024 Proxy Statement | Compensation Discussion and Analysis
MSFT
Board of
Directors
Purpose
37
Annual indirect compensation, not
variable
Employee benefits
Annual cash incentive awards
Annual performance compensation,
variable
not variable
Base salary
Annual compensation,
Compensation Element
The compensation program for our named executive officers consists of the following elements:
Elements of our Compensation Program
When approving compensation decisions, the Compensation and Human Resources Committee reviews tally sheet
information for each of our executive officers. These tally sheets are prepared by management and quantify the elements
of each executive officer's total compensation. The tally sheets include a summary of all stock compensation awards
previously granted to each executive officer, the gain realized from past vesting or exercise of stock compensation awards,
the value of unvested stock compensation awards, and the projected value of accumulated stock compensation
awards based upon then current stock price scenarios. The tally sheets help the Compensation and Human Resources
Committee members analyze the compensation each executive officer has accumulated to date and to fully understand
the amount the executive officer could potentially accumulate in the future.
Stock compensation awards
Long-term performance compensation,
variable
Information
2
Corporate
Governance
Use of Tally Sheets and Wealth Accumulation Analysis
3
Executive
Compensation
Annual
To provide a base level of cash compensation for executive officers tied to role, scope
of responsibilities and experience.
Other
4 Audit
6
Meeting
31,424
14,643,488
Brian Thompson
2023
1,000,000
6,000,585 2,000,126
1,200,000
4,813,113 2,187,555
21,187
10,221,898
Executive Vice President
2022
1,000,000
951,154
1,840,000
19,184
9,859,429
and CEO, UnitedHealthcare
2,050,000
2021
5,250,185 1,750,060
2022
8,550,501
1,161,539
8,550,501 2,850,024
2,050,000
25,904
14,637,968
Dirk McMahon
2023
1,200,000
10,050,636 3,350,074
1,440,000
33,427
16,074,137
President and Chief
1,200,000
9,300,612 3,100,109
2,200,000
32,099
15,832,820
Operating Officer
2021
1,161,539
2,850,024
1,700,000
(4) The amounts reported in this column reflect the aggregate grant date fair value of the RSUs and performance
shares (at target) granted in 2023, 2022 and 2021 and are computed in accordance with FASB ASC Topic 718, based
on the closing stock price on the grant date. The grant date fair value of RSUs granted in 2023 and the grant date
fair value of performance shares granted in 2023 if target performance and maximum performance were achieved
are as follows:
9,671,006
Governance
Executive
Compensation
4 Audit
5
Annual
Meeting
6
Other
Information
Name
Andrew Witty
John Rex
Dirk McMahon
Brian Thompson
Rupert Bondy
Performance Shares
Restricted
Stock Units
($)
5,000,487
Target
($)
10,000,483 20,000,966
Maximum
($)
3,350,376
2021
6,700,260 13,400,520
3,350,376
3
19,184
2
Board of
Directors
Rupert Bondy
2023
875,000
3,375,943 1,125,113
708,750
337,650
6,422,456
Executive Vice President,
2022
706,731 2,000,000 5,876,767 1,125,110
1,090,000
519,217
11,317,825
Chief Legal Officer and
Corporate Secretary
2021
*
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation
program necessary for an understanding of the information disclosed in this table. Please also see "Executive
Employment Agreements" below for a description of the material terms of each named executive officer's employment
agreement.
(1) All principal positions set forth above are as of December 31, 2023. John Rex has served as President and Chief
Financial Officer of the Company since April 1, 2024.
(2) Amounts reported reflect the base salary earned by named executive officers in the years ended December 31,
2023, 2022 and 2021. None of the named executive officers deferred any salary in 2023 under our Executive Savings
Plan.
(3) The amount reported in this column for Rupert represents his sign-on bonus paid in 2022 to compensate him for
the loss of cash and other incentives at his prior employer upon his employment with the Company, and is subject
to prorated repayment if, within 24 months of hire, he quits without "Good Reason” or is terminated for "Cause”, as
each is defined in his employment agreement with the Company.
2024 Proxy Statement | 2023 Summary Compensation Table 50
Corporate
and CFO
Information
32,099
Information
Compensation and Human Resources Committee Report
The Compensation and Human Resources Committee has reviewed and discussed the above Compensation
Discussion and Analysis with management. Based on its review and discussions, the Compensation and Human
Resources Committee recommended to the Board that the Compensation Discussion and Analysis be included in
the proxy statement and incorporated by reference into the Company's Annual Report on Form 10-K for the year
ended December 31, 2023. This report was provided by the following independent directors who comprise the
Compensation and Human Resources Committee:
Members of the Compensation and Human Resources Committee
Timothy Flynn (Chair)
Valerie Montgomery Rice, M.D.
John Noseworthy, M.D.
The members of the Compensation and Human Resources Committee listed above participated in the review, discussion
and recommendation with respect to the Compensation Discussion and Analysis.
Compensation and Human Resources Committee Interlocks and Insider
Participation
Meeting
During fiscal 2023, Tim Flynn, Valerie Montgomery Rice, and John Noseworthy served on the Compensation and
Human Resources Committee. None of these persons had ever been an officer or employee of the Company or any of
its subsidiaries while serving on the Compensation and Human Resources Committee. Furthermore, during 2023, none of
these persons served as a member of the Compensation and Human Resources Committee (or other board committee
performing equivalent functions) or as a director of another entity where an executive officer of such entity served on
our Compensation and Human Resources Committee or Board.
49
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
2024 Proxy Statement | Compensation and Human Resources Committee Report | Interlocks and Insider Participation
6
4 Audit
Other
5
6,700,260 13,400,520
6
Meeting
Information
We have a clawback policy that entitles the Board to seek reimbursement from any executive directly involved in
misconduct causing a restatement of financials, detrimental conduct or violation of certain employment agreement
provisions, including any non-compete, non-solicit or confidentiality provisions. Actions that trigger this clawback
policy may require an executive to reimburse all or a portion of certain annual incentive payments and stock
compensation awards. The Board also has the right to cancel or reduce the executive's rights to any incentive
payment or stock compensation awards. In addition, the Company adopted a Dodd-Frank compliant clawback
policy in 2023 that provides for the recoupment of incentive compensation from current and former executive
officers in the event the company is required to prepare an accounting restatement due to material noncompliance
with securities law.
In addition, our Compensation and Human Resources Committee retains discretion to adjust compensation for quality
of performance, adherence to Company values and other factors.
Potential Impact on Compensation from Executive Misconduct/ Compensation Clawbacks
If the Compensation and Human Resources Committee determines an executive officer has engaged in detrimental
conduct as defined in the clawback policy, the Compensation and Human Resources Committee may take a range of
actions to remedy the detrimental conduct in order to prevent its recurrence and impose such discipline as would be
appropriate, including, without limit: (i) terminating employment; (ii) initiating legal action against the executive officer; and
(iii) requiring reimbursement of (or canceling or reducing) rights to any annual incentive payments or stock compensation
awards subject to the clawback policy. In addition, with respect to our senior executives, including our named executive
officers, if the misconduct causes, in whole or in part, a material restatement of the Company's financial statements,
action may include (a) seeking reimbursement of the entire amount of cash incentive compensation awarded to the
executive officer, if the executive officer would have received a lower (or no) cash incentive award if calculated based on
the restated financial results; (b) canceling all outstanding vested and unvested stock compensation awards subject to
the clawback policy and requiring the executive officer return to the Company all gains from stock compensation awards
realized during the 12-month period following the filing of the incorrect financial statements; and (c) seeking
reimbursement of the entire amount of any bonus paid.
The Company also has adopted a Dodd-Frank compliant clawback policy which applies to our current and former
executive officers. The policy provides for mandatory clawback in certain situations as required by SEC and NYSE rules.
Specifically, in the event the Company's financial results are restated due to material noncompliance with any financial
reporting requirement, the Company will recover any erroneously awarded compensation received by any covered officer
during the applicable period. The clawback period covers the three completed fiscal years preceding the date the
Company determines that the Company is required to prepare an accounting restatement, as well as any applicable
transition period. The erroneously awarded compensation equals the amount of incentive-based compensation received
by a covered officer that exceeds the amount of incentive-based compensation that otherwise would have been
received by such covered officer had it been determined based on the restated amounts, computed without regard to
any taxes paid.
As discussed in Incentive Compensation Risk Assessment, a compensation risk assessment is performed annually, and
the results are reviewed with the Compensation and Human Resources Committee.
Tax Considerations
Internal Revenue Code Section 162(m)(6) addresses the tax deductibility of compensation paid by health insurance
providers, including the Company. Section 162(m)(6) provides an annual tax deduction limit of $500,000 per person per
year for compensation that we pay to any of our employees, directors, officers and any other individuals who provide
services to or on behalf of the Company. While the Compensation and Human Resources Committee considers the
impact of Section 162(m)(6), it believes shareholder interests are best served by not restricting the Compensation and
Human Resources Committee's discretion and flexibility in crafting the executive compensation program, even if non-
deductible compensation expenses could result.
2024 Proxy Statement | Compensation Discussion and Analysis 48
Board of
2
Directors
Corporate
Governance
3
Executive
Compensation
Annual
6
15,832,820
Meeting
The following table provides certain summary information for the years ended December 31, 2023, 2022 and 2021
relating to compensation paid or granted to, or accrued by us, on behalf of our named executive officers.*
2,760,000
104,334
2021
1,450,769
10,781,573 3,593,777
2,550,000
57,024
18,433,143
John Rex
12,375,672 4,125,100
2023
10,050,636 3,350,074
1,440,000
33,427
16,074,137
Executive Vice President
2022
1,200,000
9,300,612 3,100,109
2,200,000
1,200,000
1,500,000
2022
Chief Executive Officer
Name and Principal
Position(1)
Salary
Year ($)(2)
Bonus
Stock
Awards
Option
Awards
Non-Equity
Incentive Plan
Compensation
All Other
Compensation
Total
($)(3)
($)(4)
($)(5)
($)(6)
Andrew Witty
2023
1,500,000
15,000,970 5,000,114
1,800,000
($)(7)
233,852
($)
23,534,936
2023 Summary Compensation Table*
2,000,195
1,125,478
2/23/2023
See the "2023 Grants of Plan-Based Awards" table for more information on stock awards granted in 2023.
2/23/2023
2/23/2023
23 ---- 6,814 - - 3,350,376
24,928
491.69
3,350,074
Dirk McMahon
Annual Cash Incentive
Award (2)
Performance Share
Award (3)(4)
2,160,000
Stock Option Award(3)
2,400,000 4,800,000
6,814
- 28
3,350,376
23 ------- 24,928 491.69 3,350,074
RSU Award (3)
Stock Option Award (3)
2/23/2023
2/23/2023
Brian Thompson
Annual Cash Incentive
2/23/2023
23 - - - 15 13,627 27,254 - - - 6,700,260
RSU Award (3)
6,700,260
---
3,000,000 6,000,000
Award (2)
Performance Share
Award(3)(4)
RSU Award (3)
2/23/2023
Stock Option Award (3)
2/23/2023
- 22 20.339 40.678
_
10,000.483
23-10,170 37,206 491.69 5,000,484
John Rex
Annual Cash Incentive
Award (2)
2,160,000 2,400,000 4,800,000
Performance Share
2/23/2023
15
13,627
27,254
Award(3)(4)
1,800,000 2,000,000
4,000,000
Award (2)
Performance Share
Please see "Compensation Discussion and Analysis" above for a description of our executive compensation program
necessary for an understanding of the information disclosed in this table.
(1) The actual value to be realized by a named executive officer depends upon the appreciation in value of the
Company's stock and the length of time the award is held. No value will be realized with respect to any stock
option award if the Company's stock price does not increase following the grant date. For a description of the
assumptions used in computing grant date fair value for stock option awards pursuant to FASB ASC Topic 718, see
Note 11 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2023. The grant date fair value of each RSU award and targeted grant date value of each
performance share award were computed in accordance with FASB ASC Topic 718 based on the closing stock
price on the grant date. Under the 2020 Stock Incentive Plan, all stock-based compensation awards are subject to
one year minimum vesting requirements, subject to an exception for a limited number of shares not to exceed 5%.
Stock-based compensation awards to employees are generally subject to three or four year vesting provisions.
For additional information on vesting of 2023 Grants of Plan-Based Awards, see footnote 3 below.
2024 Proxy Statement | 2023 Grants of Plan-Based Awards 53
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
(2) Amounts represent estimated payouts of annual cash incentive awards granted under our Executive Incentive Plan
in 2023. The Executive Incentive Plan permits a maximum annual bonus pool for executive officers equal to 2% of
the Company's net income (as defined in the plan) and no executive officer may receive more than 25% of such
annual bonus pool. The Compensation and Human Resources Committee has limited annual cash incentive
payouts to executive officers to not more than two times the target amount, and the maximum amounts shown for
each named executive officer equal two times each executive officer's target amount. In order for any amount to be
paid, the Company must achieve approved performance measures of (i) revenue, (ii) operating income, (iii) cash
flow, (iv) NPS (absolute and relative), and (v) employee experience index. The estimated threshold award represents
the amount that may be paid if threshold performance is achieved on each of the performance measures. Once
threshold performance is achieved on an approved performance measure, the Compensation and Human Resources
Committee has the discretion to pay an award. The actual annual cash incentive amounts earned in connection
with the 2023 awards are reported in the 2023 Summary Compensation Table.
