Notice of 2019 Annual Meeting of Shareholders
|
|
|
|
Date
|
|
June 3, 2019
|
|
|
|
Time
|
|
10:00 a.m. Central Time
|
|
|
|
Location
|
|
Lower Level Conference Center
300 North LaSalle
Chicago, Illinois 60654
|
|
|
|
Record Date
|
|
April 9, 2019. Only shareholders of record of the Company's common stock at the close of business on the record date are entitled to receive notice of, and to vote at the Annual Meeting and any adjournments or
postponements of the meeting.
|
|
|
|
Items of Business
|
|
Elect the eleven nominees
set forth in the attached proxy statement to the Company's Board of Directors.
Conduct an advisory vote to approve the compensation paid to the Company's named executive officers as disclosed in the attached proxy statement (a "Say-on-Pay" vote).
Ratify the appointment of
Deloitte & Touche LLP as the independent registered public accounting firm for the Company for the year ending December 31, 2019.
Consider a shareholder proposal set forth in the attached proxy
statement, if properly presented at the Annual Meeting.
Transact other business that properly may come before the Annual Meeting or any adjournments or postponements of the meeting.
|
|
|
|
Admission to the Annual Meeting
|
|
To attend the Annual Meeting in person, you will need to bring an admission ticket and valid photo identification. You may attend the Annual Meeting by following the procedures described under Question 7 of the
"Questions and Answers About the Annual Meeting and Voting" section in the attached proxy statement.
|
|
|
|
Proxy Voting
|
|
Important.
Even if you plan to attend the Annual Meeting, we still encourage you to submit your proxy by Internet, telephone or mail prior to the meeting. If you later choose to revoke your proxy or change your vote, you may do so
by following the procedures described under Question 13 of the "Questions and Answers About the Annual Meeting and Voting" section in the attached proxy statement.
|
|
|
|
Webcast
|
|
You can listen to the live webcast of the Annual Meeting by visiting our website at
www.unitedhealthgroup.com
and clicking on "Investors" and then on the link to
the webcast. See Question 10 of the "Questions and Answers About the Annual Meeting and Voting" section in the attached proxy statement.
|
|
|
|
By
Order of the Board of Directors,
Dannette
L. Smith
Secretary to the Board of Directors
April 19,
2019
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 3, 2019:
The Notice of Internet Availability of Proxy Materials, Notice of Annual Meeting of Shareholders, Proxy Statement and Annual Report
are available at
www.unitedhealthgroup.com/proxymaterials
.
Table of Contents
Table of Contents
i
Table of Contents
ii
Table of Contents
This
summary highlights information contained elsewhere in this proxy statement. We encourage you to review the entire proxy statement.
Business Results
We are a diversified health care company whose mission is to help people live healthier lives and to help make the health system work better
for everyone. UnitedHealth Group, Optum and UnitedHealthcare are actively engaged in helping to achieve the Triple Aim better health outcomes, lower costs and a better consumer
experience. We put the needs of others first, one person at a time. In turn, we grow and earn the opportunity to serve more people in more ways, delivering exceptional returns for society and for our
shareholders. We again achieved strong business results in 2018, including:
-
-
Revenues increased 12% to $226.2 billion from $201.2 billion in 2017;
-
-
Operating earnings increased 14% year-over-year to $17.3 billion; net earnings to UnitedHealth Group common shareholders increased to
$12 billion; and cash flows from operations grew 16% year-over-year to $15.7 billion;
-
-
Diluted earnings per share increased 14% to $12.19 per share from $10.72 in 2017. Adjusted earnings per share
1
increased 28% to
$12.88 per share from $10.07 per share in 2017;
-
-
Return on equity was consistent with the prior year at 24.4% in 2018;
-
-
Cumulative shareholder return for UnitedHealth Group, which is defined as the increase in stock price, together with dividends reinvested when
paid, was 122% over the 2016-2018 time period and 258% over the 2014-2018 time period. Cumulative shareholder return for the S&P 500 Index was 30% over the 2016-2018 time period and 50% over
the 2014-2018 time period;
-
-
Our annual cash dividend rate increased to $3.60 per share, paid quarterly, representing a 20% increase over the annual cash dividend rate of
$3.00 per share paid quarterly since the second quarter of 2017;
-
-
UnitedHealth Group was the top ranked company in the insurance and managed care sector on
Fortune's
2019 "World's Most Admired
Companies" list. This is the ninth consecutive year UnitedHealth Group has ranked No. 1 overall in its
sector. The Company ranked No. 1 on all nine key attributes of reputation innovation, people management, use of corporate assets, social responsibility, quality of
management, financial soundness, long-term investment, quality of products and services and global competitiveness. The Company was rated No. 1 in innovation for the tenth consecutive year.
-
-
UnitedHealth Group was named to both the Dow Jones Sustainability World and North America Indices for the 20th consecutive year;
-
-
UnitedHealth Group was included among the 2018 Best Employers for Diversity by Forbes;
-
-
UnitedHealth Group was named one of America's Most JUST Companies by JUST Capital and Forbes in 2018. The JUST 100 rankings measure how U.S.
companies perform on issues Americans care about most, including worker pay and treatment, customer respect, product quality and environmental impact; and
-
-
In the 2017-2018 Newsweek Green Rankings, created in partnership with Corporate Knights Capital and HIP Investor, UnitedHealth Group ranked in
the top 10% out of the largest 500 U.S. companies in corporate sustainability and environmental impact.
-
1
-
Adjusted
earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for a reconciliation of adjusted earnings
per share to the most directly comparable GAAP measure.
1
Table of Contents
Corporate Governance
UnitedHealth Group is committed to meeting high standards of ethical behavior, corporate governance and business conduct. Our company and our
people are committed to the shared cultural values of integrity, compassion, innovation, relationships and performance. This commitment has led us to implement many governance best practices,
including the following:
-
-
Board Structure and Composition
Our directors
are elected annually by a majority vote of our shareholders. We have an Executive Chairman of our Board of Directors and an Independent Lead Director, and nine of our eleven directors are independent.
-
-
Chief Executive Officer ("CEO") Succession
Planning
Our succession plan, which is reviewed annually by our Board of Directors, addresses both an unexpected loss of our CEO and
longer-term succession.
-
-
Board Refreshment and Tenure
Since January
2017, we have appointed five new directors to the Board who are standing for election this year, four of whom are independent, advancing both the skill and experience profile of the Board as well as
its diversity.
-
-
Nominating Advisory Committee
Our Nominating
Advisory Committee, comprised of long-term shareholders of the Company and a member of the medical community, provides our Nominating and Corporate Governance Committee (the "Nominating Committee")
with additional input regarding desirable characteristics of director candidates and the composition of our Board.
-
-
Proxy Access
A shareholder or group of
shareholders who have owned at least 3% of our common stock for at least three years, and who comply with specified procedural and disclosure requirements, may include in our proxy materials
shareholder-nominated director candidates representing up to 20% of the Board.
-
-
Stock Ownership Guidelines
Each of our
executive officers and directors were in compliance with our stock ownership guidelines as of April 9, 2019. Mr. Wichmann, our CEO, is required to own shares equal to eight times his
base salary by the fifth anniversary of his appointment as CEO. As of April 9, 2019, Mr. Wichmann owned shares equal to 169 times his base salary.
-
-
Stock Retention Policy
We generally require
executive officers to hold, for at least one year, one-third of the net shares acquired upon vesting or exercise of any equity award. Our directors are generally required to hold all equity awards
granted until completion of service on the Board, or until they have met our stock ownership requirements.
-
-
Clawback Policy
We have adopted a clawback
policy that entitles the Board of Directors to seek reimbursement from our senior executives if they are involved in fraud or misconduct that causes a material restatement or in the event of a senior
executive's violation of non-compete, non-solicit or confidentiality provisions.
-
-
Independent Compensation Consultant
Our
Compensation and Human Resources Committee (the "Compensation Committee") uses an independent compensation consultant that performs no other consulting or services for the Company.
-
-
Political Contributions Disclosure
We
publicly disclose our political contributions and public advocacy efforts and the contributions of our federal and state political action committees.
-
-
Environmental Policy
We seek to minimize our
environmental impact and to heighten our employees' awareness of the importance of the environment.
-
-
Short Selling and Hedging Transactions in Company
Securities
Our insider trading policy prohibits all directors, executive officers and employees from engaging in short sales and hedging
transactions relating
2
Table of Contents
See
the "Corporate Governance" portion of this proxy statement for further information on our governance practices.
Enterprise-Wide Risk Oversight
Our Board of Directors, assisted by its committees, oversees management's enterprise-wide risk management activities. Risk management
activities include assessing and taking actions necessary to mitigate and manage risk incurred in connection with the long-term strategic direction and operation of our business.
Executive Compensation
Our executive compensation program uses a mix of base salary, annual and long-term cash incentives, equity awards and broad-based benefits to
attract and retain highly qualified executives and maintain a strong relationship between executive pay and Company performance. Shareholders again expressed strong support for our executive
compensation program at our 2018 Annual Meeting of Shareholders, with more than 95% of the votes cast in favor of our Say-on-Pay proposal.
Our Overall Compensation Program Principles
-
-
Pay-for-performance
A substantial portion of the total compensation of our
executive officers is earned based on achievement of enterprise-wide goals that drive long-term performance, including growth and shareholder value.
-
-
Enhance the value of the business
Incentive compensation is designed to
grow and sustain the longer-term value of the Company and avoid excessive risk-taking.
-
-
Reward long-term growth and focus management on sustained success and shareholder value
creation
Compensation of our executive officers is weighted toward equity awards that encourage sustained performance and drive shareholder returns over
time.
