8-KMaterial AgreementsExhibits & Filings

UNITEDHEALTH GROUP INC 8-K Report, Material Agreement (Feb 3, 2006)

Filed February 3, 2006For Securities:UNH

Summary

UnitedHealth Group Incorporated (UNH) filed an 8-K on February 2, 2006, reporting on executive compensation and stock award practices as of January 31, 2006. The Compensation and Human Resources Committee made key decisions regarding long-term performance awards for the 2006-2008 period and approved specific performance goals for the 2005-2007 period, based on earnings per share and other financial and non-financial metrics. These adjustments aim to align executive incentives with company performance and strategic objectives. Additionally, the company updated its stock incentive plans by approving revised forms of stock option, restricted stock, and stock appreciation rights agreements. A notable change allows most outstanding stock option holders to elect a net cashless exercise, providing them with greater flexibility. The board also approved a reduction in quarterly and initial grants of non-qualified stock options for non-employee directors, indicating a shift in director compensation structure.

Key Highlights

  • 1Designation of executive officers as eligible for long-term performance awards for the 2006-2008 performance period.
  • 2Approval of target and maximum performance awards and objective performance goals for the 2005-2007 period, primarily based on EPS.
  • 3Awards are subject to adjustment based on various financial and non-financial objectives including revenue growth, operating income, and strategic initiatives.
  • 4Revised forms of stock option, restricted stock, and Stock Appreciation Rights (SAR) agreements were approved for officers.
  • 5Approval of net cashless exercise feature for substantially all outstanding stock options held by officers.
  • 6Reduction in quarterly and initial stock option grants for non-employee directors starting in 2006.
  • 7Filing includes forms of amended stock award agreements for options, restricted stock, and SARs.

Frequently Asked Questions

This 8-K filing primarily details changes and approvals related to UnitedHealth Group's executive compensation plans and stock incentive programs, effective January 31, 2006. It outlines performance award criteria, revised award agreement forms, and adjustments to director stock option grants.

Long-term performance awards for executives are based on achieving specific earnings per share (EPS) amounts for the 2005-2007 performance period. These awards can be adjusted based on other financial metrics like revenue growth, operating income, cash flows, operating margin, return on equity, and progress on strategic initiatives.

The company approved a net cashless exercise feature for substantially all outstanding stock options held by officers. This allows them to exercise their options and use a portion of the resulting shares to cover the exercise cost and taxes, without needing to pay cash out-of-pocket.

Yes, the Board of Directors approved a reduction in the number of non-qualified stock options granted to non-employee directors. Quarterly grants were reduced from 10,000 to 8,000 shares, and initial grants for new directors were reduced from 72,000 to 58,000 shares, commencing in 2006.