UnitedHealth Group (UNH)

by our senior executives that, in turn will increase the value of our shareholders’ investment over the long term. We accomplish this by tying compensation of executives to the successful achievement of corporate, business unit and individual goals that are closely aligned with the long-term interests of our shareholders. Overall compensation includes base salary, annual cash incentive awards, long-term cash incentive awards, long-term equity awards and benefits. The Compensation Committee believes that a substantial majority of the total compensation opportunity of executive officers should be at-risk and payable only in the event of performance by executives that benefits the Company’s shareholders and other constituents. We place a greater emphasis on long-term, equity-based incentives versus cash compensation and other employee benefits. The primary equity-based, at-risk incentives we use are stock options and stock-settled stock appreciation rights (SARs) typically with four year vesting schedules. We believe that stock options and SARs, when combined with our stock ownership guidelines, align our executives’ interest with those of our shareholders. Thus, the combination of our equity awards and stock ownership guidelines is inherently performance-based. The Company’s cash long-term incentive award focuses on sustained financial results over a three-year period, complementing stock options and SARs. We do not use substantial non-performance-based compensation mechanisms for executive officers. We do not provide perquisites such as apartments, vacation homes, automobiles, club memberships, drivers for personal travel or personal use of corporate aircraft to our executive officers.

We believe that our emphasis on equity-based compensation has contributed to establishing and sustaining an entrepreneurial Company culture that has served our shareholders well in a highly competitive and rapidly evolving industry. For example, over the 5-, 10- and 15-year periods ended December 31, 2006, our Company’s compounded annualized total return to shareholders exceeded that of the S&P 500 Index by 18.7, 17.0 and 12.7 percentage points, respectively.