-
-
Standard benefits and very limited perquisites
We provide standard
employee benefits and very limited perquisites to our executive officers.
Summary of Compensation Paid to CEO David S. Wichmann in 2018
-
-
Base salary
$1.3 million.
-
-
Cash incentive awards
Annual cash incentive award of $4.5 million
and long-term cash incentive award of $890,600, which reflect the Company's performance against pre-set goals and continued strong leadership by Mr. Wichmann.
-
-
Equity awards
Performance shares with a target grant date fair value of
$5.55 million, restricted stock units with a grant date fair value of $2.775 million and stock options with a grant date fair value of $2.775 million.
-
-
Company matching contributions
$178,875 under our 401(k) and executive
savings plan.
Information
regarding compensation paid to each of our named executive officers in 2018 is described in the "Compensation Discussion and Analysis" section.
3
Table of Contents
Strong Governance Standards in Oversight of Executive Compensation Policies
We
maintain strong governance standards in the oversight of our executive compensation policies and practices, including:
-
-
Performance based compensation arrangements, including performance based equity awards, that use a variety of performance measures, with
different measures used for annual and long term plans.
-
-
Double trigger change in control arrangements for equity grants.
-
-
No excise tax gross ups in the event of a change in control.
-
-
Our 2011 Stock Incentive Plan prohibits the repricing of stock options and stock appreciation rights without shareholder approval.
-
-
Annual advisory shareholder votes to approve the Company's executive compensation.
-
-
Stock ownership guidelines requiring executive officers to beneficially own specified amounts of the Company's common stock within five years
of their appointment as an executive officer.
-
-
A stock retention policy generally requiring executive officers to hold, for at least one year, one third of the net shares acquired upon
vesting or exercise of any equity award.
-
-
A clawback policy entitling the Board of Directors to seek reimbursement from senior executives if they are involved in fraud or misconduct
that causes a material restatement or in the event of a senior executive's violation of non-compete, non-solicit or confidentiality provisions.
This
proxy statement and our Annual Report for the year ended December 31, 2018, are first being mailed to the Company's shareholders and made available on the Internet at
www.unitedhealthgroup.com/investors/annual-reports.html
on or about April 19, 2019. Website addresses included
throughout this proxy statement are for reference only. The information contained on our website is not incorporated by reference into this proxy statement.
4
Table of Contents
Voting Matters and Vote Recommendations
|
|
|
|
|
|
|
|
|
Proposal
|
|
Board Recommendation
|
|
Reasons for Recommendation
|
|
More Information
|
1
|
|
Election of eleven directors
|
|
FOR
|
|
The Board and Nominating Committee believe the eleven Board candidates possess the experience, skills, attributes and diversity to effectively monitor performance, provide oversight and advise management on the Company's
strategy.
|
|
Page 6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
Advisory Approval of the Company's Executive Compensation (a "Say-on-Pay" vote)
|
|
FOR
|
|
Our executive compensation program is designed to attract and retain highly qualified executives and to maintain a strong link between pay and the achievement of enterprise-wide goals. We emphasize and reward teamwork and
collaboration among executive officers, which we believe fosters Company growth and performance, optimizes the use of enterprise-wide capabilities, drives efficiencies and integrates products and services for the benefit of our customers and other
stakeholders.
|
|
Page 68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
Ratification of Independent Registered Public Accounting Firm
|
|
FOR
|
|
Based on the Audit Committee's assessment of Deloitte & Touche's qualifications and performance, it believes their retention for fiscal year 2019 is in the best interests of the Company.
|
|
Page 72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
Shareholder Proposal Regarding Amendment to Proxy Access Bylaw
|
|
AGAINST
|
|
The Board does not believe the proposal is in the best interests of the Company or our shareholders and is unnecessary given our current corporate governance practices and strong Board accountability.
|
|
Page 73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board
of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Proposal 1 Election of Directors
|
Director Nomination Process
Criteria for Nomination to the Board
We believe that an effective Board consists of a diverse group of individuals who bring a variety of complementary skills and a range of
personal and business experience to their positions on the Board. The Nominating Committee developed and maintains a skills matrix to assist in considering the appropriate balance of experience,
skills and attributes required of a director and to be represented on the Board as a whole. The skills matrix is consistent with the Company's long-term strategic plan and is regularly reviewed and
updated by the Nominating Committee. The Nominating Committee evaluates Board candidates against the skills matrix on an annual basis to determine whether to recommend candidates for initial election
to the Board and whether to recommend currently serving directors for reelection to the Board.
The
skills matrix has two sections a list of core criteria every member of the Board should meet and a list of skills and attributes to be represented collectively by the Board.
The core director criteria are:
-
-
Independence under the Company's Standards for Director Independence and New York Stock Exchange ("NYSE") listing requirements, subject to
waiver by the Nominating Committee;
-
-
Service on no more than three other public company boards; except our Chief Executive Officer may serve on no more than one other public
company board;
-
-
High integrity and ethical standards;
-
-
Standing and reputation in the individual's field;
-
-
Risk oversight ability with respect to the particular skills of the individual director;
-
-
Understanding of and experience with complex public companies or like organizations; and
-
-
Ability to work collegially and collaboratively with other directors and management.
Each
of our independent director nominees has satisfied all the core director criteria set forth in the skills matrix. Messrs. Hemsley and Wichmann are not independent directors because
Mr. Hemsley serves as Executive Chairman of the Board and Mr. Wichmann is Chief Executive Officer.
6
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board
of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
In addition, the skills matrix provides a number of substantive areas of expertise that the Board as a whole should represent. The following table includes a list of these
areas and indicates the director nominees with expertise in each area.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ballard
|
|
|
|
Burke
|
|
|
|
Flynn
|
|
|
|
Hemsley
|
|
|
|
Hooper
|
|
|
|
McNabb
|
|
|
|
Montgomery
Rice
|
|
|
|
Noseworthy
|
|
|
|
Renwick
|
|
|
|
Wichmann
|
|
|
|
Wilensky
|
|
|
|
|
Corporate Governance
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health Care Industry
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct Consumer Markets
|
|
|
|
|
|
|
|
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
·
|
|
|
|
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Social Media/Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diversity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
|
|
|
|
|
|
|
|
·
|
|
|
|
|
|
|
|
·
|
|
|
|
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Experience with Large Complex Organizations
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology/Business Processes
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clinical Practice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Political/Health Care Policy/Regulatory
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Markets
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
·
|
|
|
|
·
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our
Nominating Committee also strives to maintain a balance of tenure on the Board. Long-serving directors bring valuable experience with our Company and familiarity with the successes and challenges
the enterprise has faced over the years, while newer directors contribute fresh perspectives and innovative ideas. Tenure of the eleven director nominees is as follows:
7
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board
of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Board Diversity
UnitedHealth Group embraces and encourages a culture of diversity and inclusion. Valuing diversity makes good business sense and helps to
ensure our future success, because the customers, clients and consumers we serve are as diverse as the thousands of communities where we live and work across all 50 states in the U.S. and 130 other
nations. UnitedHealth Group's commitment to diversity and inclusion empowers our employees to contribute their best work, collaborating to be the preeminent health and well-being business and
community partner of choice.
While
our Board has not adopted a formal definition of diversity, and does not establish specific goals with respect to diversity, the Board's diversity is a consideration in the director nomination
process and is assessed annually when the Board evaluates overall effectiveness.
For
this year's election, the Board has nominated eleven individuals; all are incumbent nominees who collectively bring tremendous diversity to the Board. Each nominee is a strategic thinker and has
varying, specialized experience in the areas relevant to the Company and its businesses. Moreover, their collective experience covers a wide range of geographies and industries, including health care,
insurance, consumer products, technology and financial services, and roles in academia, corporate governance and government. The eleven director nominees range in age from 56 to 78; three of the
eleven director nominees are women; two are African American; and one is a citizen of New Zealand.
Update on Recent Changes in Board Membership
Recent changes to the Board of Directors include:
-
-
Timothy P. Flynn, former Chairman of KPMG International, joined the Board in 2017;
-
-
Valerie C. Montgomery Rice, M.D., President and Dean of the Morehouse School of Medicine, joined the Board in 2017;
-
-
F. William McNabb III, former Chairman of The Vanguard Group, Inc., joined the Board in 2018;
-
-
John H. Noseworthy, M.D., former Chief Executive Officer and President of Mayo Clinic, joined the Board in 2019;
-
-
Sir Andrew P. Witty relinquished his position on our Board in 2018 in anticipation of his appointment as Chief Executive Officer of Optum and
Executive Vice President of UnitedHealth Group later the same year; and
-
-
Kenneth I. Shine, M.D., retired from the UnitedHealth Group Board of Directors in 2018 after nearly ten years of exceptional service as an
independent director.
We
have for several years maintained an active "Evergreen" director candidate pipeline which reflects our continuing commitment to diversity in life, cultural and business experience among director
nominees. The Nominating Committee has an outside firm on retainer to assist in identifying and evaluating director candidates. The Nominating Committee will also consider recommendations submitted by
shareholders for director candidates. Recommendations should be directed to the Secretary to the Board of Directors. None of the Company's shareholders recommended candidates for the Board of
Directors in connection with the 2019 Annual Meeting.
Prior
to the appointment of each of the new independent directors in 2017, 2018 and 2019, the Nominating Committee considered a wide slate of potential candidates, including qualified women and
minority candidates. Each eventual nominee was selected due to his or her overall skills and experience.
