This excerpt taken from the UNH DEF 14A filed Apr 30, 2007.
Benchmarking of Executive Compensation
The Companys outside compensation consultant, Hewitt, regularly provides to management information regarding executive compensation practices within our Companys industry and among other companies of varying size. This generally has included information pertaining to the compensation practices of the companies named below. The Company also considers competitive third-party survey data of comparably sized companies in general industry. Management from time to time provides this information to the Compensation Committee. Benchmarking of executive compensation in this manner informs and influences both the compensation recommendations made by management to the Compensation Committee and the Compensation Committees decisions regarding compensation, but does not replace the Compensation Committees responsibility to determine the appropriate compensation levels for our executive officers. For purposes of executive compensation benchmarking, our executive officers are matched to benchmarks on the basis of job functions and responsibilities. Market compensation data is derived from these market matches, and statistical reference points (such as median and 75th percentile) are calculated for total compensation and for separate elements of the compensation program.
Since 2003, in addition to survey data, we have most commonly used a group of 30 companies for compensation benchmarking. This group of companies was originally selected and is modified from time to time by management after consultation with Hewitt, on the basis of annual revenue, cash flow return on average equity, and total shareholder return over three- and five-year periods. The intent of the Compensation Committee and our management is to generate and maintain a group of companies representing multiple industries and having generally strong financial performance and median revenue similar to, or smaller than, that of our Company and to supplement the information regarding these companies by survey data. This approach reflects the view that our Company competes for senior executive talent with successful companies across industry boundaries. The named companies used for benchmarking during 2006 are set forth below. When referring to peer group companies elsewhere in this Compensation Discussion and Analysis, we mean these named companies as well as the information included in the survey data.