(3) Amounts represent grants under the 2020 Stock Incentive Plan. Please refer to the chart on page 43 for a summary
of our stock compensation award types, vesting terms and termination provisions. RSUs are eligible to receive
dividend equivalents, which are subject to the same terms as the RSUs and will be forfeited if the underlying RSUs
do not vest. No dividend equivalents are paid on performance shares.
(4) Amounts represent the estimated future number of performance shares that may be earned under our 2020 Stock
Incentive Plan at each of the threshold, target and maximum levels. The performance share award will be paid
out in shares of Company common stock. The number of performance shares the executive officer will receive will
be determined at the conclusion of the 2023-2025 performance period and will be dependent upon the Company's
achievement of a cumulative AEPS measure and an average ROE measure approved by the Compensation and
Human Resources Committee. The Compensation and Human Resources Committee has the discretion to
reduce the number of performance shares an executive officer is entitled to receive. The estimated threshold
award represents the number of performance shares that may be awarded if threshold performance is achieved on
one of the performance measures.
2024 Proxy Statement | 2023 Grants of Plan-Based Awards
54
4 Audit
1,125,478
1,125,113
2,700,000
491.69
2,289
2/23/2023
Award(3)(4)
RSU Award (3)
2/23/2023
Stock Option Award (3)
2/23/2023
Rupert Bondy
Annual Cash Incentive
Award (2)
Performance Share
Award(3)(4)
RSU Award (3)
Stock Option Award (3)
9
8,136
16,272 · - - - 4,000,390
====== 4.069 14,883 491.69 2,000,126
1,063,125
1,181,250
2,362,500
2/23/2023
23 - - - 5 4,577 9,154 --- 2,250,465
2/23/2023
2/23/2023
8,372
4,000,390 8,000,780
2,250,465 4,500,930
Annual Cash Incentive
and Option
Awards
Preparation
($)
Name
Andrew Witty
John Rex
Dirk McMahon
Brian Thompson
Rupert Bondy
10,320
14,850
Tax
Equalization
and Tax Return
18,577
18,577
14,850
6,337
15,840
252,720
223,532
69,090
As permitted by SEC rules, we have omitted perquisites and other personal benefits that we provided to certain named
executive officers in 2023 if the aggregate amount of such compensation to each such named executive officer was less
than $10,000. The Company provided each of the named executive officers a $2 million face value term life insurance
policy.
2024 Proxy Statement | 2023 Summary Compensation Table 51
14,850
Premiums Relocation
($)
($)
Insurance
708,750
(5) The actual value to be realized by a named executive officer depends upon the performance of the Company's
stock and the length of time the award is held. No value will be realized with respect to any award if the Company's
stock price does not increase following the award's grant date or if the executive officer does not satisfy the
vesting criteria.
The amounts reported in this column for 2023 reflect the aggregate grant date fair value of stock options granted
in 2023 computed in accordance with FASB ASC Topic 718. For a description of the assumptions used in computing
the aggregate grant date fair value, see Note 11 to the Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2023.
(6) Amounts reported reflect annual cash incentive awards to our named executive officers under our 2008 Executive
Incentive Plan. The 2023 annual incentive awards, including amounts deferred by the named executive officers, were
the following:
Total Amount of
Annual Cash
Incentive Award
($)
Amount of Annual
Cash Incentive
Award Deferred
($)
Name
Andrew Witty
John Rex
Dirk McMahon
Brian Thompson
Rupert Bondy
(7) All other compensation for 2023 includes the following:
Company Matching
Contributions
Under 401(k)
Savings Plan
($)
1,800,000
1,440,000
1,440,000
86,400
1,200,000
Board of
Directors
2
Corporate
Governance
3
Plan Awards
Name
Andrew Witty
Grant
Date
Threshold
($)
Target
($)
Maximum
($)
Threshold
(#)
Estimated Future Payouts
Under Equity Incentive
Plan Awards
Target
(#)
Maximum
(#)
of Shares
of Stock
or Units
(#)
All Other
Stock
Awards:
Number
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
Exercise
or Base
Price of
Option
Awards
($/Sh)
Grant Date
Fair Value
of Stock
Estimated Future Payouts
Under Non-Equity Incentive
($)(1)
The following table presents information regarding each grant of an award under our compensation plans made during
2023 to our named executive officers for fiscal year 2023.
Information
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
The Company offers relocation assistance for all transferred or relocated professionals. The amount shown for Relocation
represents payments related to relocation costs and temporary living benefits for Rupert in 2023 and includes tax
assistance of $120,661 made on Rupert's behalf by the Company during 2023 for the payment of taxes related to those
relocation costs. The Company pays the taxes related to relocation costs for all transferred and relocated professionals
and executives to the extent those relocation costs are deemed to be income to the professional or executive.
Andrew is provided with tax equalization pursuant to the Company's tax equalization policy to ensure that as a U.S. non-
resident, his overall tax obligation is the same as if he were taxed exclusively in the United Kingdom. This policy also
provides assistance in preparation of tax returns due to the complexity of multi-jurisdictional filing requirements. Pursuant
to the Company's international transfer policy, tax service assistance support is also available to Rupert due to the
complexity of multi-jurisdictional filing requirements.
2024 Proxy Statement | 2023 Summary Compensation Table
52
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
6
Meeting
2023 Grants of Plan-Based Awards
Other
20,865,106
Executive
Compensation
18,088
28,484
14,242
21
127%
18,088
28,484
14,242
21
127%
22,807
35,916
17,958
26
(% of Target)
(#)
(#)
127%
(#)
10
13,118
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
2024 Proxy Statement | Compensation Discussion and Analysis 45
The Company does not pay dividend equivalents on performance shares granted to employees. Unvested shares of
RSUs receive dividend equivalents, which are subject to the same terms as the RSUs and will be forfeited if the underlying
RSUs do not vest. The determination to pay dividend equivalents on RSUs was made after considering market practices.
The aggregate number of shares subject to stock compensation awards made in 2023 for all employees was less
than 1% of the Company's shares outstanding at the end of 2023.
The Compensation and Human Resources Committee's stock compensation award policy requires all grants of stock
compensation to be made at set times. We do not have a specific program, plan or practice to time stock compensation
awards to named executive officers in coordination with our release of material information.
127%
3,240
5,102
2,551
4
127%
8,330
6,559
(#)
Award
Paid
Capital deployment activities over the three-year period;
•
Onset of the COVID-19 pandemic beginning in early 2020;
•
Factors that positively or negatively influenced our results subsequent to the approval of the long-term business plan in
early 2021 included:
Information
Meeting
6
Other
Annual
4 Audit
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Annual
•
Difficult Brazilian economic and regulatory environment including a significant devaluation of the Brazilian Real
against the U.S. Dollar; and
•
Growth in investment and other income from the rising interest rate environment and the Company's continued
collaborative growth and innovation efforts with early-stage companies.
Actual
Shares Paid
Shares
Shares
Maximum
Threshold Target
Shares
Long-Term Performance
Rupert Bondy
Brian Thompson
4 Audit
Dirk McMahon
Andrew Witty
Name
Since these factors were not contemplated in the performance targets and would have resulted in a net benefit to
management, they were excluded from final results, reducing the calculated payout ratio and related compensation.
Excluded impacts from capital allocation actions not contemplated when the performance targets were set,
primarily from merger and acquisition activity and share repurchase activity.
Excluded impacts from unusual events not contemplated when the performance targets were set; and
•
•
Similar to the annual incentive plan, the Company's long-term incentive plan allows for adjustments to the Company's
reported results in determining long-term incentive plan awards, namely adjustments that account for the impact of
changes in accounting principles, extraordinary items, and unusual or non-recurring gains or losses. Two adjustments
were made in measuring 2021-2023 performance, which resulted in lowering the payouts to the named executive
officers:
John Rex
6
Stock Compensation Award Practices
Information
The Board has established a stock retention policy for executive officers subject to Section 16 of the Exchange Act,
which includes our named executive officers. Under this policy, Section 16 officers are generally required to retain for at
least one year one-third of the net shares acquired upon the vesting or exercise of any stock compensation awards.
Transactions in Company Securities; Prohibition on Hedging, Short Sales and Pledging
Stock options do not count towards satisfying the ownership requirements under the guidelines, regardless of their
vesting status, and performance shares do not count towards satisfying the ownership requirements until they are vested.
Time-based RSUs and restricted stock awards are counted toward the satisfaction of the ownership requirements.
The Compensation and Human Resources Committee periodically reviews compliance with the ownership requirements.
As of April 5, 2024, all of our named executive officers complied with the ownership requirements.
for any other executive officers who are not direct reports of the CEO, two times base salary.
for executive officers who are direct reports of the CEO, or the Chief Executive Officer of Optum or UnitedHealthcare,
three times base salary; and
•
for the CEO, eight times base salary;
•
The Compensation and Human Resources Committee believes that executive stock ownership aligns management's
interests with those of shareholders and fosters a long-term outlook, while also mitigating compensation risk. Under our
stock ownership guidelines, each executive officer must beneficially own at least the following amounts of the
Company's common stock within five years of the executive officer's election or appointment as an executive officer:
Executive Stock Ownership Guidelines and Stock Retention Policy
Other Compensation Practices
Information
Meeting
6
4 Audit
Other
Annual
Executive
Compensation
In general, SEC rules prohibit uncovered short sales of our common stock by our executive officers, including the
named executive officers. Accordingly, our insider trading policy prohibits short sales and hedging transactions of our
common stock by all employees and directors. Hedging transactions include, for example, purchase or sale of options
(puts or calls, whether covered or uncovered), equity swaps or other derivatives directly linked to the Company's securities.
Additionally, our insider trading policy prohibits pledging transactions by directors and executive officers and discourages
our employees from pledging transactions.
Consideration of Risk in Named Executive Officer Compensation
Our compensation programs are balanced, focused on long-term pay-for-performance, allow for discretion and are
overseen by an independent Compensation and Human Resources Committee. The Compensation and Human
Resources Committee believes the design of the compensation program for our executive officers does not encourage
excessive or unnecessary risk-taking, as illustrated by the following list of features:
•
Meeting
3
Corporate
Governance
2
Board of
Directors
2024 Proxy Statement | Compensation Discussion and Analysis 47
We require executive officers to hold, for at least one year, one-third of the net shares acquired upon vesting or
exercise of any stock compensation award granted; and
•
3
We have stock ownership guidelines for our executive officers;
Payouts are capped under the annual incentive and performance share programs;
•
No duplicative metrics between annual and long-term incentive programs;
•
A large majority of management compensation is delivered in long-term incentives that vest over multiple years;
Our stock compensation awards are delivered through a balanced mix of performance shares, RSUs and stock
options to encourage sustained performance over time;
Our annual cash bonus program includes a variety of financial and non-financial measures that require substantial
performance on a broad range of initiatives;
•
•
Corporate
Governance
.
Board of
Directors
37,206
10,170
20,339
(#)
(#)
(#)
Annual Stock
Option Award
Target Number of
Performance Shares
13,627
Rupert Bondy
Dirk McMahon
John Rex
Andrew Witty
Name
In 2023, the Compensation and Human Resources Committee granted the following target number of performance
shares, RSUs and stock options to our named executive officers:
-
2
Stock Compensation Awards -2023
Brian Thompson
6,814
Annual RSU
Award
13,627
24,928
Employment Agreements and Post-Employment Payments and Benefits
We generally do not provide excise tax gross-ups or perquisites to our executive officers. We have agreed to provide
Andrew Witty with tax equalization payments to ensure that, as a U.S. non-resident, his overall tax obligation is the same
as if he were taxed exclusively in the United Kingdom, including assistance in tax return preparation due to the
complexity of multi-jurisdictional filing requirements. Pursuant to the Company's international transfer policy, tax service
assistance support is also available to Rupert Bondy due to the complexity of multi-jurisdictional filing requirements.
In accordance with the Company's corporate aircraft policy, Andrew Witty is required for personal security reasons to use
corporate aircraft for all business travel and is encouraged to use corporate aircraft for all personal travel, including
family travel, when corporate aircraft is not otherwise being used for other business travel. Because Andrew did not make
personal use of corporate aircraft in 2023, we have not reported any such costs in the 2023 Summary Compensation
Table. Additionally, we generally prohibit personal use of corporate aircraft by any executive officer unless the Company
is reimbursed for the full incremental cost to the Company of such use. Because there is no incremental cost to the
Company, we permit on occasion an executive officer's family member to accompany the executive officer on a business
flight on Company aircraft provided a seat is available.
Perquisites
In addition to generally available benefits, our executive officers are eligible to receive supplemental long-term disability
coverage equal to 60% of base salary, and all of our named executive officers receive supplemental group term life
insurance coverage of $2 million. Executive officers are also eligible to participate in our non-qualified Executive Savings
Plan. See the "2023 Non-Qualified Deferred Compensation" table for additional information regarding contributions,
earnings and distributions for each named executive officer under the Executive Savings Plan. Our Executive Savings
Plan does not provide for guaranteed or above-market interest. In 2020, we discontinued providing company matching
credits under this plan.
2024 Proxy Statement | Compensation Discussion and Analysis 46
Benefits
Other Compensation
8,372
The grant date fair values and terms of these stock compensation awards are discussed in the 2023 Grants of Plan-
Based Awards table. Please see the "Long-Term Incentive Compensation" section above for additional details regarding
the rationale underlying the Compensation and Human Resources Committee's determination to award performance
shares, RSUs and stock options.
2,289
4,577
14,883
4,068
8,136
24,928
6,814
The Company has entered into employment agreements with each of our named executive officers. These employment
agreements are described in greater detail in “Executive Employment Agreements" and "2023 Summary Compensation
Table".