8
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board
of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Nominating Advisory Committee
The Board of Directors formed the Nominating Advisory Committee in 2006 to provide the Nominating Committee with additional input from
shareholders and others regarding desirable characteristics of director candidates and the composition of the Board of Directors. The key features of the skills matrix are also discussed with members
of our Nominating Advisory Committee and their feedback is considered by the Nominating Committee when it updates the skills matrix. The Nominating Committee considers, but is not bound by, input
provided by the Nominating Advisory Committee. The Nominating Advisory Committee currently includes four individuals affiliated with long-term shareholders of the Company and one individual who is a
member of the medical community. Members of the Nominating Advisory Committee do not receive any compensation from the Company for serving on the Nominating Advisory Committee. The Nominating Advisory
Committee met once in 2018. A description of the Nominating Advisory Committee, including a description of how the members of the committee are nominated and selected, can be found on our website at
www.unitedhealthgroup.com/about/corporate-governance
.
Shareholder Director Candidates for Inclusion in our Proxy Statement (Proxy Access)
Our Bylaws provide a shareholder or group of shareholders (of up to 20) who have owned at least 3% of our common stock for at least
three years the ability to include in our proxy statement shareholder-nominated director candidates for up to 20% of the Board. To be eligible to use this right, the shareholder(s) and the
candidate(s) must satisfy the requirements specified in our Bylaws. Our Bylaws are
available at
www.unitedhealthgroup.com/about/corporate-governance
. For the 2020 Annual Meeting, director nominations
submitted under these Bylaw provisions must be received at our principal executive offices, directed to the Secretary to the Board of Directors, no earlier than November 21, 2019 and no later
than December 21, 2019.
Shareholder Nominations of Director Candidates at an Annual Meeting
Our shareholders may also nominate candidates for election to the Board of Directors from the floor of our Annual Meeting of Shareholders,
instead of including the director candidate in our proxy statement, only by submitting timely written notice to the Secretary to the Board in accordance with our Bylaws. The notice must include the
information required by our Bylaws, which are available at
www.unitedhealthgroup.com/about/corporate-governance
. For the
2020 Annual Meeting, this notice must be received at our principal executive offices, directed to the Secretary to the Board of Directors, no earlier than February 4, 2020 and no later than
March 5, 2020.
2019 Director Nominees
Our Certificate of Incorporation and Bylaws provide that each member of our Board of Directors is elected annually by a majority of votes cast
if the election is uncontested. The Board of Directors has nominated the eleven directors set forth below for election by the shareholders at the 2019 Annual Meeting. All of the director nominees were
elected by our shareholders at the 2018 Annual Meeting except for Dr. Noseworthy, who was appointed unanimously by the Board in February 2019. The Company and the Nominating Committee were
familiar with Dr. Noseworthy and had considered him as a potential Board candidate upon his availability following retirement from the Mayo Clinic. Following Dr. Shine's retirement from
the Board, the Nominating Committee was particularly interested in strengthening the depth of clinical expertise on the Board. All of the nominees have informed the Board they are willing to serve as
directors if elected. If any nominee should become unable to serve as a director for any reason, the persons named as proxies will elect a replacement.
9
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board
of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
The Board of Directors recommends that you vote FOR the election of each of the nominees. Executed proxies will be voted FOR the
election of each nominee unless you specify otherwise.
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Director Since
|
|
William C. Ballard, Jr.
|
|
|
78
|
|
|
|
1993
|
|
|
|
|
|
|
|
|
Richard T. Burke
|
|
|
75
|
|
|
|
1977
|
|
|
|
|
|
|
|
|
Timothy P. Flynn
|
|
|
62
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
Stephen J. Hemsley
|
|
|
66
|
|
|
|
2000
|
|
|
|
|
|
|
|
|
Michele J. Hooper
|
|
|
67
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
F. William McNabb III
|
|
|
61
|
|
|
|
2018
|
|
|
|
|
|
|
|
|
Valerie C. Montgomery Rice, M.D.
|
|
|
57
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
John H. Noseworthy, M.D.
|
|
|
67
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
Glenn M. Renwick
|
|
|
63
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
56
|
|
|
|
2017
|
|
|
|
|
|
|
|
|
Gail R. Wilensky, Ph.D.
|
|
|
75
|
|
|
|
1993
|
|
|
|
|
|
|
|
|
The
director nominees, if elected, will serve until the 2020 Annual Meeting or until their successors are elected and qualified. Following is a brief biographical description of each director nominee.
A table listing the areas of expertise in the skills matrix held by each director and which, in part, led the Board to conclude each respective director should continue to serve as a member of the
Board, is included on page 7.
|
|
|
William C. Ballard, Jr.
|
|
Director since 1993
|
|
|
|
Mr. Ballard served as Of Counsel to Bingham Greenebaum Doll LLP (formerly Greenebaum Doll & McDonald PLLC), a law firm in Louisville, Kentucky, from 1992 until 2008. In 1992, Mr. Ballard retired from Humana, Inc., a
health and well being company, after serving with Humana in various roles for 22 years, including as the Chief Financial Officer ("CFO") and a director. In the past five years, he also served as a director of Welltower, Inc. (formerly
Health Care REIT, Inc.).
|
Richard T. Burke
|
|
Director since 1977
|
|
|
|
Mr. Burke is Lead Independent Director of the Board of Directors of UnitedHealth Group and has served in that capacity since September 2017. Mr. Burke served as Chairman of the Board from 2006 to August 2017, has been a member of our Board
since 1977, and was Chief Executive Officer of UnitedHealthcare, Inc., our predecessor corporation, until 1988. From 1995 until 2001, Mr. Burke was the owner, Chief Executive Officer and Governor of the Phoenix Coyotes, a National Hockey
League team. Mr. Burke serves as a director of Meritage Homes Corporation.
|
Timothy P. Flynn
|
|
Director since 2017
|
|
|
|
Mr. Flynn was Chairman of KPMG International ("KPMG"), a global professional services organization that provides audit, tax and advisory services, from 2007 until his retirement in October 2011. From 2005 until 2010, he served as Chairman and,
from 2005 to 2008, as CEO of KPMG LLP in the U.S., the largest individual member firm of KPMG. Prior to serving as Chairman and CEO of KPMG LLP, Mr. Flynn was Vice Chairman, Audit and Risk Advisory Services, with operating
responsibility for Audit, Risk Advisory and Financial Advisory Services practices. He previously served as a trustee of the Financial Accounting Standards Board, a member of the World Economic Forum's International Business Council, and a director of
the International Integrated Reporting Council. Mr. Flynn serves as a director of Alcoa Corporation, JPMorgan Chase & Co. and Walmart Inc.
|
10
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board
of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
|
|
|
Stephen J. Hemsley
|
|
Director since 2000
|
|
|
|
Mr. Hemsley is Executive Chairman of the Board of UnitedHealth Group and has served in that capacity since September 2017. Mr. Hemsley previously served as Chief Executive Officer from 2006 to August 2017. He has been a member of the Board
of Directors since 2000. Mr. Hemsley joined the Company in 1997 as Senior Executive Vice President and became Chief Operating Officer in 1998. Mr. Hemsley served as President and Chief Operating Officer from 1999 to 2006 and as President
and Chief Executive Officer from 2006 to November 2014. Mr. Hemsley serves as a director of Cargill, Inc.
|
Michele J. Hooper
|
|
Director since 2007
|
|
|
|
Ms. Hooper is President and CEO of The Directors' Council, a private company she co-founded in 2003 that works with corporate boards to increase their independence, effectiveness and diversity. She was President and CEO of Voyager Expanded
Learning, a developer and provider of learning programs and teacher training for public schools, from 1999 until 2000. Prior to that, she was President and CEO of Stadtlander Drug Company, Inc., a provider of disease-specific pharmaceutical care,
from 1998 until Stadtlander was acquired in 1999. Ms. Hooper is a nationally recognized corporate governance expert. Ms. Hooper serves as a director of PPG Industries, Inc. and United Continental Holdings, Inc.
|
F. William McNabb III
|
|
Director since 2018
|
|
|
|
Mr. McNabb served as Chairman of The Vanguard Group, Inc. from 2008 until his retirement in 2018 and served as CEO from 2008 to 2017. He joined Vanguard in 1986. In 2010, he became Chairman of the Board of Directors and the Board of
Trustees of the Vanguard group of investment companies. Earlier in his career, Mr. McNabb led each of Vanguard's client facing business divisions. Mr. McNabb serves as the Vice-Chairman of the Investment Company Institute's Board of
Governors and served as Chairman from 2013 to 2016. Mr. McNabb is Chairman of the Board of the Zoological Society of Philadelphia and serves on the Wharton Leadership Advisory Board and the Dartmouth Athletic Advisory Board. He is also a board
member of CECP: The CEO Force for Good.
|
Valerie C. Montgomery Rice, M.D.
|
|
Director since 2017
|
|
|
|
Dr. Montgomery Rice is President and Dean of the Morehouse School of Medicine, a medical school in Atlanta, Georgia, and has served in that capacity since 2014. Dr. Montgomery Rice served as the Executive Vice President and Dean from 2011
to 2014. Morehouse School of Medicine is among the nation's leading educators of primary care physicians and was recently recognized as the top institution among U.S. medical schools for their social mission. Prior to joining Morehouse School of
Medicine, she served as dean of the School of Medicine and Senior Vice President of health affairs at Meharry Medical College from March 2006 to June 2009, and as director of the Center for Women's Health Research, one of the nation's first research
centers devoted to studying diseases that disproportionately impact women of color, from 2005 to 2011. Dr. Montgomery Rice also serves as a Council Member of the National Institute of Health and National Center for Advancing Translational
Science. Dr. Montgomery Rice previously served on the National Institute of Health's Minority Health and Health Disparities and Office of Research on Women's Health advisory councils and the Association of American Medical Colleges Council of
Deans' administrative board. Dr. Montgomery Rice is a member of the National Academy of Medicine and is a renowned infertility specialist and women's health researcher.
|
11
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board
of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
|
|
|
John H. Noseworthy, M.D.
|
|
Director since 2019
|
|
|
|
Dr. Noseworthy is the former Chief Executive Officer and President of Mayo Clinic, a world renowned, non-profit health care organization. He retired at the end of 2018 after a 28 year career at Mayo Clinic, recognized by
U.S. News and World Report
as best in its honor roll of America's top providers of care for patients with serious and complex problems. Mayo Clinic cares for patients from every state and 143 countries worldwide.
