UnitedHealth Group (UNH)

Chief Executive Officer

The Committee believes it is important to determine Dr. McGuire’s total compensation package in accordance with the Company’s overall compensation philosophy described above, taking into account

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factors such as Company and individual performance, and competitive compensation levels at other companies of similar size and complexity. The Committee determines Dr. McGuire’s compensation consistent with these principles and by the terms of his employment agreement with the Company. The vast majority of Dr. McGuire’s cash compensation is dependent on overall Company performance. In 2005, with the support of Dr. McGuire, the Committee reviewed Dr. McGuire’s total compensation, and suggested certain amendments to his employment agreement, which was subsequently amended in August 2005. The Committee evaluated Dr. McGuire’s total compensation package for 2005, and noted outstanding Company performance in 2005 compared to other comparable companies, as well as outstanding Company performance over the 15-year period in which Dr. McGuire has served as Chief Executive Officer. From 1991 until 2005, the Committee noted that the Company’s stock price outperformed substantially all of the companies included in the current S&P 500 index that have public stock price histories from the time Dr. McGuire became Chief Executive Officer. The Committee also noted that over a five-year period the Company substantially outperformed the S&P 500 index, as well as the weighted average returns of companies included in the Company’s peer group and a selected group of Fortune 50 largest companies in the U.S., as more fully described under “Performance Graphs.” Beyond the Company’s outstanding market performance, the Committee noted that during the period in which Dr. McGuire has served as Chief Executive Officer, the Company has brought health care services to approximately 65 million Americans, and has effectively used its leadership position to advocate and help advance the use of evidence-based medicine, to improve clinical quality and health service delivery, and to facilitate health care access for the non-insured. The Committee also noted that many independent sources have included Dr. McGuire among the best Chief Executive Officers in America, regardless of industry.

Dr. McGuire’s 2005 base salary of $2,200,000 was established under his amended employment agreement (with any increases at the sole discretion of the Committee). Dr. McGuire’s employment agreement provides for an annual incentive award target of 150% of his base salary (assuming performance thresholds established by the Committee are met), which the Committee has determined to be an appropriate target amount that furthers the goal of linking a significant portion of Dr. McGuire’s cash compensation to performance. The Committee determined that the 2005 performance thresholds previously established by the Committee had been achieved; and, in recognition of Dr. McGuire’s performance in 2005, the Committee granted him a $5,808,000 annual incentive award in accordance with the terms of the Executive Incentive Plan. In determining the amount of this award, in addition to considering the marketplace generally and established incentive compensation levels for corporate executive positions, the Committee considered the Company’s continued outstanding performance over the past several years, and specifically, the Company’s performance in 2005 in relation to established goals, and compared that performance to prior years’ results. The Committee noted that the Company exceeded the performance objectives established by the Committee at the beginning of 2005. The Committee also identified a number of significant operational and other achievements in 2005, including record revenues of $45.4 billion, earnings from operations of $5.4 billion, net earnings of $3.3 billion, cash flows generated from operating activities of $4.3 billion, and a return on shareholders’ equity of 27%. This performance was reflected in an increase in our stock price of approximately 41% during 2005 as compared to an increase in the S&P 500 Index of 3%. The Committee also considered efforts made in 2005 to position the Company to provide services to an increasing number of people in the future, including preparation and launch of the Company’s Part D program and several successful acquisitions in 2005, including PacifiCare Health Systems, Inc., and the ongoing development of management teams and new platforms for growth. The Committee

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determined that our strong performance in 2005 resulted in significant part from Dr. McGuire’s leadership, and concluded that an award of $5,808,000 to Dr. McGuire, in excess of the target specified in Dr. McGuire’s employment agreement, was an appropriate incentive amount.

The Committee believes it is also important to link a significant portion of Dr. McGuire’s compensation to long-term performance of the Company. The Committee determined that the performance thresholds previously established by the Committee for the 2003-2005 performance period had been achieved; and, accordingly, approved payment to Dr. McGuire of a $1,997,000 long-term performance award under the Executive Incentive Plan. In determining the amount of this award, the Committee considered Company performance from 2003 to 2005 and identified a number of key achievements. The Committee noted that from 2003 through 2005, revenues increased 57%, earnings from operations increased 83%, net earnings increased 81%, cash flows generated from operating activities increased 44%, diluted net earnings per share increased 68%, and our stock price increased 198%, compared to a 42% increase in the S&P 500 Index. During this period, the Committee noted that the Company made significant operational improvements and positioned itself for future profitable growth. The Committee agreed that Dr. McGuire’s leadership was a critical factor in the Company’s accomplishments during this period, and accordingly determined that a $1,997,000 performance award payment was appropriate.

In 2005, in recognition of strong Company performance as noted above, we granted Dr. McGuire a stock option to purchase 1,300,000 shares of our common stock at an exercise price of $45.28 per share in connection with our regularly scheduled first quarter Committee meeting and a stock option to purchase 400,000 shares of our common stock at an exercise price of $47.34 per share in connection with our regularly scheduled second quarter Committee meeting. The options become exercisable as to 25% of the shares underlying the options over a period of four years, subject to accelerated vesting if specified events occur.