Other
4 Audit
6
5
3
Executive
Compensation
Corporate
Governance
2
Annual
Meeting
Name
Potential Payments Upon Termination or Change in Control
The following table describes the potential payments to named executive officers upon termination of employment or a
change in control of the Company as of December 31, 2023. Amounts are calculated based on the benefits available to
the named executive officers under existing plans and arrangements, including each of their employment agreements
described under "Executive Employment Agreements".
Change
For Good Reason
or Not For Cause
Death
($)
Disability Retirement In Control
($)
Andrew Witty
8,322,000
Board of
Directors
Cash Payments
Information
2024 Proxy Statement | Executive Employment Agreements 59
Termination Provisions
Non-Solicitation, Non-Competition and Confidentiality Provisions
✓
Annual Cash Incentive (1)
✓
(2) Benefit provided at the Company's expense.
(3) Annual benefit covers 60% of eligible base salary in the event of a qualifying long-term disability, subject to the
terms of the policy.
Each employment agreement and each executive officer's employment may be terminated (a) by mutual agreement,
(b) by the Company with or without "Cause”, (c) by the executive officer, and (d) upon the executive officer's death or
disability that renders him or her incapable of performing the essential functions of his or her job, with or without reasonable
accommodation. Each executive officer may also terminate his or her employment agreement and employment at any
time for "Good Reason". If the executive officer's employment is terminated by the Company without "Cause” or by the
executive officer for "Good Reason", the Company will provide the executive officer with outplacement services
consistent with those provided to similarly situated executives and pay the executive officer severance compensation
equal to the sum of (a) 200% of his or her annualized base salary as of his or her termination date, (b) 200% of the
average of his or her last two calendar year bonuses, or if termination occurs within two years from the start of employment
with the Company, 200% of his or her target incentive, excluding any stock compensation awards and any special or one-
time bonus or incentive compensation payments, and (c) $12,000 to offset the costs of benefit continuation coverage.
The severance compensation will be payable over a 24-month period. In addition, if the Company terminates John Rex's
employment without Cause, or if John terminates employment for "Good Reason", John has the option to remain
employed in an advisory capacity for one year (at his then-current annual base salary and target bonus) following
notification of termination.
Material Definitions
As defined in each executive officer's employment agreement, "Cause” means (a) material failure to follow the Company's
reasonable direction, or to perform any duties reasonably required on material matters; (b) material violation of, or
failure to act upon or report known or suspected violations of, the Company's Code of Conduct; (c) conviction of any
felony, commission of any criminal, fraudulent or dishonest act, or any conduct that is materially detrimental to the
Company's interests, or (d) material breach of the employment agreement. The Company must provide the executive
office with written notice of Cause within 120 days of discovery, and the executive will have 60 days to remedy the conduct,
if the conduct is reasonably capable of being remedied.
2024 Proxy Statement | Executive Employment Agreements 58
Board of
Directors
Each executive officer is subject to provisions prohibiting his or her solicitation of the Company's employees and
customers or competing with the Company during the term of the employment agreement and for two years following
termination of employment for any reason. For Rupert Bondy, these prohibitions are applicable only to the extent
permissible under the American Bar Association Model Rules of Professional Conduct's provisions regarding restrictions
on the right to practice law or any applicable state counterpart. In addition, each executive officer is prohibited at all
times from disclosing Company confidential information.
2
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
As defined in each executive officer's employment agreement, “Good Reason" exists if the Company (a) reduces the
executive officer's base salary or long or short-term target bonus percentage other than in connection with a general
reduction affecting a group of similarly situated employees, (b) moves the executive officer's primary work location more
than 50 miles, or (c) makes changes that substantially diminish the executive officer's duties or responsibilities. For
Andrew Witty, John Rex and Dirk McMahon, "Good Reason" also exists if the Company changes the executive officer's
reporting relationship. For John, “Good Reason" also exists if the Company makes changes resulting in John no longer
serving as both Chief Financial Officer of the Company and as a member of the Office of the Chief Executive Officer.
The executive officer must provide the Company with written notice of the circumstances constituting "Good Reason"
within 120 days of discovery, and the Company will have 60 days to remedy the circumstances, if they are reasonably
capable of being remedied.
Corporate
Governance
Insurance Benefits
4,000,000
43,708,514
4,800,000 4,800,000 4,800,000
24,897,022 24,897,022 31,972,779 31,972,779
31,697,022 30,417,022 36,772,779 31,972,779
Brian Thompson
Cash Payments
5,416,000
Annual Cash Incentive (1)
Insurance Benefits
Continued Equity Vesting (2)
17,001,327
Total (3)
38,634,779
22,417,327
Rupert Bondy
Cash Payments
4,124,500
Annual Cash Incentive (1)
2,362,500 2,362,500 2,362,500
Insurance Benefits
Continued Equity Vesting (2)
Total(3)
6,361,985
10,486,485
✓
4,000,000 4,000,000
2,000,000 600,000
14,893,067 14,893,067
19,043,230
20,893,067 19,493,067 4,000,000 19,043,230
Total (3)
31,972,779
Continued Equity Vesting (2)
Total (3)
52,030,514
6,000,000 6,000,000
2,000,000 900,000
33,518,161 33,518,161 43,708,514 43,708,514
41,518,161 40,418,161 49,708,514 43,708,514
6,000,000
John Rex
6,662,000
Cash Payments
Annual Cash Incentive (1)
Insurance Benefits
4,800,000 4,800,000
2,000,000 720,000
4,800,000
Continued Equity Vesting (2)
31,972,779
Total (3)
38,634,779
24,897,022 24,897,022 31,972,779 31,972,779
31,697,022 30,417,022 36,772,779 31,972,779
Dirk McMahon
Cash Payments
6,662,000
Annual Cash Incentive (1)
Insurance Benefits
2,000,000
720,000
Continued Equity Vesting (2)
✓
Executive
Compensation
✓
2023 Non-Qualified Deferred Compensation
The following table presents information as of the end of 2023 regarding the non-qualified deferred compensation
arrangements for our named executive officers for fiscal year 2023.
Executive
Contributions
in Last FY
Registrant
Contributions
in Last FY
Aggregate
Balance at
Aggregate
Earnings
in Last FY
Aggregate
Withdrawals/
($)(3)
(d)
Distributions
($)(4)
(e)
Last FYE
Information
($)(5)
(f)
John Rex
Dirk McMahon
Brian Thompson
Rupert Bondy
($)(1)(2)
(b)
132,000
($)(1)
(c)
528,795
414,897
2,701,563
2,680,409
1,339,661
Name (a)
Andrew Witty
Meeting
6
4 Audit
Vesting
($)
(#)
Vesting
($)
42,125
21,478,357
25,161
12,926,379
25,317
13,004,942
13,485
6,881,665
3,821
1,974,678
2024 Proxy Statement | 2023 Option Exercises and Stock Vested
56
Board of
Directors
2
Corporate
Governance
3
2,000,000
Annual
Other
207,575 - 1,339
✓
(1) All amounts in these columns have been reported as compensation in the 2023 Summary Compensation Table.
(2) Named executive officers are eligible to participate in our Executive Savings Plan, which is a non-qualified deferred
compensation plan. Under the plan, employees may currently defer up to 80% of their eligible annual base salary
and up to 100% of their annual cash incentive awards. Amounts deferred, including Company credits, are credited to
a bookkeeping account maintained for each participant, and are distributable pursuant to an election made by the
participant as to time and form of payment that is made prior to the time of deferral. The Company maintains a Rabbi
Trust for the plan. The Company's practice is to set aside amounts in the Rabbi Trust to be used to pay for all
benefits under the plan, but the Company is under no obligation to do so except in the event of a change in control.
(3) Amounts deferred are credited with earnings from measuring investments selected by the employee from a
(4) Under our Executive Savings Plan, unless an employee in the plan elects to receive distributions during the term of
his or her employment with the Company, benefits will be paid no earlier than at the beginning of the year following
the employee's termination. However, upon a showing of severe financial hardship, an employee may be allowed to
access funds in his or her deferred compensation account earlier. Benefits can be received either as a lump sum
payment, in five or ten annual installments, in pre-selected amounts and on pre-selected dates or a combination
thereof. An employee may change his or her election with respect to the timing and form of distribution for such
deferrals under certain conditions. However, for deferrals relating to services performed on or after January 1,
2004, employees may not accelerate the timing of the distributions.
Participation in incentive compensation plans (1)
Andrew
John
Witty
Rex
Dirk
McMahon
Brian
Thompson
Rupert
Bondy
Stock-based awards (1)
Base salary(1)
$2 million term life insurance policy (2)
Generally available employee benefit programs
✓
✓
✓
✓
✓
✓
✓
✓
✓
Long-term disability policy (2)(3)
Compensation Component
Summary of Compensation Components
We have entered into an employment agreement with each of the named executive officers. The table below and the
narrative that follows summarize the material terms of their respective employment agreements.
(5) This column includes the amounts shown in column (b) as well as the following amounts reported in the summary
compensation table for prior years:
Name
Andrew Witty
John Rex
Dirk McMahon
Brian Thompson
Rupert Bondy
Amount Previously
Reported
1,100,203
675,000
40
2024 Proxy Statement | 2023 Non-Qualified Deferred Compensation 57
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
6
Meeting
Information
Executive Employment Agreements
predetermined collection of unaffiliated mutual funds identified by the Company. The Executive Savings Plan does
not credit above market earnings or preferential earnings to amounts deferred. Employees may change their selection
of measuring investments on a daily basis.
525,000
Named
Executive
Officers (3)(4)
5,096,422
Information
change in fair value of outstanding long-term incentive awards which is primarily driven by changes in our share
price and company performance between measurement dates:
2023
SCT Total Compensation
Deduct Grant Date Fair Value of Stock Awards and Option Awards (as disclosed in the
SCT)
Add Fair Value of Awards Granted in 2023 (Unvested / Unearned) as of 12/31/23
Add Change in Fair Value of Awards Granted in Prior Years (Unvested / Unearned) as
of 12/31/23
Add Change in Fair Value of Awards Granted in Prior Years that Vested during 2023 as
of the Vesting Date
CAP Total
2022
SCT Total Compensation
Meeting
Deduct Grant Date Fair Value of Stock Awards and Option Awards (as disclosed in the
SCT)
Add Change in Fair Value of Awards Granted in Prior Years that Vested during 2022 as
of the Vesting Date
CAP Total
2021
SCT Total Compensation
Deduct Grant Date Fair Value of Stock Awards and Option Awards (as
disclosed in the SCT)
Add Fair Value of Awards Granted in 2021 (Unvested / Unearned) as of
12/31/21
Add Change in Fair Value of Awards Granted in Prior Years (Unvested/
Unearned) as of 12/31/21
$ (9,825,797)
$10,203,134
Current PEO
$ 23,534,936
Add Fair Value of Awards Granted in 2022 (Unvested / Unearned) as of 12/31/22
Add Change in Fair Value of Awards Granted in Prior Years (Unvested / Unearned) as
of 12/31/22
Non-PEO NEOS
$12,198,157
6
4 Audit
2021
$18,433,143
2020
$11,221,093
$17,872,713
$55,452,750
$36,611,403
$37,166,242
$11,347,389
$11,312,854
Adjusted
Net Income
EPS(8)
$23,144,000,000 $25.12
$20,639,000,000 $22.19
$29,088,841 $176 $143 $17,732,000,000 $19.02
$19,941,168 $121 $113
$15,769,000,000
$16.88
(1) The term compensation actually paid is a mandated SEC naming convention, and the methodology for calculating
compensation actually paid also is mandated by the SEC rule. The amount shown for any period, however, does not
reflect total compensation actually earned during the period. Instead, the amounts shown reflect, among other
things, adjustments to the grant date fair value of stock compensation awards reported in the Summary Compensation
Table to reflect their fair value as of the last day of the fiscal year and increases or decreases in the value of
unvested stock compensation awards granted in prior years, which may never actually vest or may have a different
value when they do vest. Accordingly, these totals change from year to year based primarily upon share
performance, but do not reflect actual compensation paid or earned by an executive for any year. Compensation
resulting from an award of options or RSUs is not actually realized until exercise, in the case of options, which vest
over 4 years and have a 10-year duration; vesting of RSUs which vest ratably over 4 years; or completion and
achievement of a long-term performance share plan, which has a 3-year duration. See footnote 5 below for a more
detailed break down between earned/vested and unearned/unvested amounts.
5
(2) Andrew Witty has served as our PEO since February 3, 2021. Dave Wichmann, our former PEO, served as our
PEO until February 2, 2021. These columns reflect amounts for both PEOs in 2021 when both served as PEO for a
portion of the year.
(4) The values reflected in this column reflect the Total compensation set forth in the Summary Compensation Table
(SCT) on page 50. See the footnotes to the SCT for further detail regarding the amounts in these columns.
(5) In accordance with SEC rules, the Compensation Actually Paid (CAP) totals reflected in these columns is computed
by deducting and adding the following amounts from the Total column of the SCT (fair value at each measurement
date is computed in a manner consistent with the fair value methodology used to account for share-based
payments in our financial statements under GAAP). The change in value from the SCT to CAP is based on the
2024 Proxy Statement | Pay vs. Performance 63
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
(3) For 2022 and 2023, our other NEOs were John Rex, Dirk McMahon, Brian Thompson and Rupert Bondy. For 2021,
our other NEOs were John Rex, Dirk McMahon, Brian Thompson and Marianne Short. For 2020, our other NEOS
were John Rex, Andrew Witty, Dirk McMahon and Patricia Lewis.