Dr. Noseworthy joined Mayo Clinic in 1990 and has served in various capacities since that time, including chairman of Mayo Clinic's internal Board of Governors, member of the Board of Trustees, Professor of Neurology at Mayo Clinic College of
Medicine & Science, chair of Mayo's Department of Neurology, medical director of the Department of Development and Vice Chair of the Mayo Clinic Rochester Executive Board. Dr. Noseworthy also served as editor-in-chief of
Neurology
, the official journal of the American Academy of Neurology, from 2007 to 2009. Dr. Noseworthy was a Health Governor of the World Economic Forum from 2012 to 2018 and serves as a director of
Merck & Co.
|
Glenn M. Renwick
|
|
Director since 2008
|
|
|
|
Mr. Renwick has been Chairman of the Board of Fiserv, Inc. since May 2017, and has been a director of Fiserv since 2001. Mr. Renwick served as Chairman of the Board of Directors of The Progressive Corporation, an auto insurance holding
company, from November 2013 to May 2018, as Executive Chairman of Progressive from July 2016 to June 2017, and as President and CEO from 2001 to 2016. Before being named President and CEO in 2001, Mr. Renwick served as CEO-Insurance Operations
and Business Technology Process Leader at Progressive from 1998 to 2000. Prior to that, he led Progressive's Consumer Marketing group and served as President of various divisions within Progressive. Mr. Renwick joined Progressive in 1986 as Auto
Product Manager for Florida.
|
David S. Wichmann
|
|
Director since 2017
|
|
|
|
Mr. Wichmann is Chief Executive Officer of UnitedHealth Group and a member of the Board of Directors, having served in that capacity since September 2017. Mr. Wichmann previously served as President of UnitedHealth Group from November 2014
to August 2017. Mr. Wichmann also served as Chief Financial Officer of UnitedHealth Group from January 2011 to June 2016. From April 2008 to November 2014, Mr. Wichmann served as Executive Vice President of UnitedHealth Group and President
of UnitedHealth Group Operations. Mr. Wichmann serves as a director of Tennant Company.
|
Gail R. Wilensky, Ph.D.
|
|
Director since 1993
|
|
|
|
Dr. Wilensky has been a senior fellow at Project HOPE, an international health foundation, since 1993. From 2008 to 2009, Dr. Wilensky was President of the Department of Defense Health Board and chaired its sub-committee on health care
delivery. From 2006 to 2008, Dr. Wilensky co-chaired the Department of Defense Task Force on the Future of Military Health Care. During 2007, she also served as a commissioner on the President's Commission on Care for America's Returning Wounded
Warriors. From 2001 to 2003, she was the Co-Chair of the President's Task Force to Improve Health Care for our Nation's Veterans. From 1997 to 2001, she was also Chair of the Medicare Payment Advisory Commission. From 1992 to 1993, Dr. Wilensky
served as the Deputy Assistant to President George H. W. Bush for policy development, and from 1990 to 1992, she was the Administrator of the Health Care Financing Administration (now known as the Centers for Medicare and Medicaid Services),
directing the Medicaid and Medicare programs for the United States. Dr. Wilensky is a nationally recognized health care economist. Dr. Wilensky serves as a director of Quest Diagnostics Incorporated.
|
12
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Director Compensation
We seek to compensate our non-employee directors fairly for work required for a company of our size, complexity and scope and to align their
interests with the long-term interests of our shareholders. Director compensation reflects our desire to attract, retain and benefit from the expertise of highly qualified people. The Compensation
Committee annually reviews the compensation of our non-employee directors and makes recommendations to the Board of Directors. In August 2018, the Compensation Committee, with the advice of its
independent compensation consultant, undertook a review of the structure, philosophy and overall mix of the director compensation program as compared to the Company's compensation peer group and also
the four large publicly traded managed health care companies. Following this review, the Compensation Committee recommended, and the Board approved, an increase in the annual grant of deferred stock
units awarded to non-employee directors from $175,000 to $205,000, effective as of October 1, 2018. No other changes were made to the compensation of non-employee directors. The Compensation
Committee's recommendations, and the Board's subsequent approval, were made after considering the results of the market practices review and the complexity of the Company's structure and operations.
The
following table highlights the material elements of our director compensation program:
|
|
|
|
Compensation Element
|
|
Compensation Value
|
|
Annual Cash Retainer
|
|
$125,000
|
|
|
|
|
|
Annual Audit Committee Chair Cash Retainer
|
|
$ 25,000
|
|
|
|
|
|
Annual Compensation Committee Chair Cash Retainer
|
|
$ 20,000
|
|
|
|
|
|
Annual Nominating Committee Chair Cash Retainer
|
|
$ 20,000
|
|
|
|
|
|
Annual Public Policy Committee Chair Cash Retainer
|
|
$ 20,000
|
|
|
|
|
|
Annual Lead Independent Director Cash Retainer
|
|
$ 75,000
|
|
|
|
|
|
Annual Equity Award
|
|
$205,000 aggregate fair value of deferred stock units
|
*
|
|
|
|
|
Equity Conversion Program
|
|
At the director's election, cash compensation may be converted into DSUs, or if the director has met the stock ownership guidelines, into common stock
|
|
|
|
|
|
-
*
-
Effective
October 1, 2018, the annual deferred stock unit award was increased from $175,000 to $205,000.
Cash Compensation
Cash retainers are payable on a quarterly basis in arrears on the first business day following the end of each fiscal quarter, and are subject
to pro rata adjustment if the director did not serve the entire quarter. Directors may elect to receive deferred stock units ("DSUs") or common stock (if the director has met the stock ownership
guidelines) in lieu of their cash compensation or may defer receipt of their cash compensation to a later date pursuant to the Directors' Compensation Deferral Plan ("Director Deferral Plan"). The
cash retainers are in consideration of general service and responsibilities and required meeting preparation.
Equity-Based Compensation
Non-employee directors receive annual grants of DSUs under the 2011 Stock Incentive Plan having an aggregate fair value of $205,000 effective
October 1, 2018 and pro-rated for the remainder of the year. Prior to October 1, 2018, the aggregate fair value of the DSUs was $175,000. The grants are issued quarterly in
arrears on
13
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
the
first business day following the end of each fiscal quarter and prorated if the director did not serve the entire quarter. The number of DSUs granted is determined by dividing $51,250 (the
quarterly value of the annual equity award; $43,750 prior to October 1, 2018) by the closing price of our common stock on the grant date, rounded up to the nearest share. The grants are in
consideration of general service and responsibilities and required meeting preparation.
The DSUs immediately vest upon grant and must be retained until completion of the director's service on the Board of Directors. Upon completion of service, the DSUs convert
into an equal number of shares of the Company's common stock. A director may defer receipt of the shares for up to ten years after completion of service pursuant to the Director Deferral Plan.
Non-employee directors who have met their stock ownership requirement may elect to receive common stock in lieu of DSUs and/or in-service distributions on pre-selected dates.
If
a director elects to convert his or her cash compensation into common stock or DSUs, such conversion grants are made on the day the eligible cash compensation becomes payable to the director. The
director receives the number of shares of common stock or DSUs, as applicable, equal to the cash compensation foregone, divided by the closing price of our common stock on the date of grant, rounded
up to the nearest share. The DSUs immediately vest upon grant. A director may only elect to receive common stock if he or she has met the stock ownership guidelines.
The
Company pays dividend equivalents in the form of additional DSUs on all outstanding DSUs. Dividend equivalents are paid at the same rate and at the same time that dividends are paid to Company
shareholders and are subject to the same vesting conditions as the underlying grant.
Stock Ownership and Retention Guidelines
Under our stock ownership guidelines, we require non-employee directors to achieve ownership of shares of the Company's common stock
(excluding stock options, but including vested DSUs and vested restricted stock units) having a fair market value equal to five times the directors' annual base cash retainer. Non-employee directors
must comply with the stock ownership guidelines within five years of their appointment to the Board of Directors. All of our non-employee directors have met the stock ownership requirement or have
served as a director for less than five years. Our directors are required to hold all equity awards granted until completion of service on the Board or until they have met our stock ownership
requirements.
Director Deferral Plan
Under the Director Deferral Plan, subject to compliance with applicable laws, non-employee directors may elect annually to defer receipt of
all or a percentage of their compensation. Amounts deferred are credited to a bookkeeping account maintained for each director participant that uses a predetermined collection of unaffiliated mutual
funds as measuring investments. Subject to certain additional rules set forth in the Director Deferral Plan, a participating director may elect to receive the distribution in one of the following
ways:
-
-
a series of five or ten annual installments following the completion of his or her service on the Board of Directors;
-
-
a delayed lump sum following either the fifth or tenth anniversary of the completion of his or her service on the Board of Directors;
14
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
-
-
for cash deferrals, an immediate lump sum upon the completion of his or her service on the Board of Directors; or
-
-
pre-selected amounts to be distributed on pre-selected dates while the director remains a member of the Board of Directors.
