UnitedHealth Group (UNH)

The Board of Directors unanimously recommends a vote AGAINST the foregoing proposal for the following reasons:

The Board of Directors has carefully considered the proposal submitted by the Nathan Cummings Foundation and has concluded that the proposal would not be in the best interests of the Company and its shareholders at this time. Our Nominating and Corporate Governance Committee and the entire Board have studied the merits of advisory votes carefully and continue to believe it is not necessary to adopt this proposal.

Our Compensation Committee, which consists entirely of independent directors, is responsible for the careful design and implementation of our compensation policies and programs—as described in the section entitled “Compensation Disclosure and Analysis – Elements of our Compensation Program.” We believe that these compensation policies and programs are fully serving the interests of the shareholders and the Company, as well as being appropriately balanced and competitive to accomplish the critical tasks of recruiting and retaining talented senior executives and motivating those executives to achieve superior value for our shareholders over the longer term.

The proponent of this proposal believes that a non-binding (yes or no) advisory vote by shareholders would provide an effective mechanism for investors to express opinions on the compensation of the named executive officers. In fact, executive compensation is a complex topic. A single yes or no vote does not effectively distinguish among the various elements of compensation and goals and thus does not offer a mechanism for constructive input by our shareholders into a matter of considerable complexity and great importance.

The Board of Directors of the Company believes that better alternatives exist to obtain shareholder input on our executive compensation practices. For instance, we have taken the following steps to promote greater engagement and accountability to shareholders with respect to our executive compensation practices:

67

Table of Contents

We believe that these actions have had and will continue to have direct and observable effects on our executive compensation determinations.

Shareholder proposals similar to this proposal have been presented for a shareholder vote at each of our last two annual meetings and, in each instance, have received less than a majority support. In addition, the investment community is divided in its views about the usefulness of an advisory vote, when balanced against the resources required by the investment community to implement it. Because of the continuing interest of some shareholder groups, the Board of Directors continues to believe it is important for the Company to monitor developments in this area, but does not believe that it would be prudent to adopt an advisory vote policy at this time.

The Board of Directors unanimously recommends a vote AGAINST the foregoing proposal for the following reasons:

The Board of Directors has carefully considered the proposal submitted by the AFSCME Employees Pension Plan, which is similar to proposals rejected by shareholders at our 2005 and 2007 annual meetings. While our Board and our Compensation Committee both strongly support and use performance-based compensation, the Board believes that adoption of this proposal would unduly limit the Compensation Committee’s flexibility to design an effective overall executive compensation approach.

The Board believes that our Compensation Committee should retain the necessary flexibility to make compensation awards based on a review of all relevant information in order to attract, motivate and retain executives in today’s highly competitive market for talent. The Compensation Committee consists entirely of independent outside directors who devote considerable time and effort to compensation issues and make decisions they believe are in the best interests of the Company and its shareholders. If the Board were to adopt the proposal, the Company would be precluded from granting a significant portion of its equity awards to senior executives in the form of stock options and SARs, even if our Compensation Committee determined such awards to be appropriate, necessary and in the interest of the Company and its shareholders, based on their performance and market norms.

81

Table of Contents

The Board and the Company strongly believe in linking both cash and equity components of executive compensation to Company performance, and believe that the portion of total compensation linked to performance or “at risk” should be the highest for our most senior executives. The Compensation Committee has structured the Company’s senior executive compensation programs so that a significant portion of executives’ total compensation is at risk, as it is tied to both annual and long-term financial performance of the Company as well as to the creation of value for its shareholders. In Proposal 2 of this proxy statement, among other things, the Board is requesting that the shareholders approve a list of objective performance criteria which could be used as vesting terms in restricted share grants. The AFSCME Employees Pension Plan proposal would limit the Compensation Committee’s flexibility in determining the appropriate mix between performance vesting shares and SARs or other forms of equity compensation.

We believe that we have already implemented an overall compensation program for managers that links compensation to performance and provides the Compensation Committee with the flexibility to make changes as it deems necessary. Moreover, in 2006 the Company adopted stock ownership guidelines for its executives which further aligns the interests of the Company’s senior executives with the interests of its shareholders. The Board believes that the stock ownership requirements contained in the guidelines ensure that executives maintain a long-term interest in the Company’s financial performance.

The Board believes that it is to the benefit of the Company and its shareholders for the Compensation Committee to retain flexibility and discretion with respect to the appropriate forms and mix of executive compensation to use, rather than to commit to a policy with respect to one aspect of executive compensation, the specifics of which it believes are less than optimal. The Board also believes that the proposal could potentially undermine the long-term interests of shareholders by putting the Company at a competitive disadvantage by restricting the Compensation Committee’s ability to compensate management in the manner it believes will be most effective at aligning their interests with those of our shareholders and by adversely affecting the Company’s ability to attract, motivate and retain the most talented executives to manage the business.

The Board of Directors unanimously recommends a vote AGAINST the foregoing proposal for the following reasons:

The CalPERS proposal, if adopted by the Company, would result in disruptive, divisive and expensive director elections without benefit to the shareholders as a whole. Further, the proposal is unnecessary because the Company’s policies and procedures already provide the Company’s shareholders with the opportunity for meaningful input into the director nomination and election process.

First, in November 2006, the Company formed a nominating advisory committee (the “Nominating Advisory Committee”). The Nominating Advisory Committee provides input on desired characteristics of the Board, suggests additional director candidates for consideration by the Nominating and Corporate Governance Committee and the Company’s Board of Directors; and it provides feedback about characteristics of specific director candidates under consideration by the Nominating and Corporate Governance Committee and the Company’s Board of Directors. Second, the Company’s existing Bylaws permit shareholders to nominate director candidates for consideration at annual stockholder meetings. In addition, representatives of the Company have met with representatives of CalPERS and assured them that the Company is open to input and dialogue as to prospective director candidates recommended by our shareholders.