$(20,001,084)
$ 20,931,590
$ (2,051,233)
Non-PEO NEOS
$13,210,724
$ (9,700,891)
$11,470,624
$ 2,159,448
$ 558,733
$17,698,638
Non-PEO NEOS
$11,347,389
$ (8,575,523)
$14,389,137
$10,877,212
$ 1,050,626
$29,088,841
Non-PEO NEOS
$11,312,854
$ 17,872,713
$ (8,050,262)
$10,678,145
Add Fair Value of Awards Granted in 2020 (Unvested / Unearned) as of 12/31/20
Add Change in Fair Value of Awards Granted in Prior Years (Unvested / Unearned) as
of 12/31/20
$ 16,861,629
$ 9,852,819
$ 4,699,669
Add Change in Fair Value of Awards Granted in Prior Years that Vested during 2020 as
of the Vesting Date
CAP Total
$ 5,379,711
$ 37,166,242
$ 1,300,762
$19,941,168
(6) The methodology used to determine the fair value of long-term incentive awards at each measurement date for
purposes of the SEC pay versus performance disclosure rules is consistent with the methodology used to calculate
the grant date fair value of these same awards for purposes of SCT Total Compensation. The inclusion of long-term
incentive awards granted in prior years and the change in our stock price at each measurement date (and the
2024 Proxy Statement | Pay vs. Performance 64
$(12,800,630)
Former PEO
$ 3,305,627
$36,611,403
$22,084,683
$ (1,122,439)
$ (2,236,039)
$ 20,178,170
$ (1,069,673)
$10,383,382
Current PEO
$ 20,865,106
$(16,500,772)
$ 19,765,736
$ 4,501,423
$ 2,628,303
$ 31,259,796
Current PEO
$ 18,433,143
$(14,375,350)
$ 24,998,702
$ 22,167,623
Add Change in Fair Value of Awards Granted in Prior Years that Vested
during 2021 as of the Vesting Date
$ 4,228,632
$ 55,452,750
CAP Total
2020
SCT Total Compensation
Deduct Grant Date Fair Value of Stock Awards and Option Awards (as disclosed in the
SCT)
Former PEO
$11,221,093
$17,698,638 $188 $140
$13,210,724
$31,259,796
$20,865,106
2024 Proxy Statement | CEO Pay Ratio 61
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
4 Audit
Annual
Meeting
Other
6
We have a broad and diverse workforce with approximately 58% of the people represented in three key talent pillars
(35% clinicians, 13% customer-facing employees and 10% information and computer technologists). Our median employee
(one of our customer-facing employees) is a non-exempt, full-time employee who works within our operations function
as a senior provider data specialist in the United States.
Information
By Tenure
10+ years,
22%
Less than
1 year,
17%
By Geography
Americas
(Non-U.S.),
15%
5-10 years,
22%
1-2 years,
17%
Asia-Pacific,
17%
United States,
68%
2-5 years,
22%
A summary of our workforce population is provided in the charts below:
We consistently applied total cash compensation as the measure to determine the median employee in our global
employee population as of October 1, 2023. That workforce population consisted of 423,619 global full-time, part-time,
temporary and seasonal employees employed on that date. 136,335 of those employees were located outside the United
States and we then applied the de minimis exemption to exclude 13,211 employees in Colombia and Peru (3.1% of
our global employee population).
Our enterprise-wide Company compensation philosophy is designed to attract and retain high-quality talent and provide
market-competitive total compensation opportunities that support our pay-for-performance culture. Actual pay practices
vary for employees by level and geographic location based on competitive market factors. The most significant difference
in the pay practices for our CEO versus our median employee is the use of variable/at-risk compensation.
For purposes of reporting annual total compensation and the ratio of annual total compensation of our CEO to our
median employee, both the CEO and median employee's annual total compensation were calculated consistent with
the Summary Compensation Table executive compensation disclosure requirements, plus the value of employer-paid
health insurance contributions. Our median employee compensation was $66,821 and our CEO's compensation was
$23,551,610. Accordingly, our CEO to median employee pay ratio is 352:1.
9,458,922
7,983,922 2,362,500
7,508,181
7,508,181
(1) Represents the maximum amount the Compensation and Human Resources Committee may in its discretion
determine, but is not required, to pay the executive officer (or the executive officer's estate, if applicable) based
upon a prorated portion of the award the executive officer would have received but for his death, disability or
retirement, calculated at the achievement of the maximum performance target, as more fully described in footnote
2 to the 2023 Grants of Plan-Based Awards table. For the purposes of this table, the potential amounts have not been
prorated because the table assumes a death, disability or retirement as of December 31, 2023.
(2) Represents the (i) unvested RSUs multiplied by the closing stock price on December 29, 2023 ($526.47), (ii) intrinsic
value of the unvested stock options, which is calculated based on the difference between the closing price of our
stock on December 29, 2023 ($526.47) and the exercise or grant price of the unvested stock options as of that date,
and (iii) the number of performance shares earned if target performance is achieved multiplied by the closing
stock price on December 29, 2023 ($526.47). If maximum performance is achieved for the performance shares,
2024 Proxy Statement | Potential Payments Upon Termination or Change in Control 60
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
4 Audit
Annual
Other
6
Meeting
Information
the amounts for Continued Equity Vesting would be (a) “For Good Reason or Not for Cause", $63,572,227 for
Andrew; $46,027,948 for John; $46,027,948 for Dirk; $25,168,982 for Brian; and $11,188,662 for Rupert; (b) for
"Death" and "Disability”, $43,191,521 for Andrew; $31,876,435 for John; $31,876,435 for Dirk; $18,910,560 for Brian;
and $7,511,340 for Rupert; (c) for "Retirement", $63,572,227 for Andrew; $46,027,948 for John; and $46,027,948
for Dirk; and (d) for "Change in Control", $63,572,227 for Andrew; $46,027,948 for John; $46,027,948 for Dirk;
$27,210,886 for Brian; and $12,334,858 for Rupert.
"For Good Reason or Not for Cause", the amount includes the value of unvested stock compensation awards held
by the named executive officer that will not immediately vest upon termination but will continue to vest through any
applicable severance period. For “Retirement”, the amount includes the value of certain unvested stock
compensation awards granted in 2020, 2021, 2022, and 2023 that will continue to vest and be exercisable for a
period of five years (but not after the award's expiration date). The value of the awards that will not immediately vest
is based on their intrinsic values on December 31, 2023. However, because these awards would continue to vest
after termination of employment or retirement, the actual value the named executive officer would receive is not
determinable. At December 31, 2023, Andrew, John and Dirk had met the retirement eligibility provisions. For additional
information regarding termination provisions applicable to stock compensation awards granted under our 2020
Stock Incentive Plan, see footnote 3 to the "2023 Grants of Plan Based Awards" table.
(3) Does not include the value of benefits, plans or arrangements that would be paid or available following termination
of employment that do not discriminate in scope, terms or operation in favor of our executive officers and that are
generally available to all salaried employees or accrued balances under any non-qualified deferred compensation
plan that is described above.
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing
the following information about the relationship between the annual total compensation of our median employee and the
annual total compensation of our CEO.
Pay vs. Performance
5,096,422
The disclosure included in this section is prescribed by SEC rules and is not incorporated by reference to Part III of the
Company's Annual Report on Form 10-K for the year ended December 31, 2023. The Compensation and Human
Resources Committee did not consider the pay versus performance data presented below in making its pay decisions
for any of the years shown.
2024 Proxy Statement | Pay vs. Performance 62
Non-PEO
Value
Realized on
Average
Compensation
Actually Paid
Non-PEO
Named
Value of Initial
Fixed $100
Investment
Based on:
Peer
Group
TSR
(S&P
Health
Executive
Average
Summary
Compensation
Table Total for
Care
TSR
Index)(7)
2023
$23,534,936
$20,178,170
$12,198,157
$10,383,382
$190
$143
2022
Officers (1)(3)(5)(6)
Compensation
Actually Paid
Former
PEO(1)(2)(5)(6)
PEO(2)(4)
Former
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Meeting
Information
The following table sets forth information concerning the compensation imputed to our current and former Principal
Executive Officers (each, a PEO) and to our other Named Executive Officers (NEOs) compared to certain performance
measures for the years ended December 31, 2023, 2022, 2021, and 2020.
Actually Paid
Current
Current
Year
PEO(2)(4)
PEO(1)(2)(5)(6)
Summary
Summary
Compensation Compensation Compensation
Table Total for Table Total for
As described in greater detail above in the "Compensation Discussion and Analysis" section, our executive compensation
program strongly links executive pay and the achievement of enterprise goals, which are aligned to the economic
interests of our shareholders. This strong pay-for-performance linkage is a core principle of our executive compensation
philosophy, with a large majority of executive officers' compensation at risk and weighted towards long-term
compensation to promote long-term shareholder value creation. Approximately 82% of total compensation granted to
our named executive offers in 2023 was stock-based long-term compensation that is earned over multiple years only if our
company and stock perform for shareholders. Our robust oversight and governance practices discourage excessive or
unnecessary risk-taking and include a balanced set of performance measures with different metrics used for our annual
and long-term incentive plans. Our stock retention policy requires executive officers to hold, for at least one year,
one-third of the net shares acquired upon vesting or exercise of any stock compensation award. For example, an
executive exercising options which had been held for ten years is required to retain one-third of the net shares acquired
for an additional year. In addition, our compensation clawback policies allow, and in some cases require, the Board to
seek cash or stock compensation reimbursement from our senior executives in certain circumstances, including specified
situations involving financial restatements, material detrimental conduct, or violation of non-compete, non-solicit or
confidentiality provisions.
Shares
Acquired on
(1) Any adjustments to base salary, actual bonuses payable and stock-based awards are at the discretion of the
Compensation and Human Resources Committee.
Option Awards
Number of
Shares
Acquired on
Exercise
(#)
43,561
2/8/2017
29,468
2/13/2018
37,410
2/26/2019
20,352(3)
10,686(3)
32,058
2/13/2020
6/7/2016
20,351
20,164(3)
6,721
2/14/2022
491.69
24,928(3)
2/23/2023
John Rex
244.43
23,548
2/22/2021
56,416
2/9/2016
31,623
5,036(4) 2,651,330
6,616(4) 3,483,094
17,391(5) 9,155,840
10,707,873
20,339(5)
Vested (#) Vested ($)(2)
Have Not
Plan
Awards:
Market
Value of
Unearned
Shares or
Units That
1,234,122
5,712 (4) 3,007,135
2,344(4)
6,700 (4) 3,527,535
That
Have Not
Vested (#)
10,320 (4) 5,433,281
Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)(2)
Have Not
Incentive
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares or
Units That
Equity
Stock Awards
Option
Stock
Expiration Award
Date(1)
Grant Date
2/23/2033 2/23/2023
2/14/2032 2/23/2023
2/22/2031 2/14/2022
2/13/2030 2/14/2022
11/6/2029 2/22/2021
2/26/2029 2/13/2020
6/5/2028
2/23/2033 2/23/2023
474.40 2/14/2032 2/23/2023
327.64 2/22/2031 2/14/2022
302.20 2/13/2030 2/14/2022
262.98 2/26/2029 2/22/2021
226.64 2/13/2028 2/13/2020
160.31 2/8/2027
136.94 6/7/2026
111.16 2/9/2026
108.97 2/10/2025
25,504
2/10/2015
6/5/2018
327.64
302.20
250.52
262.98
38,078
2/26/2019
Name
Securities
Number of
Underlying
Unexercised
Number of
Securities
Option Awards
The following table presents information regarding outstanding equity awards held at the end of fiscal year 2023 by our
named executive officers.
Outstanding Equity Awards at 2023 Fiscal Year-End
Information
Meeting
6
5
4 Audit
Other
Annual
Executive
Compensation
3
Corporate
Governance
2
Board of
Directors
Value
Realized on
Exercise
Date of
Option Grant
13,627(5) 7,174,207
13,070(5) 6,880,963
Options (#)
Unexercised
17,845
11/6/2019
12,705(3)
38,112
2/13/2020
25,663(3)
25,662
2/22/2021
474.40
26,831(3)
8,943
2/14/2022
37,206(3)
2/23/2023
Andrew Witty
Exercise/
Grant
Price ($)
Unexercisable
Exercisable
Number
of
Shares or
Units of
Stock
Option
Options (#)
Underlying
4,530(4) 2,384,875
1,972(4) 1,038,381
491.69
2/23/2023
2024 Proxy Statement | Outstanding Equity Awards at 2023 Fiscal Year-End
2,417,024
4,591(5)
1,764(3) 928,708
2,409,653
4,577(5)
2,323(3) 1,222,889
2/23/2033 2/23/2023
6/6/2032 2/23/2023
6/6/2022
6/6/2022
491.69
490.18
55
6,576(3)
6/6/2022
8,372(3)
2/23/2023
Rupert Bondy
2/8/2027
160.31
6,535
2/8/2017
1,096(3) 577,187
2,192
Board of
Directors
2
Corporate
Governance
Rupert Bondy
Dirk McMahon
Brian Thompson
Dirk McMahon
John Rex
Andrew Witty
Name
Stock Awards
Number of
The following table presents information regarding the exercise of stock options during fiscal year 2023 by our named
executive officers and vesting of performance shares and RSUs held by our named executive officers for fiscal year 2023.
2023 Option Exercises and Stock Vested
(5) Vest 100% at the end of the three-year performance period. The number of performance shares the executive
officer will receive is dependent upon the achievement of a cumulative EPS measure and an average ROE measure
approved by the Compensation and Human Resources Committee. The number of performance shares reported
above for grants made in 2023 and 2022 is at the target number established by the Compensation and Human
Resources Committee because we currently believe that is the probable outcome based on the Company's
performance through December 31, 2023.