The
Director Deferral Plan does not provide for matching contributions by the Company.
Other Compensation
We reimburse directors for any out-of-pocket expenses incurred in connection with service as a director. We also provide health care coverage
to directors if the director is not eligible for subsidized coverage under another group health care benefit program. Health care coverage is provided generally on the same terms and conditions as
current employees. Upon retirement from the Board of Directors, directors may continue to obtain health care coverage under benefit continuation coverage, and after the lapse of such coverage, under
the Company's post-employment medical plan for up to a total of 96 months if they are otherwise eligible.
The
Company maintains a program through which it will match up to $15,000 of charitable donations made by each director for each calendar year. The directors do not receive any financial benefit from
this program because the charitable income tax deductions accrue solely to the Company. Donations under the program may not be made to family trusts, partnerships or similar organizations.
Our
corporate aircraft use policy prohibits personal use of corporate aircraft by any independent director. However, because there is essentially no incremental cost to the Company, the policy permits
a director's family member to accompany the director on a business flight on Company aircraft provided a seat is available.
15
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
The following table provides summary information for the year ended December 31, 2018, relating to compensation paid to or accrued by us on behalf of our non-employee
directors who served in this capacity during 2018.
2018 Director Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
(1)
|
|
Fees Earned
or Paid in
Cash
($)
(2)
|
|
Stock
Awards
($)
(3)
|
|
Option
Awards
($)
(4)
|
|
Change in Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings
($)
(5)
|
|
All Other
Compensation
($)
(6)
|
|
Total
($)
|
|
William C. Ballard, Jr.
|
|
|
131,484
|
|
|
175,331
|
|
|
|
|
|
|
|
|
|
|
18,490
|
|
|
325,395
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard T. Burke
|
|
|
200,000
|
|
|
175,331
|
|
|
|
|
|
|
|
|
|
|
30,654
|
|
|
406,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy P. Flynn
|
|
|
|
|
|
300,658
|
|
|
|
|
|
|
|
|
|
|
24,892
|
|
|
325,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michele J. Hooper
|
|
|
145,000
|
|
|
175,331
|
|
|
|
|
|
|
|
|
|
|
18,374
|
|
|
338,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodger A. Lawson
|
|
|
97,990
|
|
|
118,599
|
|
|
|
|
|
|
|
|
|
|
22,350
|
|
|
238,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F. William McNabb III
|
|
|
|
|
|
189,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
189,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valerie C. Montgomery Rice, M.D.
|
|
|
125,000
|
|
|
175,331
|
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
318,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glenn M. Renwick
|
|
|
|
|
|
325,526
|
|
|
|
|
|
|
|
|
|
|
27,189
|
|
|
352,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth I. Shine, M.D.
|
|
|
125,000
|
|
|
175,331
|
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
318,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gail R. Wilensky, Ph.D.
|
|
|
145,000
|
|
|
175,600
|
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
338,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
|
56,250
|
|
|
78,976
|
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
153,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Messrs. Hemsley
and Wichmann are employee directors and do not receive additional compensation for serving as directors. Dr. Noseworthy joined the
Board on February 12, 2019 and is not included in the table. Mr. McNabb joined the Board on February 13, 2018, and compensation was prorated from that date. Dr. Shine
retired from the Board of Directors, effective December 31, 2018. Mr. Lawson did not stand for re-election at the 2018 Annual Meeting of Shareholders. For Mr. Witty, the amounts
reported reflect compensation earned in connection with his service as a director through March 13, 2018. Compensation paid in connection with Mr. Witty's service as Chief Executive
Officer of Optum, which commenced on July 1, 2018, is reported in the Summary Compensation Table and additional tabular disclosures, as appropriate.
-
(2)
-
Mr. Flynn
converted his $125,000 cash compensation into 530 DSUs, Mr. McNabb converted his $78,820 cash compensation into 320 DSUs and
Mr. Renwick converted his $150,000 cash compensation into 635 DSUs.
-
(3)
-
The
amounts reported reflect the aggregate grant date fair value of the stock awards granted in 2018 computed in accordance with FASB ASC Topic 718, based on the
closing price of our common stock on the grant date. For a description of the assumptions used in computing the aggregate grant date fair value, see Note 11 to the Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. For each director, the amounts reported include the aggregate grant date fair value
of the annual equity award of DSUs granted in quarterly installments. The amounts reflect the value of fractional shares issued with the quarterly installments as we round equity grants up to the
nearest whole share. For Messrs. Flynn, McNabb and Renwick, we combined the cash compensation they elected to convert into DSUs on a quarterly basis and the value of the quarterly DSU grant
prior to determining the number of DSUs to be granted each quarter. For 2018, Dr. Shine elected that all of his, and Dr. Wilensky elected that a portion of her, annual DSU awards be
granted in shares of common stock.
16
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
The
aggregate grant date fair values of the stock awards granted in 2018, computed in accordance with FASB ASC Topic 718 based on the closing price of our common stock on the grant date, are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
January 2,
2018
($)
|
|
April 2,
2018
($)
|
|
July 2,
2018
($)
|
|
October 1,
2018
($)
|
|
William C. Ballard, Jr.
|
|
|
43,790
|
|
|
|
43,874
|
|
|
|
43,804
|
|
|
|
43,863
|
|
|
Richard T. Burke
|
|
|
43,790
|
|
|
|
43,874
|
|
|
|
43,804
|
|
|
|
43,863
|
|
|
Timothy P. Flynn*
|
|
|
75,194
|
|
|
|
75,151
|
|
|
|
75,234
|
|
|
|
75,079
|
|
|
Michele J. Hooper
|
|
|
43,790
|
|
|
|
43,874
|
|
|
|
43,804
|
|
|
|
43,863
|
|
|
Rodger A. Lawson
|
|
|
43,790
|
|
|
|
43,874
|
|
|
|
30,935
|
|
|
|
|
|
|
F. William McNabb III*
|
|
|
|
|
|
|
39,313
|
|
|
|
75,234
|
|
|
|
75,079
|
|
|
Valerie C. Montgomery Rice, M.D.
|
|
|
43,790
|
|
|
|
43,874
|
|
|
|
43,804
|
|
|
|
43,863
|
|
|
Glenn M. Renwick*
|
|
|
81,387
|
|
|
|
81,450
|
|
|
|
81,421
|
|
|
|
81,268
|
|
|
Kenneth I. Shine, M.D.
|
|
|
43,790
|
|
|
|
43,874
|
|
|
|
43,804
|
|
|
|
43,863
|
|
|
Gail R. Wilensky, Ph.D.
|
|
|
43,790
|
|
|
|
43,874
|
|
|
|
43,804
|
|
|
|
44,132
|
|
|
Andrew P. Witty
|
|
|
43,790
|
|
|
|
35,186
|
|
|
|
|
|
|
|
|
|
|
-
*
-
Includes
the value of DSUs issued upon conversion of annual cash retainers as described in footnote 1 above of $125,000 for Mr. Flynn, $78,820 for
Mr. McNabb and $150,000 for Mr. Renwick.
-
-
As
of December 31, 2018, our non-employee directors held outstanding DSU awards as follows:
|
|
|
|
|
|
|
Name
|
|
Deferred
Stock Units
|
|
William C. Ballard, Jr.
|
|
|
23,191
|
|
|
Richard T. Burke
|
|
|
23,191
|
|
|
Timothy P. Flynn
|
|
|
2,484
|
|
|
Michele J. Hooper
|
|
|
29,858
|
|
|
F. William McNabb III
|
|
|
770
|
|
|
Valerie C. Montgomery Rice, M.D.
|
|
|
891
|
|
|
Glenn M. Renwick
|
|
|
44,179
|
|
|
Kenneth I. Shine, M.D.
|
|
|
6,351
|
|
|
Gail R. Wilensky, Ph.D.
|
|
|
21,419
|
|
|
-
(4)
-
The
Company did not grant stock option awards to directors in 2018. As of December 31, 2018, our non-employee directors held outstanding (and unexercised)
stock option awards as follows: Mr. Ballard 10,000; Mr. Burke 15,000; and Dr. Wilensky 10,860.
-
(5)
-
The
Director Deferral Plan does not credit above-market earnings or preferential earnings to the amounts deferred. There are no measuring investments tied to Company
stock performance. The measuring investments are a predetermined collection of unaffiliated mutual funds identified by the Company.
-
(6)
-
In
2018, the Company matched $15,000 in charitable contributions made by the following directors to charitable organizations selected by the directors pursuant to
the Company's Board Matching Program: Messrs. Ballard, Burke, Flynn, Lawson, Renwick and Witty; and Drs. Montgomery Rice, Shine and Wilensky, and $14,884 in charitable contributions made by
Ms. Hooper. In 2018, the Company also made $3,000 contributions to charitable organizations selected by the following directors: Messrs. Ballard, Burke, Flynn, Lawson, Renwick and Witty;
Ms. Hooper; and Drs. Shine, Montgomery Rice and Wilensky. In 2018, the Company also paid $12,654, $9,189, $6,892, $4,350, $490 and $490 in health care premiums on behalf of
Messrs. Burke, Renwick, Flynn, Lawson, Ballard and Ms. Hooper, respectively.