101

Table of Contents

Further, the Company is recommending additional significant governance initiatives with respect to director elections. This proxy statement contains a proposal to amend the Company’s Bylaws and Articles of Incorporation to implement a majority-voting standard. The Board of Directors recommends that the shareholders vote for the amendment to implement majority voting. These changes, if approved by the shareholders, would require directors to receive a majority of the votes cast in a director election, except in contested elections. The Company will retain its existing director resignation policy, whereby any incumbent director who fails to receive a majority vote in favor of his or her re-election must submit his or her resignation for consideration by the Board of Directors. In addition, under the Board of Directors’ proposed changes, all directors will serve one-year terms and stand for election at each annual meeting. Taken together, all of these policies provide shareholders a greatly increased voice in the annual director election process.

Permitting certain shareholders or shareholder groups to nominate director candidates in the Company’s proxy materials could result in expensive and divisive director elections without offering shareholders additional benefit. It could also lead to the election of “special interest directors” who may be inclined to represent the interests of the shareholders who nominated them and not the interests of all of the Company’s shareholders. This proposal, if implemented, could have a tremendously disruptive effect by turning every director election into a proxy contest, effectively requiring the expenditure of significant Company resources in a manner inconsistent with the creation of shareholder value.

Some have pointed to the costs of printing and mailing a competing proxy as a barrier to shareholder proposed director candidates. As of July 1, 2007, the SEC will allow for the electronic delivery of proxy materials by persons other than an issuer to be distributed by posting the materials on the Internet and giving shareholders a notice of their availability (except where materials related to a business combination). Electronic delivery of proxy materials should reduce the mailing and printing costs associated with third party solicitations. By utilizing the additional flexibility provided by electronic delivery of proxy materials, shareholders will have a greater ability to express their views on and influence the outcome and the process of annual elections than ever before and proposals such as those put forward by CalPERS would impose an undue burden on the Company that all shareholders would have to bear without offering shareholders any substantial additional benefit.

The Board of Directors unanimously recommends a vote AGAINST the foregoing proposal for the following reasons:

This proposal is unnecessary. In 20 years as a public company, no candidate for election to our Board has ever received less than 80% of the votes cast. The proposal’s contention that a nominee could be elected with as little as a single affirmative vote is hypothetical and misleading when reviewed against our long history of director elections. The proposal is also unnecessary to assure our commitment to best practices in corporate governance. Our Board policies and procedures comply with and often exceed requirements set by the NYSE, the SEC and Sarbanes-Oxley. In connection with our Board’s annual review of our corporate governance practices, in January 2006, our Board adopted a policy (reflected within its Principles of Governance) with respect to director elections. Pursuant to the policy, in an uncontested election, any director nominee who receives a greater number of votes “withheld” from his or her election than votes “for” such election will tender his or her resignation for consideration by the Nominating Committee and the Board of Directors. The full text of the policy is as follows:

Voting for Directors.    In an uncontested election, any nominee for Director who receives a greater number of votes “withheld” from his or her election than votes “for” such election (a “Majority Withheld Vote”) shall promptly tender his or her resignation following certification of the shareholder vote. The Nominating Committee shall consider the resignation offer and recommend to the Board whether to accept it. The Board will act on the Nominating Committee’s recommendation within 90 days following certification of the shareholder vote. Thereafter, the Board will promptly disclose their decision whether to accept the Director’s resignation offer (or the reasons for rejecting the resignation offer, if applicable) in a press release to be disseminated in the manner that Company press releases typically are distributed. Any Director who tenders his or

34

Table of Contents

her resignation pursuant to this provision shall not participate in the Nominating Committee recommendation or Board action regarding whether to accept the resignation offer. However, if each member of the Nominating Committee received a Majority Withheld Vote at the same election, then the independent Directors who did not receive a Majority Withheld Vote shall appoint a committee amongst themselves to consider the resignation offers and recommend to the Board whether to accept them. However, if the only Directors who did not receive a Majority Withheld Vote in the same election constitute three or fewer Directors, all Directors may participate in the action regarding whether to accept the resignation offers.

We believe that this policy is effective in giving shareholders a meaningful role in the election of directors and in removing a director opposed by shareholders, thereby effectively alleviating the underlying concerns raised by the United Brotherhood of Carpenters’ proposal.

Our directors are presently elected based on a plurality of votes cast at a meeting of shareholders, which is the standard provision for the election of directors under Minnesota law. This standard is explained in the “General Matters – Voting Procedures and Proxy Solicitation” section of this proxy statement. Given the possible uncertainty of electing directors by a majority of votes cast, we believe that adoption of this proposal has the potential to reduce shareholders’ ability to choose who will serve as a director and unnecessarily complicate the election of directors.

The Board of Directors unanimously recommends a vote AGAINST the foregoing proposal for the following reasons:

The Board of Directors has carefully considered the proposal submitted by the United Brotherhood of Carpenters and Joiners of America. This proposal is similar to the proposal offered by the AFL-CIO described above. Accordingly, this proposal is also similar to a proposal that was considered by UnitedHealth Group’s shareholders at its 2004 annual meeting, which a majority of shareholders declined to support. As discussed above, while the Board strongly supports the concept of performance-based compensation arrangements, the Board believes that because the Company’s compensation programs are already substantially performance-based, the adoption of this proposal is not necessary and is not in the best interests of UnitedHealth Group and its shareholders at this time for all of the reasons indicated above as well as the following additional reasons:

Accordingly, the Board of Directors believes that this proposal should be declined for these reasons as well as the reasons indicated in the opposition statement to the AFL-CIO proposal above.