(4) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date, other than for
retirement eligible executive officers. Generally, a portion of a retirement eligible executive officer's award that
otherwise would have vested on the next specified vesting date is cancelled to pay applicable FICA taxes owed by
the executive officer. The cancellation occurs in the year of grant if the executive officer is retirement eligible during
that year or in the first year the executive officer becomes retirement eligible. The remainder of the award vests
proportionally over the remaining vesting period. Andrew, John, and Dirk are retirement eligible. In Andrew's case,
his FICA taxes are addressed via the Company's Tax Equalization Policy as he is held to a United Kingdom tax
standard.
(1) The expiration date shown is the latest date that stock options may be exercised. Stock options may terminate
earlier in certain circumstances, such as in connection with the named executive officer's termination of employment.
(2) Based on the per share closing market price of our common stock on December 29, 2023 of $526.47.
(3) Vest 25% annually over a four-year period beginning on the first anniversary of the grant date.
Information
Meeting
6
5
4 Audit
Annual
Executive
Compensation
3
2,086(3) 1,098,139
1,135(3) 597,754
Other
2,843(3) 1,496,578
6/7/2021
3,794
2/14/2022
2/23/2023
Brian Thompson
11,643
2/10/2015
56,921
2/9/2016
39,205
32,414
2/13/2018
29,393
2/26/2019
24,928(3)
20,164(3)
20,352(3)
10,686(3)
20,351
32,058
2/13/2020
2/22/2021
7,378(5) 3,884,296
2/14/2022
6,721
4,969
14,883(3)
11,383(3)
4,970(3)
2/8/2017
9,372
4,283,360
4,128 (3) 2,173,312
2/22/2021
4,530 (4) 2,384,875
1,972 (4) 1,038,381
13,070(5) 6,880,963
5,036(4) 2,651,330
7,174,207
6,616(4) 3,483,094
491.69 2/23/2033 2/23/2023
474.40 2/14/2032 2/23/2023
327.64 2/22/2031 2/14/2022
302.20 2/13/2030 2/14/2022
262.98 2/26/2029 2/22/2021
226.64 2/13/2028 2/13/2020
160.31 2/8/2027
111.16 2/9/2026
108.97 2/10/2025
491.69 2/23/2033 2/23/2023
474.40 2/14/2032 2/23/2023
400.25 6/7/2031 2/14/2022
327.64 2/22/2031 2/14/2022
2/13/2030 6/7/2021
243.20 8/12/2029 2/22/2021
262.98 2/26/2029 2/13/2020
226.64 2/13/2028
17,681
2/13/2018
13,627(5)
8,136(5)
21,377
2/26/2019
13,008
9,373(3)
8/12/2019
302.20
5,937(3)
2/13/2020
17,810
•
.
The Governance Committee of the Board of Directors oversight responsibilities include:
Board oversight and strong and effective governance practices help to ensure UnitedHealth Group's political contributions
are aligned to, and consistent with, the Company's declared public policy priorities. The Board appreciates the potential
reputational risks associated with the Company making political contributions and has strong governance in place to
manage such risks. Overall, and particularly in light of the importance of government-funded programs to the evolving
health care landscape and the Company's business, the Board believes it is important to engage in the policymaking
process on a bipartisan basis, in multiple ways, including through the making of political contributions. We also believe
participating in industry and trade associations is important to advancing our mission and public policy priorities and
routinely evaluate the effectiveness of our memberships in trade associations. The key trade associations to which
we belong are aligned to one or more of our priorities outlined in "A Path Forward".
Information
Amended our Political Contributions Policy, which the Board oversees, to further articulate key considerations
for making political contributions and the due diligence performed on each political contribution made by the
Company in 2022.
Meeting
•
•
6
•
Board Oversight
Added information on the Company's approach and governance related to trade association memberships to
our 2023 Political Contributions and Related Activity Report.
-
Reviewing quarterly reports of political contributions made by the Company and its political action committees
which include the purpose and benefit of the political contributions - and approving the semi-annual public
disclosure of such contributions.
Monitoring the Company's advocacy and lobbying processes and activities, including key trade association and
coalition memberships.
•
•
Overseeing the manner in which the Company conducts its public policy and government relations activities.
Overseeing the Company's external relations functions and activities.
Conclusion
We remain committed to transparency and regularly review our approach to disclosure of political contributions and
related activities as a fundamental part of our existing governance activities. Board and management oversight, strong
and effective governance processes, and a strategic and comprehensive review process ensure we are making political
contributions in alignment with our core public policy priorities and minimizing reputational risk.
-
As we continue to navigate an evolving health care landscape, we believe it is our responsibility. on behalf of the
people and communities we serve, our employees, shareholders and businesses to engage in the policymaking
process on a bipartisan basis. The additional reporting sought by the proponents is unnecessary and detracts from our
focus on advancing public policy solutions to further our Company's mission of helping people live healthier lives and
helping make the health system work better for everyone.
For these reasons, the Board recommends you vote AGAINST the proposal. Executed proxies will be voted
AGAINST this proposal unless you specify otherwise.
Other
Board of
Directors
2024 Proxy Statement | PROPOSAL 4: Shareholder Proposal Requiring a Political Contributions Congruency Report 73
Reviewing and recommending to the Board periodically any changes to the Company's Political Contributions
Policy.
Annual
•
Executive
Compensation
Other
2
6
Meeting
Information
electioneering communications" means spending, from the corporate treasury and from its PACs, during the year,
directly or through third parties, in printed, internet, or broadcast communications, which are reasonably susceptible to
interpretation as being in support of or in opposition to a specific candidate.
Board of Directors' Recommendation
The Board unanimously recommends a vote AGAINST the foregoing proposal for the following reasons:
We have carefully considered this proposal and have concluded it is unnecessary and not in the best interests of the
Company and its shareholders.
•
•
•
•
We recognize and appreciate investor and stakeholder interest in this important topic. In response to feedback
from our shareholders and others, which have been broadly supportive of the Company's transparency, we
continue to strengthen our approach to reviewing, making, and reporting political contributions to effectively
manage reputation and brand risk while remaining engaged with policymakers on the Company's advocacy
priorities.
This is the third consecutive year UnitedHealth Group received this proposal, which failed to receive majority
support in 2022 and 2023 and after a 26 percent decline in shareholder support for this proposal from 2022 to
2023.
UnitedHealth Group publishes a Political Contributions and Related Activity Report, which we have done for
over a decade. This report provides transparency into our approach and governance practices related to political
contributions, trade association memberships, lobbying activities and public policy priorities.
While the proponent asserts that its proposal would "minimize values misalignment and reputation and brand
risk," it failed to identify any specific examples of misalignment or other detriment to shareholders resulting from
the Company's current approach to governance and disclosure of political contributions. The proponent also
has not been able to provide an example of the reporting being sought that they find acceptable.
UnitedHealth Group's approach to political contributions and advocacy is grounded in our core public policy
priorities — expanding access to care, improving health care affordability and simplifying the health care
experience. These priorities are detailed in "A Path Forward," available on the Company's website. Accordingly,
we consider factors such as a candidate's role in advancing key health care policies that impact the Company and
people we serve when making political contribution decisions.
Our political giving comes with the understanding that we may not agree with every position taken by each
recipient of political contributions from the Company on the many issues considered by policymakers and
candidates for public office. We regularly evaluate recipients of political contributions.
Recent Enhancements to Political Contributions and Related Activity Reporting
UnitedHealth Group's Board of Directors has enhanced corporate governance policies over time to align with best
practices, drive sustained shareholder value and respond to the interests of our shareholders.
We have consistently engaged with stakeholders and shareholders, including the proponents of this proposal, about our
approach to political contributions and have made enhancements in recent years to our reporting and processes to
increase transparency regarding our political contributions, trade association memberships, lobbying activities and public
policy priorities including:
•
Detailing the multi-step review process in place for evaluating each political contribution in our 2023 Political
Contributions and Related Activity Report.
•
In 2021, we also conducted an assessment of the review process and added a new, third-party candidate
vetting resource in 2022.
2024 Proxy Statement | PROPOSAL 4: Shareholder Proposal Requiring a Political Contributions Congruency Report 72
Board of
Directors
2
Corporate
Governance
3
4 Audit
Corporate
Governance
Most Important Performance Measures. The most important performance measures that we use in setting pay-for-
performance compensation for the most recently completed fiscal year are listed alphabetically in the table below. The
manner in which these measures determine the amounts of incentive compensation paid to our NEOS is described above
in the "Compensation Discussion and Analysis" section of this proxy statement.
Executive
Compensation
Directors
2
Board of
2024 Proxy Statement | Pay vs. Performance 65
Revenue
Return on Equity
Net Promoter System (NPS)
Operating Income
Employee Experience Index (EXI)
Cash Flow from Operations
Adjusted Earnings Per Share (EPS)
Most Important Performance Measures
As reflected in the pay versus performance table above, our net income and adjusted EPS steadily increased during the
2020 through 2023 timeframe and TSR has also increased during each of the measurement periods included in the
disclosure. While there is a strong correlation between our financial performance as reflected by net income and adjusted
EPS and any increases in the compensation amounts reported in the SCT given our pay for performance philosophy, a
similar correlation with how compensation is attributed to determine CAP using the SEC's required calculation
methodology will not always exist. Although a large majority of our executives' total compensation is earned based on
achievement of enterprise-wide goals, which is further described in the "Compensation Discussion and Analysis" section
of this proxy statement, and our stock price performance during the vesting period of the long-term incentives, the
methodology required to attribute compensation to determine CAP under the SEC rules may not always reflect a direct
correlation to financial performance. For example, although both net income and adjusted EPS increased from 2022 to
2023 and TSR has increased in each of the measurement periods, amounts attributed to determine CAP for both the
PEO and the average across the non-PEO NEOs decreased from 2021 to 2023 due to how the yearly changes in the fair
value of outstanding long-term incentive awards are calculated and impact the calculation of compensation amounts
attributed as CAP under the SEC pay versus performance rules.
Corporate
Governance
(8) Performance shares granted under our long-term incentive plan, which are selected to ensure a strong pay-for-
performance alignment between the Company's executive compensation program and drivers of shareholder value,
account for 42% and 40% of overall compensation respectively to our PEO and non-PEO NEOs during the most
recently completed fiscal year and are weighted equally between cumulative adjusted EPS and average return on
equity for the three-year performance period. Cumulative adjusted EPS includes the adjusted EPS for each year of
the three-year performance period. Refer to Appendix A for a description of how adjusted EPS is calculated from
the Company's financial statements and the section entitled “Long-Term Awards" in the "Compensation Discussion
and Analysis" section of this proxy statement for additional information related to the adjusted EPS performance
measure within our long-term performance share awards. The correlation and impact of operating income (a
performance measure described in more detail in our discussion of our annual incentive plan in the "Compensation
Discussion and Analysis" section above) on adjusted EPS is the reason we selected adjusted EPS for inclusion in
our Pay Versus Performance table as opposed to the return on equity metric.
resulting impact on the fair value calculation) is the most significant factor in the difference between the reported
SCT Total Compensation and the determination of compensation amounts attributable in determining CAP for each
reporting year under the SEC pay versus performance rules.
Information
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(7) Reflects our cumulative TSR and the cumulative TSR of the S&P Health Care Index for the year ended December 31,
2020, the two-years ended December 31, 2021, the three years ended December 31, 2022, and the four years
ended December 31, 2023, assuming a $100 investment at the closing price on December 31, 2019 and the
reinvestment of all dividends.
3
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Questions and Answers About the Annual Meeting and Voting
1. When and where is our Annual Meeting?
We will be holding our Annual Meeting virtually on Monday, June 3, 2024, at 11:00 a.m., Eastern Time, at
www.virtualshareholdermeeting.com/UNH2024.
We have determined that the 2024 Annual Meeting will be held in virtual format only. At our Annual Meeting,
shareholders will be able to participate in, vote and submit questions via the internet. Whether or not you plan to
participate in the Annual Meeting, we urge you to vote and submit your proxy in advance of the meeting by one of
the methods described in these proxy materials. Additional information can also be found at
https://www.unitedhealthgroup.com/investors/annual-reports.html.
An archived copy of the Annual Meeting will be available on the Investors page of our website at
https://www.unitedhealthgroup.com/investors/shareholder-materials/annual-meeting.html for 14 days following the
Annual Meeting.
2. What is the purpose of the Annual Meeting?
At the Annual Meeting, shareholders will act upon the matters outlined in the Notice of Annual Meeting of
Shareholders. These include:
• election of ten directors named in this proxy statement;
an advisory vote to approve our executive compensation (a Say-on-Pay vote);
•
•
ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting
firm; and
if properly presented, one shareholder proposal.
In addition to the business of the Annual Meeting, management of the Company will also give a business update.
Management, chairs of each standing Board committee and representatives of Deloitte will be available to respond
to appropriate questions from shareholders.
3. What is a proxy?
It is your legal designation of another person to vote the stock you own in the manner you direct. That other person
is called a proxy. If you designate someone as your proxy in a written document, that document also is called a
proxy or a proxy card. We have designated Rupert Bondy and Kuai Leong to serve as proxies for the 2024 Annual
Meeting. The Board will use the proxies at the 2024 Annual Meeting of Shareholders. The proxies also may be voted
at any adjournments or postponements of the meeting.
4. What is a proxy statement?
The Company's Board is soliciting proxies for use at the 2024 Annual Meeting of Shareholders. A proxy statement
is a document we give you when we are soliciting your vote pursuant to SEC regulations.