17
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Overview
UnitedHealth Group is committed to high standards of corporate governance and ethical business conduct. Important documents reflecting this
commitment are listed below.
|
|
|
|
|
|
|
Corporate Governance Documents
|
|
|
Certificate of Incorporation
|
|
|
|
Code of Conduct: Our Principles of Ethics & Integrity
|
|
|
Bylaws
|
|
|
|
Related-Person Transactions Approval Policy
|
|
|
Principles of Governance
|
|
|
|
Board of Directors Communication Policy
|
|
|
Board of Directors Committee Charters
|
|
|
|
Political Contributions Policy
|
|
|
Standards for Director Independence
|
|
|
|
Corporate Environmental Policy
|
You
can access these documents at
www.unitedhealthgroup.com/about/corporate-governance
to learn more about our corporate
governance practices. We will also provide copies of these documents without charge upon written request to the Company's Secretary to the Board of Directors. Our key corporate governance practices
are highlighted below.
Board Structure and Shareholder Rights
-
-
All members of our Board of Directors are elected annually by our shareholders.
-
-
Our Certificate of Incorporation provides, in an uncontested election, each director must be elected by a majority vote. To address a provision
in Delaware law that allows a director who has not been re-elected to remain in office until a successor is elected and qualified, we have a policy requiring any director who does not receive a
greater number of votes "for" than "against" his or her election in an uncontested election to tender his or her resignation from the Board of Directors following certification of the shareholder
vote.
-
-
Our Bylaws provide eligible shareholders the right to include shareholder director nominees representing up to 20% of the Board in our proxy
statement.
-
-
Each share of stock is entitled to one vote and our Certificate of Incorporation and Bylaws do not have any supermajority shareholder approval
provisions.
-
-
We have an Executive Chairman of the Board and a Lead Independent Director.
18
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Board and Board Committee Composition and Performance
-
-
All members of our Audit Committee are "audit committee financial experts" as defined by the Securities and Exchange Commission ("SEC").
-
-
A non-management director may not serve on more than three other public company boards of directors, and our CEO may not serve on more than one
other public company board of directors.
-
-
Our directors are required to offer their resignations upon a change in their primary careers.
-
-
Our Board of Directors and each Board committee regularly conduct executive sessions of non-management directors. Our Lead Independent Director
presides over each executive session of non-management directors. Committee Chairs preside over executive sessions of their respective committees.
-
-
Our Board of Directors and Board committees have the authority to retain independent advisors.
-
-
Our Board of Directors and Board committees conduct performance reviews annually.
Guidelines and Board Policies
-
-
Our Board of Directors has developed a CEO succession plan with input from our CEO and reviews the plan annually. The CEO succession plan has
two components: one addressing an emergency or unanticipated loss of our CEO and one addressing longer-term succession. Material features of this plan include identification of Board members to lead
the succession process, identification and development of internal candidates and identification of external resources necessary to ensure a successful transition.
-
-
We maintain stock ownership and retention guidelines for directors and executive officers. See "Compensation Discussion and
Analysis Elements of Our Compensation Program Other Compensation Practices Executive Stock Ownership Guidelines and Stock Retention
Policy," "Director Compensation Equity-Based Compensation" and "Director Compensation Stock Ownership and Retention Guidelines" for further information.
-
-
We have a related-person transactions approval policy regarding the review, vote and ratification by our Nominating Committee on all proposed
related-person transactions. See "Certain Relationships and Transactions."
-
-
We have a clawback policy that entitles the Board of Directors to seek reimbursement from our senior executives if they are involved in fraud
or misconduct that causes a material restatement or in the event of a senior executive's violation of non-compete, non-solicit or confidentiality provisions. See "Compensation Discussion and
Analysis Elements of Our Compensation Program Other Compensation Practices Potential Impact on Compensation from Executive
Misconduct/Compensation Clawbacks."
-
-
We have a political contributions policy that is overseen by our Public Policy Strategies and Responsibility Committee (the "Public Policy
Committee"). The Company's political contributions and public advocacy efforts and the contributions of our federal and state political action committees are disclosed on our
website.
-
-
We have an environmental policy that outlines our focus on minimizing our impact on the environment and creating a Company culture that
heightens our employees' awareness of the importance of preserving the environment and conserving energy and natural resources.
19
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
-
-
Our insider trading policy prohibits all directors, executive officers and employees from engaging in short sales and hedging transactions
relating to our common stock, and requires advance approval of the Compensation Committee of any pledging of common stock by directors, executive officers and other members of
management.
-
-
Our Board of Directors believes that effective Board-shareholder communication strengthens the Board of Directors' role as an active, informed
and engaged fiduciary, so we have a communication policy that outlines how shareholders and other interested parties may communicate with the Board of Directors. See "Corporate
Governance Communication with the Board of Directors."
-
-
A Nominating Advisory Committee comprised of representatives from the shareholder and medical communities provides input into the composition
of our Board of Directors.
Principles of Governance
Our Certificate of Incorporation and Bylaws, together with Delaware law and NYSE and SEC rules, govern the Company. Our Board has also adopted
"Principles of Governance," which set forth many of our practices, policies and procedures in corporate governance. The policies and practices covered in our Principles of Governance include
shareholder rights and proxy voting; structure, composition and performance of the Board of Directors; stock ownership and retention requirements; Board of Directors operation; individual director
responsibilities; and Board committees. Our Principles of Governance are reviewed at least annually by our Nominating Committee and are revised as necessary.
Code of Conduct: Our Principles of Ethics & Integrity
The Code of Conduct: Our Principles of Ethics & Integrity document is posted on our website and covers our principles and policies
related to business conduct, conflicts of interest, public disclosure, legal compliance, reporting and accountability, corporate opportunities, confidentiality, fair dealing and protection and proper
use of Company assets. Any waiver of the Code of Conduct for the Company's executive officers, senior financial officers or directors may be made only by the Board of Directors or a committee of the
Board. We will publish any amendments to the Code of Conduct and waivers of the Code of Conduct for an executive officer or director on our website.
Compliance and Ethics
We strongly and broadly encourage employees to raise ethics and compliance concerns, including concerns about accounting, internal controls or
auditing matters. We offer several channels for employees and third parties to report ethics and compliance concerns or incidents, including by telephone or online, and individuals may choose to
remain anonymous in jurisdictions where anonymous reporting is permissible. We prohibit retaliatory action against any individual who in good faith raises concerns or questions regarding ethics and
compliance matters or reports suspected violations. We train all employees annually and periodically advise them regarding the means by which they may report possible ethics or compliance issues and
their affirmative responsibility to report any possible issues. In our 2018 employee survey, 96% of employees said they knew what to do if they believed unethical behavior or misconduct occurred in
their work area.
20
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Director Independence
Our Board of Directors has adopted the Company's Standards for Director Independence, which are available on our website at
www.unitedhealthgroup.com/about/corporate-governance
.
The Standards for Director Independence requirements exceed the
independence standards set by the NYSE.
Our
Board of Directors has determined that William C. Ballard, Jr., Richard T. Burke, Timothy P. Flynn, Michele J. Hooper,
F. William McNabb III, Valerie C. Montgomery Rice, M.D., John H. Noseworthy, M.D., Glenn M. Renwick and
Gail R. Wilensky, Ph.D. are each "independent" under the NYSE rules and the Company's Standards for Director Independence, and have no material relationships with the Company that
would prevent the directors from being considered independent. Stephen J. Hemsley, Executive Chairman of the Board, and David S. Wichmann, CEO, are not independent
directors.
In
determining independence, the Board of Directors considered, among other factors, the business relationships between the Company and our directors and nominees, their immediate family members (as
defined by the NYSE) and their affiliated companies. The Board of Directors considered whether any director or any nominee was a director, partner, significant shareholder or executive officer of an
organization that has a relationship with the Company, and also considered charitable contributions that the Company or its affiliates made to organizations with which such directors or nominees are
or have been associated. In particular, the Board of Directors evaluated the following relationships and determined that such relationships were in the normal course of business and did not impair the
directors' ability to exercise independent judgment:
-
-
Mr. Burke is an owner of Rainy Partners, LLC. Rainy Partners is a customer of the Company and paid the Company premiums for
health insurance of approximately $398,600 in 2018. These premiums were determined on the same terms and conditions as premiums for other comparable customers.
-
-
Dr. Montgomery Rice is President and Dean of Morehouse School of Medicine. In 2018, Morehouse School of Medicine paid the Company
approximately $175,600 for claims software and medical records review services. The Company paid Morehouse School of Medicine approximately $910,000 for services as a network care provider in 2018.
Total moneys paid by the Company and the United Health Foundation to Morehouse School of Medicine during 2018 were substantially less than 1% of Morehouse School of Medicine's total revenues for 2018.
Dr. Montgomery Rice was not directly involved in these relationships.
The
Board of Directors also considered relationships between the Company and organizations on which our non-employee directors or their immediate family members serve only as directors and determined
that such relationships did not impair the directors' exercise of independent judgment.
Board Leadership Structure
Our Board of Directors believes having independent Board leadership is an important component of our governance structure. As such, our Bylaws
require the Company to have either an independent Chairman of the Board or a Lead Independent Director. Our current Board of Directors' leadership structure also separates the positions of CEO and
Chairman of the Board. The Board believes this separation is appropriate for
the Company at this time because it allows for a division of responsibilities and a sharing of ideas between individuals having different perspectives.
21
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
In connection with the CEO succession that took place in 2017, our Board created the position of Executive Chairman. The Board unanimously selected Mr. Hemsley to serve
as our Executive Chairman due to his vision for the Company's future and his understanding of the Company and its evolving competitive environment. Given that Mr. Hemsley is not an independent
director under applicable NYSE rules, the Board determined to continue the strong voice of independent directors and created the role of Lead Independent Director. Mr. Burke was appointed to
serve as Lead Independent Director.