Chief Executive Officer

The Committee believes it is important to determine Dr. McGuire’s total compensation package in accordance with the Company’s overall compensation philosophy described above, taking into account factors such as outstanding Company and individual performance, and competitive compensation levels at other companies of similar size and complexity. The Committee determines Dr. McGuire’s compensation consistent with these principles and by the terms of his employment agreement with the Company. The vast majority of Dr. McGuire’s cash compensation is dependent on overall Company performance. In 2004, with the support of Dr. McGuire, the Committee began a thorough review of Dr. McGuire’s total compensation. Although many of the elements of Dr. McGuire’s compensation are fixed under his employment agreement, the Committee evaluated Dr. McGuire’s total compensation package for 2004, and noted outstanding Company performance in 2004 compared to other comparable companies, as well as outstanding Company performance over the 14-year period in which Dr. McGuire has served as Chief Executive Officer. From 1991 until 2004, the Committee noted that the Company’s stock price outperformed substantially all of the companies included in the current S&P 500 index that have public stock price histories from the time Dr. McGuire became Chief Executive Officer. The Committee also noted that over a five-year period the Company substantially outperformed the S&P 500 index, as well as the weighted average returns of companies included in the Company’s peer group and a selected group of Fortune 50 largest companies in the U.S., as more fully described under “Performance Graphs.” Beyond the Company’s outstanding market performance, the Committee noted that during the period in which Dr. McGuire has served as Chief Executive Officer, the Company has brought health care services to approximately 55 million Americans, and has effectively used its leadership position to advocate and help advance the use of evidence-based medicine, to improve clinical quality and health service delivery, and to facilitate health care access for the non-insured. The Committee also noted that many independent sources have included Dr. McGuire among the best Chief Executive Officers in America, regardless of industry.

Dr. McGuire’s 2004 base salary of $2,100,000 is required by the terms of his employment agreement. Dr. McGuire’s employment agreement provides for an annual incentive award target of 150% of his base salary (assuming performance thresholds established by the Committee are met), which the Committee has determined to be an appropriate target amount that furthers the goal of linking a significant portion of Dr. McGuire’s cash compensation to performance. The Committee determined that the 2004 performance thresholds previously established by the Committee had been achieved; and, in recognition of Dr. McGuire’s performance in 2004, the Committee granted him a $5,550,000 annual incentive award in accordance with the terms of the Executive Incentive Plan. In determining the amount of this award, in addition to considering the marketplace generally and established incentive compensation levels for corporate executive positions, the Committee considered the Company’s continued outstanding performance over the past several years, and specifically, the Company’s performance in 2004 in relation to established goals, and compared that performance to prior years’ results. The Committee noted that the Company exceeded the performance objectives established by the Committee at the beginning of 2004. The Committee also identified a number of significant operational and other achievements in 2004, including record revenues of $37.2 billion, earnings from operations of $4.1 billion, net earnings of $2.6 billion, cash flows generated from operating activities of $4.1 billion, a return on shareholders’ equity of 31%, and a recent record of 21 successive quarters with year-over-year earnings per share growth of 30% or better. This performance was reflected in an increase in our stock price of approximately 51% during 2004 as compared to an

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increase in the S&P 500 Index of 9%. The Committee also considered several successful acquisitions in 2004, including the acquisitions of Oxford Health Plans, Inc., Mid Atlantic Medical Service, Inc. and Definity Health Corporation, and the ongoing development of management teams and new platforms for growth. The Committee determined that our strong performance in 2004 resulted in significant part from Dr. McGuire’s leadership, and concluded that an award of $5,550,000 to Dr. McGuire, in excess of the target required by Dr. McGuire’s employment agreement, was an appropriate incentive amount.

The Committee believes it is also important to link a significant portion of Dr. McGuire’s compensation to long-term performance of the Company. The Committee determined that the performance thresholds previously established by the Committee for the 2002-2004 performance period had been achieved; and, accordingly, approved payment to Dr. McGuire of a $1,897,000 long- term performance award under the Executive Incentive Plan. In determining the amount of this award, the Committee considered Company performance from 2002 to 2004 and identified a number of key achievements. The Committee noted that from 2002 through 2004, revenues increased 49%, earnings from operations increased 88%, net earnings increased 91%, cash flows generated from operating activities increased 71%, diluted net earnings per share increased 85%, and our stock price increased 149%, compared to a 6% increase in the S&P 500 Index. During this period, the Committee noted that the Company made significant operational improvements and positioned itself for future profitable growth. The Committee agreed that Dr. McGuire’s leadership was a critical factor in the Company’s accomplishments during this period, and accordingly determined that a $1,897,000 performance award payment was appropriate.

As part of his overall compensation package, Dr. McGuire is entitled to receive annually a grant of stock options to purchase at least 1,300,000 shares. Pursuant to the terms of his employment agreement, in 2004 the Company granted Dr. McGuire an option to purchase 1,300,000 shares of common stock at an exercise price of $59.40 per share, which was the fair market value of the stock on the grant date. This option becomes exercisable as to 25% of the shares underlying the option over a four-year period, beginning on January 1, 2005, subject to accelerated vesting if specified events occur.