5. What is the difference between a shareholder of record and a shareholder who holds
stock in street name?
Shareholders of Record. If your shares are registered in your name with our transfer agent, EQ Shareowner
Services, you are a shareholder of record with respect to those shares and the Notice of Internet Availability of
Proxy Materials (Notice) or the proxy materials were sent directly to you by Broadridge Financial Solutions. A list of
shareholders entitled to vote at the Annual Meeting will be available for viewing 10 days prior to the Annual
Meeting at https://www.unitedhealthgroup.com/investors/annual-reports.html.
2024 Proxy Statement | Questions and Answers About the Annual Meeting and Voting
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filings with the SEC and the process used to support management's annual report on the Company's internal
controls over financial reporting.
The Committee discussed with Deloitte matters required to be discussed by the applicable Public Company
Accounting Oversight Board standards, including any critical audit matters, and Rule 2-07 of Regulation S-X.
Deloitte provided to the Committee the written disclosures and the letter required by applicable requirements of the
Public Company Accounting Oversight Board regarding Deloitte's communications with the Committee concerning
independence, and the Committee discussed with Deloitte the accounting firm's independence. In considering the
independence of Deloitte, the Committee took into consideration whether the provision of non-audit services is
compatible with maintaining the independence of Deloitte. In connection with its selection of Deloitte as the
Company's independent registered public accounting firm for the year ending December 31, 2024, the Committee
conducted a performance evaluation of Deloitte's services.
Based upon the Committee's review of the financial statements, its independent discussions with management and
Deloitte, and its review of the representation of management and the report of the independent registered public
accounting firm, and subject to the limitations of its role, the Committee recommended to the Board that the audited
consolidated financial statements for the years ended December 31, 2023, 2022 and 2021 be included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC.
Members of the Audit and Finance Committee
F. William McNabb III (Chair)
Charles Baker
Paul Garcia
Kristen Gil
2024 Proxy Statement | Audit and Finance Committee Report 68
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Disclosure of Fees Paid to Independent Registered Public Accounting
Firm
Aggregate fees billed to the Company for the fiscal years ended December 31, 2023 and 2022, represent fees billed by
the Company's principal independent registered public accounting firm, Deloitte & Touche LLP, the member firms of
Deloitte Touche Tohmatsu, and their respective affiliates, which includes Deloitte Consulting (collectively, Deloitte). The
Audit and Finance Committee pre-approved the audit and non-audit services provided in the years ended December 31,
2023 and 2022, by Deloitte, as reflected in the table below.
Fee Category
2
Audit Fees (1)
Board of
Directors
Management represented to the Committee that the Company's consolidated financial statements were prepared
in accordance with GAAP. The Committee has reviewed and discussed with management and Deloitte in separate
sessions the Company's consolidated financial statements for the years ended December 31, 2023, 2022 and 2021,
management's annual report on the Company's internal control over financial reporting and Deloitte's attestation.
The Committee discussed with management and Deloitte the process used to support certifications by the Company's
CEO and CFO as required by the SEC and the Sarbanes-Oxley Act of 2002 to accompany the Company's periodic
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PROPOSAL 2: Advisory Approval of the Company's Executive
Compensation
The Board recognizes the significant interest of shareholders in executive compensation matters. As required by
Section 14A of the Exchange Act, we are seeking shareholders' views on our executive compensation philosophy and
practices through an advisory vote on the following resolution at the Annual Meeting:
"Resolved, the shareholders approve, on an advisory basis, the compensation of the named executive officers, as
disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC, including the Compensation
Discussion and Analysis, the compensation tables and the related narrative disclosures."
The Compensation Discussion and Analysis, compensation tables and related narrative disclosures appear on
pages 35-65 of this proxy statement.
As discussed in the Compensation Discussion and Analysis, the Board believes our executive compensation program
attracts and retains highly qualified executives while linking executive compensation directly to Company-wide performance
and long-term shareholder interests. In deciding how to vote on this proposal, the Board asks you to consider the key
points with regard to our executive compensation program included in the Compensation Discussion and Analysis and
in the "Executive Summary" section on pages 35-48 of this proxy statement.
This advisory proposal, commonly referred to as a Say-on-Pay proposal, is not binding on the Board. Nonetheless, the
Board and the Compensation and Human Resources Committee will review and consider them when evaluating our
executive compensation program, as we do each year.
In addition to our annual advisory vote to approve the Company's executive compensation, we are committed to
ongoing engagement with our shareholders on executive compensation and corporate governance issues. These
engagement efforts take place throughout the year where appropriate through meetings, telephone calls and
correspondence involving our senior management, directors and representatives of our shareholders.
The Board recommends you vote FOR approval of the compensation of the named executive officers, as disclosed
in this proxy statement. Executed proxies will be voted FOR approval of the compensation of the named executive
officers unless you specify otherwise.
2024 Proxy Statement | PROPOSAL 2: Advisory Approval of the Company's Executive Compensation 66
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Audit and Finance Committee Report
The Audit and Finance Committee (the Committee) of our Board is comprised of four non-employee directors, all of
whom are audit committee financial experts, as defined by the SEC. The Board has determined all of the members
of the Committee are independent within the meaning of the listing standards of the NYSE, the rules of the SEC and
the Company's Standards for Director Independence. The Committee operates under a written charter adopted by
the Board accessible in the corporate governance section of our website at https://www.unitedhealthgroup.com/
people-and-businesses/standards.html.
The Committee has responsibility for selecting and evaluating the independent registered public accounting firm,
which reports directly to the Committee, overseeing the performance of the Company's internal audit function, and
assisting the Board in its oversight of enterprise risk management, privacy, cybersecurity, data protection, artificial
intelligence framework, ethics and compliance. Management has primary responsibility for the Company's
consolidated financial statements and the overall reporting process, for maintaining adequate internal control over
financial reporting and, with the assistance of the Company's internal auditors, for assessing the effectiveness of the
Company's internal control over financial reporting. Deloitte & Touche LLP (Deloitte) has served as the Company's
independent registered public accounting firm since 2002. In addition, the Committee oversees the Company's
Compliance and Ethics program and management's processes to identify sustainability investment criteria and to
ensure the accuracy of key disclosures related to sustainability matters.
The Committee engages with the Company's independent registered public accounting firm and the internal
auditors regarding the overall scope and plans for their respective audits. The Company's independent registered
public accounting firm is responsible for performing an independent audit of the Company's consolidated financial
statements in accordance with the standards of the Public Company Accounting Oversight Board (United States),
expressing an opinion as to the conformity of the consolidated financial statements with generally accepted
accounting principles (GAAP) in the United States of America, and auditing management's assessment of the
effectiveness of internal control over financial reporting. The Committee's responsibility is to monitor and oversee
these processes and to oversee management's processes to identify and quantify material risks facing the Company,
including risks disclosed in the Company's Annual Report on Form 10-K. The Committee meets regularly with the
internal auditors and independent registered public accounting firm, with and without management present, to discuss
the results of their examinations, the evaluation of the Company's internal control over financial reporting and the
overall quality of the Company's accounting and reporting.
The Committee has adopted a Policy for Approval of Independent Auditor Services (the Policy) outlining the scope
of services the independent registered public accounting firm may provide to the Company. The Policy sets forth
guidelines and procedures the Company must follow when retaining the independent registered public accounting
firm to perform audit, audit-related, tax and other services. The Policy also specifies certain non-audit services that
may not be performed by the independent registered public accounting firm under any circumstances. Pursuant
to these guidelines, the Committee approves fee thresholds annually for each of these categories, and services within
these thresholds are deemed pre-approved.
2024 Proxy Statement | Audit and Finance Committee Report 67
Audit-Related Fees (2)
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Annual Meeting
PROPOSAL 4: Shareholder Proposal Requiring a Political Contributions
Congruency Report
We have been informed The Educational Foundation of America intends to introduce the proposal set forth below at the
Annual Meeting. In accordance with SEC rules, the text of the proposal is printed verbatim from the submission. The
Company will provide to shareholders the address and reported holdings of the Company's common stock for the
proposal sponsor promptly upon receiving an oral or written request. The Board has recommended a vote against this
proposal for the reasons set forth following the proposal.
Proposal 4-Political Expenditures Misalignment with Company Values
WHEREAS: Public data collected by OpenSecrets.org show that UnitedHealth Group (“UnitedHealth”) and its employee
PAC rank in the top 1% of political donors.1
As long-term shareholders of UnitedHealth, we support transparency and accountability in corporate electoral spending.
Informed disclosure is in the best interest of the company and its shareholders. As the Supreme Court recognized in
its 2010 Citizens United decision, such transparency “permits citizens and shareholders to react to the speech of
corporate entities in a proper way" and "enables the electorate to make informed decisions and give proper weight to
different speakers and messages."
Greater political spending transparency is associated with increased investment levels, both domestic and foreign, and
decreased investment volatility.2 Increased institutional investment, increased analyst following, and decreased analyst
forecast error and forecast dispersion are all positively correlated with greater transparency.³
UnitedHealth publicly discloses a policy on corporate political spending and its direct contributions to candidates,
parties, and committees. However, greater transparency is warranted because our company does not disclose information
regarding misalignment between its political spending and the company's publicly stated values and vision as articulated
in its Sustainability Report and related ESG disclosures. Investors are unable to determine if UnitedHealth is directing
its political expenditures in a way that is consistent with company values and interests and mitigates reputation risk.
To minimize values misalignment and reputation and brand risk, UnitedHealth should establish clear policies and
reporting on such misalignment.
RESOLVED: Shareholders request the Board annually publish a report, at reasonable expense, analyzing the
congruence of UnitedHealth's political and electioneering expenditures during the preceding year against its publicly
stated company values and policies. The report should state whether United Health has made, or plans to make, changes
in contributions or communications as a result of identified incongruencies.
SUPPORTING STATEMENT: Proponents recommend, at management discretion, that UnitedHealth include in its
analysis metrics that illuminate the degree to which political contributions align with stated values and policy priorities
year over year, and present such metrics in the aggregate. Proponents further recommend that the report also contain
management's analysis of risks to our company's brand, reputation, or shareholder value of political spending, including
expenditures for electioneering communications, that conflict with publicly stated company values. “Expenditures for
2
3
https://www.opensecrets.org/orgs/unitedhealth-group/summary?id=D000000348
https://doi.org/10.1016/j.jcorpfin.2018.08.014
https://www.sciencedirect.com/science/article/abs/pii/S0929119918301135
2024 Proxy Statement | PROPOSAL 4: Shareholder Proposal Requiring a Political Contributions Congruency Report 71
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Total Audit and Audit-Related Fees
Tax Fees (3)
Board of
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2024 Proxy Statement | PROPOSAL 3: Ratification of Independent Registered Public Accounting Firm 70
1
Representatives of Deloitte are expected to be present at the Annual Meeting, will have an opportunity to make a
statement and will be available to respond to appropriate questions from shareholders.
2022
2023
The Board recommends you vote FOR ratification of the appointment of Deloitte as our independent registered
public accounting firm for the year ending December 31, 2024. Executed proxies will be voted FOR ratification of this
appointment unless you specify otherwise.
19,637,000 19,247,000
8,648,000 8,432,000
28,285,000 27,679,000
3,466,000 1,398,000
31,751,000 29,077,000
(1) Audit fees for 2023 and 2022 include the audit of our consolidated financial statements and internal control over
financial reporting, quarterly reviews, other statutory and legal entity audits, and consultations on technical matters.
(2) Audit Related Fees for 2023 and 2022 include service organization controls (SOC) reports, benefit plan audits,
assurance services for one of our subsidiaries, and certain AICPA agreed upon procedures.
(3) Tax Fees include tax compliance, planning and support services. In 2023 and 2022, approximately $88,000 and
$141,000, respectively, of Tax Fees were related to international tax services, approximately $3,221,000 and
$984,000, respectively, of Tax Fees were for tax operating model design services and audit support and approximately
$157,000 and $273,000, respectively, of Tax Fees were related to tax compliance (review and preparation of
corporate tax returns, review of the tax treatment for certain expenses and claims for refunds).
The Audit and Finance Committee has reviewed the nature of non-audit services provided by Deloitte and has concluded
these services are compatible with maintaining the firm's ability to serve as our independent registered public accounting
firm.
Audit and Non-Audit Services Approval Policy
The Audit and Finance Committee has adopted a Policy for Approval of Independent Auditor Services outlining the
scope of services Deloitte may provide to the Company. The Policy sets forth guidelines and procedures the Company
must follow when retaining Deloitte to perform audit, audit-related, tax and other services. The Policy also specifies certain
non-audit services which may not be performed by Deloitte under any circumstances. Pursuant to these guidelines,
the Audit and Finance Committee approves fee thresholds annually for each of these categories, and services within
these thresholds are deemed pre-approved. The Audit and Finance Committee has delegated authority to the Chair of
the Audit and Finance Committee to pre-approve permitted audit and non-audit services between regularly scheduled
quarterly Audit and Finance Committee meetings, provided such pre-approvals are presented to the Audit and Finance
Committee at its next scheduled meeting. All fees reported above were approved pursuant to the Policy. The services
provided by our independent registered public accounting firm and related fees are discussed with the Audit and
Finance Committee, and the Policy is evaluated and updated periodically by the Audit and Finance Committee.