Our
Principles of Governance outline the specific duties of the Lead Independent Director, including:
-
-
serving as the principal liaison between the Independent Directors and the Chairman;
-
-
presiding at all meetings of the Board at which the Chairman is not present and at executive sessions of the Board's Independent Directors;
-
-
calling meetings of the Independent Directors as appropriate and, in coordination with the Chairman, all members of the Board;
-
-
facilitating discussion and open dialogue among the Independent Directors during Board meetings, executive sessions and outside of Board
meetings;
-
-
serving as an ex officio member of each Board committee of which the Lead Independent Director is not a member and working with the Board
committee chairs on the performance of their designated roles and responsibilities;
-
-
working with the Chairman to approve the agendas and meeting schedules for Board meetings;
-
-
working with the Chairman on the appropriateness (including quality and quantity) and timeliness of information provided to the Board;
-
-
meeting individually with the Chairman after each regularly scheduled Board meeting;
-
-
coordinating the preparation of agendas and materials for executive sessions of the Board's Independent Directors, if any;
-
-
leading the Board's annual goal setting and evaluation process for the Chairman;
-
-
assisting the Chair of the Nominating and Corporate Governance Committee in reviewing and reporting on the results of the Board and committee
performance self-evaluations;
-
-
communicating to the Chairman any decisions reached, suggestions, views or concerns expressed by Independent Directors in executive sessions or
outside of Board meetings;
-
-
meeting periodically with individual Independent Directors to discuss Board and committee performance, effectiveness and composition;
-
-
where appropriate, supporting the Company in interactions with shareholders and regulators in consultation with the Chief Executive Officer and
Chairman; and
-
-
interviewing, along with the Chair of the Nominating and Corporate Governance Committee, all Board candidates and making director candidate
recommendations to the Nominating and Corporate Governance Committee.
22
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Risk Oversight
Enterprise-Wide Risk Oversight
Our Board of Directors oversees management's enterprise-wide risk management activities. Risk management activities include assessing and
taking actions necessary to manage risk incurred in connection with the long-term strategic direction and operation of our business. Each director on our Board is required to have risk oversight
ability for each skill and attribute the director possesses that is reflected in the collective skills section of our director skills matrix described in "Proposal 1 Election of
Directors Director Nomination Process Criteria for Nomination to the Board" above. Collectively, our Board of Directors uses its committees to assist in its
risk oversight function as follows:
-
-
The Audit Committee oversees management's internal controls and compliance activities. The Audit Committee also oversees management's processes
to identify and quantify material risks facing the Company, including risks disclosed in the Company's Annual Report on Form 10-K. The enterprise risk management function assists the Company in
identifying and assessing the Company's material risks. The Company's General Auditor, who reports to the Audit Committee, assists the Company in evaluating risk management controls and methodologies.
The Audit Committee receives periodic reports on the enterprise risk management function. The Audit Committee also receives periodic reports on the Company's cyber security efforts. In connection with
its risk oversight role, the Audit Committee regularly meets privately with representatives from the Company's independent registered public accounting firm and the Company's CFO, General Auditor and
Chief Legal Officer;
-
-
The Compensation Committee oversees risk associated with our compensation practices and plans;
-
-
The Nominating Committee oversees Board processes and corporate governance-related risk; and
-
-
The Public Policy Committee oversees risk associated with the public policy arena, including health care reform and modernization activities,
political contributions, government relations, community and charitable activities and corporate social responsibility.
Our
Board of Directors maintains overall responsibility for oversight of the work of its various committees by receiving regular reports from the Committee Chairs regarding their work. In addition,
discussions about the Company's strategic plan, consolidated business results, capital structure, merger and acquisition-related activities and other business discussed with the Board of Directors
include a discussion of the risks associated with the particular item under consideration.
Enterprise-Wide Incentive Compensation Risk Assessment
Our Compensation Committee requested that management conduct an annual risk assessment of the Company's enterprise-wide compensation programs.
The risk assessment reviewed both cash incentive compensation plans and individual cash incentive awards paid in 2018 for the presence of potential design elements that could motivate employees to
incur excessive risk. The review included the ratio and level of incentive to fixed compensation, the amount of manager discretion, the level of compensation expense relative to the business units'
revenues, and the presence of other design features that serve to mitigate excessive risk-taking, such as the Company's clawback policy, stock ownership and retention guidelines, multiple performance
measures and similar features.
23
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
After considering the results of the risk assessment, management concluded that the level of risk associated with the Company's enterprise-wide compensation programs is not
reasonably likely to have a material adverse effect on the Company. The results of the risk assessment were reviewed with the Compensation Committee at its February 2019 meeting. Please see
"Compensation Discussion and Analysis" for a discussion of compensation design elements intended to mitigate excessive risk-taking by our executive officers.
The
Compensation Committee also receives an annual report on the Company's compliance with its equity award program controls.
Board Meetings and Annual Meeting Attendance
Directors are expected to attend Board meetings, meetings of committees on which they serve and the Annual Meeting of Shareholders. All
then-current directors attended the 2018 Annual Meeting. During the year ended December 31, 2018, the Board of Directors held twelve meetings. All then-current directors attended at least 75%
of the meetings of the Board and any Board committees of which they were members in 2018.
Board Committees
The Board of Directors has established four standing committees: Audit, Compensation, Nominating and Public Policy. These committees help the
Board fulfill its responsibilities and assist the Board in making informed decisions. Each committee operates under a written charter, and evaluates its charter and conducts a committee performance
evaluation annually.
The
following table identifies the members of each committee as of April 9, 2019:
-
*
-
Mr. Burke
is the Lead Independent Director and an ex-officio member of the Compensation Committee and Public Policy Committee. As an ex-officio member,
Mr. Burke has a standing invitation to attend each committee meeting, but does not count for quorum purposes or vote on committee matters.
24
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit Committee
|
|
Meetings Held in 2018: 9
|
|
|
|
|
Committee Members:
|
|
|
|
|
Glenn M. Renwick (Chair), Michele J. Hooper and F. William McNabb III
|
|
|
|
|
Primary Responsibilities:
|
|
|
|
|
The Audit Committee has responsibility for the selection and retention of the independent registered public accounting firm and oversees financial reporting, internal controls and public disclosure. The
Audit Committee reviews and assesses the effectiveness of the Company's policies, procedures and resource commitments in the areas of compliance, ethics, privacy and cyber security, by interacting with personnel responsible for these functions. The
Audit Committee also oversees management's processes to identify and quantify material risks facing the Company. The Audit Committee establishes procedures concerning the receipt, retention and treatment of complaints regarding accounting, internal
accounting controls and auditing matters. The Audit Committee operates as a direct line of communication between the Board of Directors and our independent registered public accounting firm, as well as our internal audit, compliance and legal
personnel.
|
|
|
|
|
Independence:
|
|
|
|
|
Each of the Audit Committee members is an independent director under the NYSE listing standards and the SEC rules. The Board of Directors has determined that Messrs. Renwick and McNabb and Ms. Hooper are "audit committee financial experts"
as defined by the SEC rules.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and Human Resources Committee
|
|
Meetings Held in 2018: 5
|
|
|
|
|
Committee Members:
|
|
|
|
|
William C. Ballard, Jr. (Chair), Richard T. Burke, Timothy P. Flynn and Gail R. Wilensky, Ph.D.
|
|
|
|
|
Primary Responsibilities:
|
|
|
|
|
The Compensation and Human Resources Committee (the "Compensation Committee") is responsible for overseeing our policies and practices related to total compensation for executive officers, the
administration of our incentive and equity-based plans and the risk associated with our compensation practices and plans. The Compensation Committee also establishes employment arrangements with our CEO and other executive officers, conducts an
annual performance review of the CEO, and reviews and monitors director compensation programs and the Company's stock ownership guidelines.
|
|
|
|
|
Independence:
|
|
|
|
|
Each of the Compensation Committee members is an independent director under the NYSE listing standards and the SEC rules, a non-employee director under the SEC rules and an outside director under the Internal Revenue Code of 1986 (the "Internal
Revenue Code").
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominating and Corporate Governance Committee
|
|
Meetings Held in 2018: 3
|
|
|
|
|
Committee Members:
|
|
|
|
|
Michele J. Hooper (Chair), William C. Ballard, Jr. and Richard T. Burke
|
|
|
|
|
Primary Responsibilities:
|
|
|
|
|
The Nominating and Corporate Governance Committee's (the "Nominating Committee") duties include identifying and nominating individuals to be proposed as nominees for election as directors at each Annual
Meeting or to fill Board vacancies, conducting the Board evaluation process, evaluating the categorical standards which the Board of Directors uses to determine director independence, and monitoring and evaluating corporate governance. The Nominating
Committee also oversees Board processes and corporate governance-related risk.
|
|
|
|
|
Independence:
|
|
|
|
|
Each of the Nominating Committee members is an independent director under the NYSE listing standards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public Policy Strategies and Responsibility Committee
|
|
Meetings Held in 2018: 4
|
|
|
|
|
Committee Members:
|
|
|
|
|
Gail R. Wilensky, Ph.D. (Chair) and Valerie C. Montgomery Rice, M.D.
|
|
|
|
|
Primary Responsibilities:
|
|
|
|
|
The Public Policy Strategies and Responsibility Committee (the "Public Policy Committee") is responsible for assisting the Board of Directors in fulfilling its responsibilities relating to the Company's
public policy, health care reform and modernization activities, political contributions, government relations, community and charitable activities and corporate social responsibility. The Public Policy Committee is also responsible for overseeing the
risks associated with these activities.
|
|
|
|
|
Independence:
|
|
|
|
|
Each of the Public Policy Committee members is an independent director under the NYSE listing standards.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Communication with the Board of Directors
The Board of Directors values the input and insights of our shareholders and other interested parties and believes effective communication
strengthens the Board of Directors' role as an active, informed and engaged fiduciary. The Board of Directors has adopted a Board of Directors Communication Policy to facilitate communication between
shareholders and other interested parties and the Board. Under this policy, the Board of Directors has designated the Company's Secretary to the Board of Directors as its agent to receive and review
communications.
