UnitedHealth Group Board Announces Series of Actions

The Special Review Committee of the Board of Directors of UnitedHealth Group (NYSE: UNH) and its independent counsel, Wilmer Cutler Pickering Hale and Dorr, have completed a review and report of UnitedHealth Group’s stock option practices and reported the findings to the non-management directors. A copy of the WilmerHale report is available at: Wilmer Hale Report. Copies of the report have been sent to the Securities and Exchange Commission and the Department of Justice. In accepting the report, the Board of Directors today announced the following actions and decisions: 1. William W. McGuire, M.D. will leave the company on or before December 1, 2006, and he stepped down today as Chairman of the Board and as a Director. Between now and his departure, he will continue as Chief Executive Officer and will assist in an orderly transition to new leadership. The Board expressed its appreciation for the extraordinary contributions made by Dr. McGuire over the past 15 years. Under his leadership, UnitedHealth Group has had an enormous positive impact on the American health care system, making significant contributions in improving accessibility and making the health care system more affordable; the company became an industry leader with revenues growing from approximately $600 million to more than $70 billion. The stock price of UnitedHealth Group rose by almost 8500 percent, more than 30 times the growth of the S&P 500. The employees, shareholders and customers of UnitedHealth Group have all benefited from his leadership, energy and vision. 2. The Board elected Stephen J. Hemsley to succeed Dr. McGuire as CEO upon Dr. McGuire’s departure from the company. Mr. Hemsley joined the company in 1997 and has been the company’s President and COO since 1999. 3. The Board has created the position of non-executive chairman of the UnitedHealth Group Board. 4. The Board has elected Richard T. Burke, founding CEO of UnitedHealth Group, and a director since 1977, to the position of non-executive chairman, effective immediately. 5. The Board has accepted the resignation of board member William G. Spears, who had remained with the Board for the past six months to see the review process through to completion. The Board is grateful to Mr. Spears for his many contributions during his 15 years of service to the company. 6. David J. Lubben will proceed with plans to retire and is stepping down today as General Counsel and Secretary. He will remain with the company to effect an orderly transition of his responsibilities. The Board is grateful to Mr. Lubben for his 25 years of outstanding service and commitment to the company, both as in-house counsel and his prior contributions as outside counsel. 7. The Board has instructed Mr. Hemsley to review the conduct of senior executives in the legal, human capital and accounting functions of the Company and recommend any additional personnel actions to the Board should they be necessary. 8. Mr. Hemsley has voluntarily agreed to reprice all options awarded through 2002 to the annual high share price for each year, and to take any other appropriate action to eliminate any possible financial benefit from options-related issues identified in the report. The Board expects similar actions by Mr. Lubben and the company’s most senior executives. 9. Dr. McGuire has voluntarily agreed to reprice all options awarded to him from 1994 through 2002 to the annual high share price for each year to eliminate any possible financial benefit from options dating issues identified in the report. The company is engaged in discussions with Dr. McGuire concerning the terms of his departure from the company, including other options issues and financial benefits. The company expects to conclude the discussions on or before December 1, 2006. In addition to the steps above, the Board is taking the following actions with respect to the corporate governance of UnitedHealth Group. 10. The Board will have five board seats filled by new independent directors over the next three years in order to bring new experiences, expertise and perspectives into its membership. 11. A new senior executive position of Chief Legal Officer will be established and a national search for candidates will be conducted. 12. The position of Chief Ethics Officer will be made a senior executive position with responsibility for communicating and monitoring compliance with standards of ethical conduct and business integrity by all of the Company’s employees. 13. The position of Chief Administrative Officer will be made a senior executive position with responsibility for the Company’s critical administrative functions and non-business operations, including human capital, personnel, compensation, compliance, internal audit and business risk management, and staff support functions. 14. A separate position of Secretary to the Board, who will report to the Board with an administrative reporting line to the Chief Legal Officer, will be established. The sole responsibility of the Secretary will be to support the activities of the Board and of its Committees, including ensuring that the Board’s activities and recordkeeping are in line with corporate best practices. The actions on corporate governance announced today follow steps taken by the Board earlier this year to improve the Company’s corporate governance and compensation practices. These include: Board Structure and Process • Appointing co-lead directors (these positions have been replaced as of today by the position of non-executive chairman). • Recommending that the Shareholders amend the Company’s Charter to eliminate the classified board, so that all directors would be elected annually • Recommending that the Shareholders amend the Company’s Charter to remove supermajority approval requirements • Establishing a Public Responsibility Committee to focus on the Company’s corporate social responsibility • Initiating the review and enhancement of the Company’s director independence standards • Requiring all Audit Committee members to be financial experts as defined by the SEC • Limiting the number of boards on which directors may serve • Requiring that all directors attend ISS accredited director training Director and Officer Compensation • Reducing Board compensation by 40 percent, following a reduction of 20 percent in 2005 • Discontinuing equity awards to a number of senior executives, including the CEO and President • Initiating the process of amending the employment agreements of the CEO and President to cap SERP benefits; require reimbursement to the Company for any personal use of corporate aircraft; eliminate any tax gross-ups payable in connection with the personal use of corporate aircraft; and eliminate certain perquisites including life insurance and disability premium payments not generally available to other employees and Company-funded post-retirement health insurance • Initiating the process of amending the employment agreements of all senior executive officers to remove any enhanced severance payments upon a change of control • Establishing stock ownership guidelines for directors and executive officers Controls Over Stock Options and Other Equity Awards • Eliminating all delegated authority to management to make equity awards • Requiring that broad based equity awards to the Company’s executives and employees occur annually and be approved at the Board meeting that generally coincides with the Company’s Annual Meeting • Requiring that awards made to new hires, or for promotions or other important and valid business purposes, only be made and approved at a subsequent regularly scheduled quarterly meeting • Significantly enhancing the Company’s approval processes and internal controls related to stock option granting and administration. The WilmerHale team was led by William R. McLucas, former Director of Enforcement of the Securities and Exchange Commission. During the inquiry, WilmerHale reviewed more than 26 million pages of materials and conducted more than 80 interviews of UnitedHealth employees, present and former directors and former auditors.