2024 Proxy Statement | Independence of Independent Registered Public Accounting Firm | Audit and Non-Audit Services Approval Policy
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Audit and Finance Committee's Consideration of Independence of
Independent Registered Public Accounting Firm
Corporate
Governance
The Audit and Finance Committee is directly responsible for the appointment, evaluation, compensation, retention and
oversight of the independent registered public accounting firm retained to audit the Company's financial statements. The
Audit and Finance Committee has appointed Deloitte & Touche LLP as our independent registered public accounting
firm for the year ending December 31, 2024. Deloitte has been retained as our independent registered public accounting
firm since 2002. The Audit and Finance Committee is responsible for approving audit fees associated with the retention
of Deloitte. In order to assure continuing auditor independence, the Audit and Finance Committee periodically considers
whether there should be a rotation of our independent registered public accounting firm. Further, as part of the Audit and
Finance Committee's assessment of Deloitte and in conjunction with the mandated rotation of the audit firm's lead
engagement partner, in October 2020, the Audit and Finance Committee interviewed candidates to become Deloitte's
new lead engagement partner and following those interviews, selected the individual who became the new lead
engagement partner beginning in 2022.
Our Audit and Finance Committee conducts an evaluation of Deloitte on an annual basis. Based on its most recent
evaluation of Deloitte, the members of the Audit and Finance Committee believe the continued retention of Deloitte as
the Company's independent registered public accounting firm is in the best interest of the Company and its shareholders.
Among the factors considered by the Audit and Finance Committee in reaching this recommendation were the following:
the quality and efficiency of Deloitte's historical and recent audit plans and performance; Deloitte's capabilities and
expertise in handling the breadth and complexity of the Company's operations; external data on audit quality and
performance, including recent Public Company Accounting Oversight Board reports on Deloitte; the appropriateness of
Deloitte's fees for audit and non-audit services; Deloitte's independence and objectivity; and the quality and candor of
Deloitte's communications with management and the Audit and Finance Committee.
Directors
PROPOSAL 3: Ratification of Independent Registered Public
Accounting Firm
Information
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The Board has proposed that shareholders ratify the appointment of Deloitte at the Annual Meeting. If shareholders do
not ratify the appointment of Deloitte, the Audit and Finance Committee will reconsider the appointment but is not
obligated to appoint another independent registered public accounting firm. The Audit and Finance Committee periodically
evaluates whether to rotate our independent registered public accounting firm.
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17. What vote is needed to approve each of the other proposals?
vote for the proposal;
• vote against the proposal; or
•
.
abstain from voting on the proposal.
The proposal to ratify the appointment of Deloitte as our independent registered public accounting firm and the
shareholder proposal must be approved by a majority of the voting power of the shares of common stock present
in person or represented by proxy and entitled to vote at the Annual Meeting in order to pass. Virtual attendance at
our Annual Meeting constitutes presence in person for purposes of quorum at the meeting. For the advisory vote
to approve our executive compensation, there is no minimum approval necessary since it is an advisory vote;
however, the Board will consider the results of the advisory vote when considering future decisions related to such
proposal.
•
The Board makes the following recommendation with regard to each proposal:
.
Recommends a vote FOR each of the director nominees named in this proxy statement.
Recommends a vote FOR advisory approval of the Company's executive compensation.
•
•
For each of the other proposals shareholders may:
Recommends a vote FOR ratification of the appointment of Deloitte & Touche LLP as our independent
registered public accounting firm.
18. What is the Board's recommendation with regard to each proposal?
A director nominee will be elected if the number of votes cast for the nominee exceeds the number of votes cast
against the nominee. Our Principles of Governance require our directors to tender an irrevocable offer to resign,
which becomes effective if he or she fails to receive a majority of the votes cast for such director's election at the
annual meeting and our Board accepts his or her resignation. In the event a director receives a majority against
vote, and prior to any such action by the Board, the Governance Committee will consider the tendered resignation
offer and recommend to the Board whether or not to accept it. Absent a compelling reason not to accept the resignation
offer, as determined by the Board in its discretion, the Governance Committee will recommend, and the Board will
accept the resignation. The Board will act on the Governance Committee's recommendation within 90 days following
certification of the shareholder vote. The text of this policy appears in our Principles of Governance, which is
available on our website at https://www.unitedhealthgroup.com/people-and-businesses/standards.html.
16. What are my choices when voting on each of the other proposals considered at the
Annual Meeting?
Board of
Directors
vote against a nominee; or
Recommends a vote AGAINST the shareholder proposal requiring a political contributions congruency
report.
We have retained Broadridge Financial Solutions to tabulate the votes. We have retained CT Hagberg LLC to act
as independent inspector of the election.
14. How may I confirm my vote was counted?
We are offering our shareholders the opportunity to confirm their votes were cast in accordance with their instructions.
Vote confirmation is consistent with our commitment to sound corporate governance standards and an important
means to increase transparency. Beginning May 20, 2024 and for up to two months after the Annual Meeting, you may
confirm your vote beginning 24 hours after your vote is received, whether it was cast by proxy card, electronically
or telephonically. To obtain vote confirmation, log onto www.proxyvote.com using your control number (located on
your Notice or proxy card) and receive confirmation on how your vote was cast. If you hold your shares through a bank
or brokerage account, the ability to confirm your vote may be affected by the rules of your bank or broker and the
confirmation will not confirm whether your bank or broker allocated the correct number of shares to you.
15. What are my choices when voting for director nominees and what vote is needed to elect
directors?
In the vote on the election of director nominees, shareholders may:
• vote in favor of a nominee;
2024 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 77
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•
• abstain from voting with respect to a nominee.
19. What if I do not specify a choice for a matter when returning a proxy?
2024 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 79
• FOR the election of all director nominees;
The Company expects all directors to participate in the Annual Meeting, absent a compelling reason.
23. What are the deadlines for submitting director nominees and other shareholder proposals
for the 2025 Annual Meeting?
Shareholder Director Nominations for Inclusion in the Company's Proxy Materials (Proxy Access). To be considered
for inclusion in our proxy statement for our 2025 Annual Meeting, director nominations submitted pursuant to
Section 3.04 of our Bylaws must be received at our principal executive offices at UnitedHealth Group, 9900 Bren
Road East, Minnetonka, Minnesota 55343, Attention: Corporate Secretary, no earlier than November 23, 2024 and
no later than December 23, 2024, and must be submitted in accordance with Section 3.04 of our Bylaws. If we
do not receive the information required by our Bylaws by the deadline described above, the director nominee will be
excluded from our proxy statement for our 2025 Annual Meeting.
Other Shareholder Proposals to Be Considered for Inclusion in the Company's Proxy Materials (SEC Rule 14a-8).
To be considered for inclusion in our proxy statement for our 2025 Annual Meeting, shareholder proposals submitted
pursuant to SEC Rule 14a-8 must be received no later than December 23, 2024 and be submitted in accordance
with Rule 14a-8. These shareholder proposals must be in writing and received by the deadline described above at our
principal executive offices at UnitedHealth Group, 9900 Bren Road East, Minnetonka, Minnesota 55343,
Attention: Corporate Secretary. If we do not receive a shareholder proposal by the deadline described above, the
proposal may be excluded from our proxy statement for our 2025 Annual Meeting.
Other Shareholder Proposals for Presentation at the 2025 Annual Meeting (Advance Notice Provision). A shareholder
proposal that is not submitted for inclusion in our proxy statement for our 2025 Annual Meeting pursuant to
Section 3.04 of our Bylaws or SEC Rule 14a-8 and is sought to be presented at the 2025 Annual Meeting must
comply with the "advance notice" deadlines in our Bylaws. As such, these shareholder proposals must be received
no earlier than February 3, 2025, and no later than March 5, 2025. These shareholder proposals must be in writing
and received within the "advance notice" deadlines described above at our principal executive offices at
UnitedHealth Group, 9900 Bren Road East, Minnetonka, Minnesota 55343, Attention: Corporate Secretary. These
to allow the independent inspectors of the election to certify the results of the vote.
Board of
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22. Does the Company have a policy about directors' attendance at the Annual Meeting of
Shareholders?
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shareholder proposals must be in the form provided in our Bylaws and must include the information set forth in the
Bylaws. If we do not receive a shareholder proposal and the required information by the "advance notice❞ deadlines
described above, the proposal may be excluded from consideration at the 2025 Annual Meeting. The "advance
notice" requirement described above supersedes the notice period in SEC Rule 14a-4(c)(1) of the federal proxy
rules regarding the discretionary proxy voting authority with respect to such shareholder business.
3
Abstentions have no effect on the election of directors. Abstentions have the effect of an against vote on the
advisory vote to approve our executive compensation, the ratification of the appointment of the Company's
independent registered public accounting firm and the shareholder proposal. Broker non-votes will have no effect
on the vote for any matter at the meeting.
21. How are abstentions and broker non-votes counted?
If you are a shareholder of record and do not submit a proxy, you must participate in the Annual Meeting in order to
vote. If you hold shares through an account with a bank or broker, your shares may be voted by the bank or broker
on some matters if you do not provide voting instructions. Banks and brokers have the authority under NYSE rules to
vote shares for which their customers do not provide voting instructions on routine matters only. The ratification of
Deloitte as our independent registered public accounting firm is considered a routine matter. The other matters being
voted on at the Annual Meeting are not considered routine and banks and brokers cannot vote shares without
instruction on those matters. Shares that banks and brokers are not authorized to vote on non-routine matters are
counted as broker non-votes.
•
FOR the advisory approval of our executive compensation;
2024 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 78
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•
•
FOR the ratification of the appointment of Deloitte as the Company's independent registered public
accounting firm; and
AGAINST the shareholder proposal requiring a political contributions congruency report.
20. Are my shares voted if I do not submit a proxy?
Shareholders should specify their choice for each matter in the manner described in the Notice or on their proxy
card. If no specific instructions are given, proxies that are signed and returned will be voted:
if a shareholder makes a written comment on the proxy card or otherwise communicates his or her vote to
management; or
4 Audit
•
Consistent with our past practice for in-person annual meetings, each shareholder will be limited to one question to
allow us to respond to as many shareholder questions as possible during the question-and-answer portion of the
meeting.
2024 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 75
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Shareholders as of our record date who participate in our Annual Meeting at www.virtualshareholdermeeting.com/
UNH2024 will have an opportunity to submit written questions live via the internet during a designated portion of
the Annual Meeting. In order to do so, shareholders must have available their control number provided on their proxy
card, voting instruction form or Notice.
Annual
6
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We will address substantially similar questions, or questions that relate to the same topic, in a single response.
Questions must comply with the Meeting Guidelines and Procedures which will be available at
www.virtualshareholdermeeting.com/UNH2024. Questions that do not comply with the Meeting Guidelines and
Procedures, are not directly related to the business of the Company and are not pertinent to the Annual Meeting
matters will not be answered. We ask that all shareholders provide their name and contact details when submitting
a question through the virtual meeting platform so that we may address any individual concerns or follow up
matters directly.
9. What shares are included on the Notice, proxy card or voting instruction form?
If you are a shareholder of record, you will receive only one Notice or proxy card for all the shares of common
stock you hold:
.
in certificate form;
Other
Shareholders as of the record date may participate in, vote and submit questions at our Annual Meeting by logging
in at www.virtualshareholdermeeting.com/UNH2024. To log in, shareholders (or their authorized representatives)
will need the control number provided on their proxy card, voting instruction form or Notice. If you experience
technical difficulties during the check-in process or during the Annual Meeting, please call the technical support
number posted on the Annual Meeting website. If you are not a shareholder or do not have a control number, you
may still access the meeting as a guest, but you will not be able to participate.
8. What do I need to participate in the Annual Meeting?
Street Name Holders. If you hold your shares in a bank or brokerage account, you also may have the opportunity
to receive the proxy materials electronically. Please check the information provided in the proxy materials you receive
from your bank or broker regarding the availability of this service.
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
4 Audit
Annual
Other
6
Meeting
Information
Street Name Holders. If you hold your shares in an account at a bank or broker, then you are the beneficial owner
of shares held in street name. The Notice or proxy materials were forwarded to you by your bank or broker, who is
considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you
have the right to direct your bank or broker on how to vote the shares held in your account or you may vote your
shares electronically by participating in the Annual Meeting.
6. How many shares must be present to hold the Annual Meeting?
In order to conduct the Annual Meeting, holders of a majority of the shares issued and outstanding and entitled to
vote as of the close of business on the record date must be present in person or by proxy. This constitutes a quorum.
Virtual attendance at our Annual Meeting constitutes presence in person for purposes of quorum at the Annual
Meeting. Your shares are counted as present if you participate in the virtual Annual Meeting and vote electronically,
or if you vote your proxy before the Annual Meeting over the internet or by telephone or by mail. Abstentions and
broker non-votes will be counted as present for purposes of establishing a quorum. If a quorum is not present, we
will adjourn the Annual Meeting until a quorum is obtained.
7. How can I access the proxy materials for the Annual Meeting?
Shareholders may access the proxy materials, which include the Notice of Annual Meeting of Shareholders, Proxy
Statement (including a form of proxy card) and Annual Report for the year ended December 31, 2023 at
https://www.unitedhealthgroup.com/investors/annual-reports.html. We will also provide a hard copy of any of these
documents free of charge upon request to: UnitedHealth Group Incorporated, 9900 Bren Road East, Minnetonka,
Minnesota 55343, Attention: Corporate Secretary.
Instead of receiving future copies of our proxy materials by mail, you can elect to receive an e-mail that will provide
electronic links to these documents. Opting to receive your proxy materials online will save the cost of producing
and mailing documents to your home or business, will give you an electronic link to the proxy voting site and will also
help preserve environmental resources.
