UnitedHealth Group (UNH)

Equity Award Historical Practices and New Policy

In early 2006, our Board of Directors initiated an independent review of the Company’s stock option practices from 1994 to 2005. The independent review was conducted by the Independent Committee with the assistance of outside counsel, WilmerHale, and independent accounting advisors. On October 15, 2006, WilmerHale completed its review and concluded, among other things, that many of the stock option grants it reviewed were likely backdated, that a 1999 supplemental grant of stock options was not accounted for correctly in the Company’s financial statements and that the Company’s controls with respect to stock option grants were inadequate. For additional information concerning the Company’s historic stock option practices, please refer to the complete text of the WilmerHale Report, a copy of which is available on the Company’s website, www.unitedhealthgroup.com, and is included as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on October 16, 2006. In light of the conclusions of the WilmerHale Report, we restated our historical financial statements as reflected in the 2006 Annual Report on Form 10-K that accompanies this proxy statement. In addition, certain former and current senior executives of the Company executed written agreements to reset the exercise prices of all of their exercised and unexercised options with stated grant dates between 1994 and 2002 to ensure that there is no potential for financial gain from the incorrect dating of any option. See “2006 Compensation Initiatives — Equity Award Initiatives” above for a description of these option repricing arrangements.

In June 2006, the Compensation Committee adopted an internal policy regarding equity awards to facilitate the establishment of appropriate processes, procedures and controls in connection with the administration of equity-based incentive plans. The policy requires that all grants of equity awards be made in the sole discretion of the Compensation Committee, and establishes set times when the Compensation Committee may consider granting equity awards. No authority to grant equity awards is delegated to management. As a result, there is no relationship between the timing of the award of equity grants and our release of material information. See “2006 Compensation Initiatives-Equity Award Initiatives” for a description of the policy.

In addition to the terms specified in our equity award policy, our 2002 Stock Incentive Plan provides that the exercise price of a stock option or SAR award is not to be less than 100% of the fair market value of a share of our common stock on the date the award is granted. The plan also provides that for these purposes, the fair market value of a share of our common stock on a particular date is the closing price of a share on the NYSE on that date.

Since 2002, the Company has decreased the aggregate number of equity awards made on an annual basis as a percentage of shares outstanding at year end. The aggregate equity awards made in 2006 did not exceed 2% of the Company’s shares outstanding at the end of 2006.