This excerpt taken from the UNH DEF 14A filed Apr 28, 2008.
Process for Determining Compensation Peer Group
As discussed under Elements of our Compensation Program below, we benchmark total compensation program levels and program elements reported for executive officers of our peer group companies, and provide this information to the Compensation Committee in support of recommended changes to the compensation of our named executive officers. Peer group executive positions that are considered to be comparable to the positions of our named executive officers, in terms of job function, duties and scope of responsibility, are identified for compensation benchmarking purposes. External compensation data from both compensation survey sources and proxy data are derived from these benchmark peer group positions, and statistical reference points (such as median or upper quartile) are calculated for use in the formation of compensation recommendations for our named executive officers.
In October 2007, at the request of the Compensation Committee, Semler Brossy re-evaluated our peer group companies. The current peer group consists of 22 similarly sized S&P 500 companies plus five large managed care companies. The Company does not feel it is appropriate to limit the peer group to only the five large managed care companies identified below because we are larger, more complex and more diverse than those companies. In addition, the Company believes that the inclusion of similarly sized S&P 500 companies is appropriate because we compete for talent and capital with other successful large companies without regard to industry. Similarly sized S&P 500 companies were determined by looking at revenue and a 36-month average market capitalization. Similar potential peer companies also were evaluated by reference to longer term total return to shareholders, average market capitalization, and cash flow return on average equity. The 27 companies used for benchmarking 2007 compensation and the 2008 compensation actions taken by our Compensation Committee are set forth below:
Companies highlighted in bold type are S&P 500 companies that are new to the peer group. Companies highlighted in italics are the 5 largest managed care companies with which we compete. We removed 15 companies from our peer group due to their failure to meet our revised criteria.