Shareholders of Record. If you vote at www.proxyvote.com, simply follow the prompts for enrolling in the electronic
proxy delivery service. You also may enroll in the electronic proxy delivery service at any time by going directly to
www.unitedhealthgroup.com/investors/shareholder-materials/annual-meeting.html and following the enrollment
instructions.
•
in book-entry form; and
•
in any Company benefit plan.
Shareholders of record may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
•
signing another proxy card with a later date and delivering it to an officer of the Company before the
Annual Meeting;
• voting again over the internet or by telephone prior to 11:59 p.m., Eastern Time, on May 31, 2024;
•
voting electronically at the Annual Meeting; or
.
notifying the Corporate Secretary in writing before the Annual Meeting.
Street name holders may revoke a proxy and/or change their vote prior to the completion of voting at the Annual
Meeting by:
•
•
submitting new voting instructions in the manner provided by your bank or broker; or
voting electronically at the Annual Meeting.
13. Are votes confidential? Who counts the votes?
We hold the votes of all shareholders in confidence from directors, officers and employees except:
•
as necessary to meet applicable legal requirements and to assert or defend claims for or against the
Company;
•
in the case of a contested proxy solicitation;
12. If I submit a proxy, may I later revoke it and/or change my vote?
•
vote at the Annual Meeting and any adjournments or postponements of the Annual Meeting.
The record date was established by our Board as required by the Delaware General Corporation Law. Owners of
record of common stock at the close of business on the record date are entitled to:
If you hold your shares in street name, you will receive one Notice or voting instruction form for each account you
have with a bank or broker. If you hold shares in multiple accounts, you may need to provide voting instructions for
each account.
If you hold shares in our 401(k) savings plan and do not vote your shares or specify your voting instructions on
your proxy card, the administrators of the 401(k) savings plan will vote your 401(k) plan shares in the same proportion
as the shares for which they have received voting instructions. To allow sufficient time for voting by the 401(k)
administrators, your voting instructions must be received by 11:59 p.m. Eastern Time on May 29, 2024.
10. What different methods can I use to vote?
By Written Proxy. All shareholders of record who received proxy materials by mail can vote by written proxy card. If
you received a Notice or the proxy materials electronically, you may request a proxy card at any time by following
the instructions on the Notice or on the voting website. If you are a street name holder, you will receive instructions
on how you may vote from your bank or broker, unless you previously enrolled in electronic delivery.
By Telephone or Internet. All shareholders of record can vote by telephone from the United States and Canada,
using the toll-free telephone number on the proxy card, or through the internet using the procedures and instructions
described on the Notice or proxy card. Street name holders may vote by internet or telephone if their bank or
broker makes those methods available, in which case the bank or broker will enclose the instructions with the proxy
materials. The internet and telephone voting procedures are designed to authenticate shareholders' identities,
allow shareholders to vote their shares and to confirm their instructions have been properly recorded.
Electronically at the Annual Meeting. Shareholders who participate in the Annual Meeting should follow the
instructions at www.virtualshareholdermeeting.com/UNH2024 to vote during the meeting.
The Notice is not a proxy card and cannot be used to vote your shares.
11. What is the record date and what does it mean?
The record date for the Annual Meeting is April 5, 2024. Only owners of record of shares of common stock of the
Company at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting, or
at any adjournments or postponements of the Annual Meeting. On April 5, 2024, there were 920,079,867 shares
of common stock issued, outstanding and entitled to vote. Each owner of record on the record date is entitled to one
vote for each share of common stock held.
2024 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 76
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Shareholder Solicitation of Director Nominations. In addition to satisfying the foregoing advanced notice
requirements under our Bylaws, to comply with the universal proxy rules under the Exchange Act, shareholders
who intend to solicit proxies in support of director nominees other than the Company's nominees must provide notice
that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 7, 2025.
24. How are proxies solicited and what is the cost?
Annual
Other
6
Meeting
Information
• receive notice of the Annual Meeting; and
We bear all expenses incurred in connection with the solicitation of proxies. We have engaged Morrow Sodali LLC
to assist with the solicitation of proxies for a base fee of $20,000 plus expenses. We will reimburse brokers, fiduciaries
Annual
Our directors, officers and employees may also solicit proxies by mail, telephone and personal contact. They will
not receive any additional compensation for these activities.
172,770(8)
316,927
489,697
*
97,547(9)
262,521
360,068
*
Rupert Bondy
32,852
9,607
4,285
63,187
13,892
*
*
All current directors, executive officers
and director nominees as a group (17
individuals)
1,730,007 (10)
Less than 1%.
30,335
Brian Thompson
Dirk McMahon
John Rex
39,013(2)
39,013
*
F. William McNabb III
12,812(2)
12,812
*
Valerie Montgomery Rice, M.D.
5,449(2)
5,449
*
John Noseworthy, M.D.
4,957(2)
4,957
Andrew Witty
96,919(2)
195,969
292,888
*
1,337,331
Michele Hooper
3,067,338
(1) Unless otherwise noted, each person and group identified possesses sole voting and dispositive power with
respect to the shares shown opposite such person's or group's name. Shares not outstanding but deemed
beneficially owned by virtue of the right of an individual to acquire them within 60 days of April 5, 2024, are treated
as outstanding only when determining the amount and percent owned by such individual or group.
The Board has adopted a written Related-Person Transactions Approval Policy, which is administered by the Governance
Committee. A copy of the policy is available on our website at https://www.unitedhealthgroup.com/people-and-businesses/
standards.html. Under the policy, related-person transactions are prohibited unless approved by the Governance
Committee. In general, a related-person transaction is any transaction or series of transactions (or amendments thereto)
meeting one of the following categories:
.
•
.
Transactions exceeding $1.00 in which both a director (or their immediate family member) and an executive
officer participate; or
Transactions exceeding $120,000 in which a director, executive officer or 5% shareholder (or their immediate
family member), and the Company or its subsidiaries participate; or
Transactions exceeding $1.00 in which a director actively participates in their capacity as an executive officer of
another entity.
Related-person transactions under the policy do not include:
Approval or Ratification of Related-Person Transactions
. Indemnification and advancement of expenses made pursuant to the Company's Certificate of Incorporation or
Bylaws or pursuant to any agreement or instrument.
•
•
Interests arising solely from the ownership of a class of the Company's equity securities, if all holders of that
class of equity securities receive the same benefit on a pro rata basis.
Any transactions with another corporation or organization with respect to which a related person's only relationship
is as a director or trustee.
Any transaction that involves the providing of compensation to a director or executive officer in connection with
his or her duties to the Company or any of its subsidiaries, including the reimbursement of business expenses
incurred in the ordinary course.
Under the policy, the Company determines whether a transaction falls under the definition of a related-person transaction
requiring review by the Governance Committee. In determining whether to approve a related-person transaction, the
Governance Committee will consider, among other things, whether the terms of the related-person transaction are fair
to the Company and on terms at least as favorable as would apply if the other party was not an affiliate; the business
reasons for the transaction; whether the transaction could impair the independence of a director under the Company's
Standards for Director Independence; and whether the transaction would present an improper conflict of interest for any
director or executive officer of the Company. Any member of the Governance Committee who has an interest in the
transaction under discussion will abstain from voting on the approval of the related-person transaction, but may, if so
requested by the Chair of the Governance Committee, participate in some or all of the Governance Committee's
discussions of the related-person transaction. Any related-person transaction that is not approved will be voided,
terminated or amended, or other actions will be taken in each case as determined by the Governance Committee so as
to avoid or otherwise address any resulting conflict of interest.
As required under SEC rules, transactions in which the Company was or is to be a participant since the beginning of
the Company's last fiscal year and the amount involved exceeds $120,000, and in which any related person had or will
have a direct or indirect material interest, are disclosed below.
2024 Proxy Statement | Certain Relationships and Transactions 84
•
Certain Relationships and Transactions
Information
Meeting
(2) Includes the following number of vested DSUs which are considered owned under the Company's stock ownership
guidelines for directors: Charlie - 290, Tim - 8,263; Paul - 1,059; Kristen - 613; Steve — 6,355;
Michele 35,643; Bill - 6,382; Valerie - 5,049 and John — 4,957.
(3) Includes 2,000 shares held indirectly in a trust.
(4) Includes 2,276 shares held indirectly in trusts.
(5) Includes 110 shares held indirectly in a trust.
(6) Includes 173,500 shares held indirectly in charitable foundations and 372,216 shares held indirectly in trusts.
(7) Includes 338.476 shares held in trust pursuant to our 401(k) plan. Pursuant to the terms of the 401(k) plan, a
participant has sole voting power over their shares; however, the plan trustee votes all unvoted shares in the same
proportions as the actual proxy votes submitted by plan participants.
(8) Includes 6,791 shares held indirectly in a trust.
(9) Includes 3,500 shares held indirectly by a spouse and 23,500 shares held indirectly in a trust.
(10) Includes the indirect holdings included in footnotes 3, 4, 5, 6, 7, 8 and 9.
2024 Proxy Statement | Security Ownership of Certain Beneficial Owners and Management 83
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
0.33%
and custodians for their costs in forwarding proxy materials to beneficial owners of common stock.
*
332,148
Corporate
2
3
Governance
Executive
Compensation
Other
4 Audit
6
Board of
Directors
Meeting
Other Information
Security Ownership of Certain Beneficial Owners and Management
The following table provides information about shareholders known to us to beneficially own more than 5% of the
outstanding shares of our common stock, based solely on the information filed by such shareholders in 2023 for the
year ended December 31, 2023 on Schedule 13G under the Exchange Act.
Amount and Nature of Percent of Class
Beneficial Ownership
(%)
Name and Address of Beneficial Owner
The Vanguard Group (1)
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
BlackRock, Inc. (2)
Information
2024 Proxy Statement | Householding Notice | Other Matters at Meeting 81
In accordance with the requirements of advance notice described in our Bylaws, no shareholder nominations or
shareholder proposals other than those included in this proxy statement will be presented at the 2024 Annual Meeting.
We know of no other matters that may come before the Annual Meeting. However, if any matters calling for a vote of the
shareholders, other than those referred to in this proxy statement, should properly come before the meeting, the
persons named as proxies will vote on such matters according to their individual judgment.
Other Matters at Meeting
25. Where can I find more information about my voting rights as a shareholder?
The SEC has an informational website that provides shareholders with general information about how to cast their
vote and why voting should be an important consideration for shareholders. You may access that information at
www.investor.gov/research-before-you-invest/research/shareholder-voting or at www.investor.gov.
2024 Proxy Statement | Questions and Answers About the Annual Meeting and Voting 80
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
6
Meeting
Information
Householding Notice
We have adopted “householding” procedures allowing us to deliver one Notice or single copies of proxy statements and
annual reports to any household at which two or more shareholders reside who share the same last name or whom
we believe to be members of the same family. Each registered shareholder living in that household will receive a separate
proxy card if the householded proxy materials are received by mail.
If you participate in householding but wish to receive a separate copy of the Notice, this proxy statement or our 2023
Annual Report for the year ended December 31, 2023, please notify us at: UnitedHealth Group, 9900 Bren Road East,
Minnetonka, Minnesota 55343, Attn: Corporate Secretary, telephone (877) 536-3550. Upon written or oral request, we will
deliver promptly, to any shareholder that elects not to participate in householding, a separate copy of the Notice of
Internet Availability and, if a shareholder requests printed versions by mail, this proxy statement and the Annual Report
on Form 10-K for the year ended December 31, 2023. You may opt-in or opt-out of householding at any time by
contacting our transfer agent, EQ Shareowner Services, at P.O. Box 64854, St. Paul, Minnesota 55164-0854, telephone
(800) 468-9716. Your householding election will apply to all materials mailed more than 30 days after your request is
received.
Your participation in the householding program is encouraged. As an alternative to householding, you may choose to
receive documents electronically. Instructions for electing electronic delivery are described in Question 7 of the "Questions
and Answers About the Annual Meeting and Voting" section of this proxy statement.
We have been notified that some banks and brokers will household proxy materials. If your shares are held in street
name by a bank or broker, you may request information about householding from your bank or broker.
50 Hudson Yards
1,514,330
83,846,150
New York, New York 10001
of April 5, 2024
Charles Baker
Timothy Flynn
Paul Garcia
Kristen Gil
Stephen Hemsley
290(2)
11,763(2)(3)
11,763
of Equity Awards Exercisable
or Vesting Within 60 Days
Total(1)
*
Percent of
Common Stock
Outstanding
(%)
4,053(2)(4)
4,053
*
1,036(2)(5)
1,036
1,182, 182(2)(6)(7)
290
Owned as a Result
Number of Shares Deemed
Beneficially
Ownership of
Common Stock
72,595,811
7.80
(1) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by The Vanguard
Group on February 13, 2024. The Vanguard Group reported having shared voting power over 1,222,040 shares, sole
dispositive power over 79,872,598 shares and shared dispositive power over 3,973,552 shares.
(2) This information, including percent of class, is based on the Schedule 13G/A filed with the SEC by BlackRock, Inc.
on February 6, 2024. BlackRock, Inc. reported having sole voting power over 66,008,588 shares and sole
dispositive power over 72,595,811 shares.
2024 Proxy Statement | Security Ownership of Certain Beneficial Owners and Management 82
Board of
Directors
2
Corporate
Governance
3
Executive
Compensation
Annual
Other
4 Audit
5
6
Information
The following table provides information about the beneficial ownership of our common stock as of April 5, 2024, by
each director and nominee for director, each current named executive officer, and by all of our current directors, executive
officers and director nominees as a group. As of April 5, 2024, there were 920,079,867 shares of our common stock
issued, outstanding and entitled to vote.
Name of Beneficial Owner or
Identity of Group
9.07
Meeting