The
Secretary to the Board of Directors will not forward to the directors communications received which are of a personal nature or not related to the duties and responsibilities of the Board of
Directors, including, without limitation, junk mail, mass mailings, business solicitations, routine customer service complaints, new product or
service suggestions and opinion surveys. The Secretary to the Board of Directors will forward such complaints and suggestions received to the appropriate members of the Company's management.
Appropriate
matters to raise in communications to the Board include:
-
-
Board composition;
-
-
Board succession planning process;
-
-
CEO succession planning process;
-
-
Executive compensation;
-
-
Use of capital;
-
-
Corporate governance; and
-
-
General Board oversight, including accounting, internal controls, auditing and other related matters.
The
policy, including information on how to contact the Board of Directors, may be found in the corporate governance section of our website,
www.unitedhealthgroup.com/about/corporate-governance
.
27
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Executive Summary
UnitedHealth Group's compensation program is designed to attract and retain highly qualified executives and to maintain a strong link between
pay and the achievement of enterprise-wide goals. We emphasize and reward teamwork and collaboration among executive officers, which we believe fosters Company growth and performance, optimizes the
use of enterprise-wide capabilities, drives efficiencies and integrates products and services for the benefit of our customers and other stakeholders.
In
determining 2018 executive compensation, the Compensation Committee considered the Company's strong growth, operating performance and financial results, all of which were achieved in an uncertain
environment, as well as individual executive performance. Some of our key business results for 2018 were:
-
-
Revenues increased 12% to $226.2 billion from $201.2 billion in 2017;
-
-
Operating earnings increased 14% year-over-year to $17.3 billion; net earnings to UnitedHealth Group common shareholders increased to
$12 billion; and cash flows from operations grew 16% year-over-year to $15.7 billion;
-
-
Diluted earnings per share increased 14% to $12.19 per share from $10.72 in 2017. Adjusted earnings per share
1
increased 28% to
$12.88 per share from $10.07 per share in 2017;
-
-
Return on equity was consistent with the prior year at 24.4% in 2018;
-
-
Cumulative shareholder return for UnitedHealth Group, which is defined as the increase in stock price, together with dividends reinvested when
paid was 122% over the 2016-2018 time period and 258% over the 2014-2018 time period. Cumulative shareholder return for the S&P 500 Index was 30% over the 2016-2018 time period and 50% over the
2014-2018 time period;
-
-
Our annual cash dividend rate increased to $3.60 per share, paid quarterly, representing a 20% increase over the annual cash dividend rate of
$3.00 per share paid quarterly since the second quarter of 2017;
-
-
UnitedHealth Group was the top ranked company in the insurance and managed care sector on
Fortune's
2019 "World's Most Admired
Companies" list, based on 2018 results. This is the ninth consecutive year UnitedHealth Group has ranked
No. 1 overall in its sector. The Company ranked No. 1 on all nine key attributes of reputation innovation, people management, use of corporate assets, social
responsibility, quality of management, financial soundness, long-term investment, quality of products and services and global competitiveness. The Company was rated No. 1 in innovation for the
tenth consecutive year.
-
-
UnitedHealth Group was named to both the Dow Jones Sustainability World and North America Indices for the 20th consecutive year; and
-
-
UnitedHealth Group was included among the 2018 Best Employers for Diversity by Forbes.
-
1
-
Adjusted
earnings per share is a non-GAAP financial measure. Refer to Appendix A in this proxy statement for a reconciliation of adjusted earnings
per share to the most directly comparable GAAP measure.
28
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
The
Compensation Committee believes total compensation for the executive officers listed in the 2018 Summary Compensation Table (the "named executive officers" or "NEOs") should be heavily weighted
toward long-term performance-based compensation. In 2018, long-term compensation represented approximately 75% of the total compensation granted to our named executive officers. The elements of
compensation for our named executive officers were unchanged from 2017.
We
endeavor to maintain strong governance standards in the oversight of our executive compensation programs, including the following policies and practices that were in effect during
2018:
-
-
Compensation Committee consisting entirely of independent Board members.
-
-
Performance-based compensation arrangements, including performance-based equity awards that use a balanced set of performance measures, with
different metrics used for annual and long-term incentive plans.
-
-
Double-trigger accelerated vesting of equity awards, requiring both a change in control and a qualifying employment termination, which is our
only change in control consideration.
-
-
No excise tax gross-ups and generally no executive-only perquisites such as company cars, security systems or financial planning.
-
-
A compensation clawback policy that entitles the Board of Directors to seek reimbursement from our senior executives if they are involved in
fraud or misconduct that causes a material restatement, or in the event of a senior executive's violation of non-compete, non-solicit or confidentiality provisions.
-
-
A stock retention policy that generally requires executive officers to hold, for at least one year, one-third of the net shares acquired upon
vesting or exercise of any equity award.
-
-
Each of our executive officers and directors were in compliance with our stock ownership guidelines as of April 9, 2019.
Mr. Wichmann, our CEO, is required to own shares equal to eight times his base salary by the fifth anniversary of his appointment as CEO. As of April 9, 2019, Mr. Wichmann owned
shares equal to 169 times his base salary.
-
-
Prohibition on repricing of stock options and stock appreciation rights without shareholder approval.
-
-
Prohibition on hedging transactions and advance approval of the Compensation Committee required for pledging transactions.
-
-
Annual advisory shareholder vote to approve the Company's executive compensation.
-
-
The direct retention by the Compensation Committee of its independent compensation consultant, Pay Governance LLC, which performs no
other consulting or other services for the Company.
As
discussed in detail below and reflected in the 2018 Summary Compensation Table, our CEO, Mr. Wichmann, received the following compensation for
2018:
-
-
Base salary of $1.3 million;
-
-
Annual cash incentive award of $4.5 million, which represents 173% of his target opportunity;
-
-
Long-term cash incentive award of $890,600 for the 2016-2018 performance period, which represents above target performance by the Company
against pre-set 2016-2018 long-term incentive plan performance goals (this cash plan has been discontinued);
-
-
A performance-based restricted stock unit opportunity ("performance shares") with a target grant date fair value of $5.55 million,
restricted stock units ("RSUs") with a grant date fair value of $2.775 million, and non-qualified stock options with a grant date fair value of $2.775 million; and
-
-
Company matching contributions of $178,875 made under the Company's 401(k) plan and Executive Savings Plan.
29
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Compensation Discussion and Analysis
Our Compensation Program Philosophy and Objectives
We seek to attract and retain highly qualified executives and establish a strong pay-for-performance alignment by linking senior management
compensation to enterprise and individual performance goals. The primary objectives of our executive compensation program are to:
-
-
Align the economic interests of our executive officers with those of our shareholders.
-
-
Reward performance that advances our mission of helping people live healthier lives and helping to make the health system work better for
everyone.
-
-
Reward performance that emphasizes teamwork and close collaboration among executive officers while also recognizing individual performance.
-
-
Reward performance that supports the Company's values.
-
-
Foster an entrepreneurial spirit with innovative thinking and action that leverages the ingenuity of our employees.
Compensation Program Principles
Our Compensation Committee uses the following principles to implement our compensation philosophy and achieve our executive compensation
program objectives:
-
-
Pay-for-performance.
Most of the total compensation of our executive
officers is at risk and only earned based on achievement of enterprise-wide goals.
-
-
Enhance the long-term value of the business.
Our pay system is weighted
toward long-term compensation to promote long-term shareholder value creation and avoid excessive risk-taking.
-
-
Reward long-term growth and focus management on sustained success and shareholder value
creation.
Compensation of our executive officers is heavily weighted toward equity and we require significant stock ownership by our management
team. This encourages sustained performance and positive shareholder returns.
-
-
Provide standard benefits.
We provide standard employee benefits and
generally do not have "executive-only" benefits or perquisites.
Determination of Total Compensation
Role of the Compensation Committee
The Compensation Committee oversees the Company's policies and philosophy related to total compensation for executive officers. The
Compensation Committee reviews and approves the compensation for the named executive officers based on its own evaluation, input from our Executive Chairman and CEO (for all executive officers except
themselves), internal pay equity considerations, the tenure, role and performance of each named executive officer, input from its independent consultant and market data.
30
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
In addition, in making compensation decisions, the Compensation Committee considers the results of the Company's annual shareholder advisory votes approving the Company's
executive compensation. More than 95% of the votes cast have been in favor of the Company's executive compensation at each of our annual meetings, beginning with our inaugural vote in 2011. The
Compensation Committee believes these shareholder votes reflect strong support for the Company's executive compensation program.
The Compensation Committee's Use of an Independent Compensation Consultant
The Compensation Committee retains independent compensation consultant, Jon Weinstein of Pay Governance LLC, to advise the Compensation
Committee on executive and director compensation matters, assess total compensation program levels and program elements for executive officers and evaluate competitive compensation trends. Pay
Governance does not provide any other services to the Company and does not perform any work for management. The Compensation Committee has assessed the independence of Mr. Weinstein and of Pay
Governance, specifically considering, in accordance with SEC rules, whether Mr. Weinstein and Pay Governance had any relationships with the Company, our officers or our Board members that would
impair their independence. Based on this evaluation, the Compensation Committee concluded that Mr. Weinstein's and Pay Governance's work for the Compensation Committee does not raise any
conflict of interest.
Competitive Positioning
The Compensation Committee believes total compensation for the named executive officers should be heavily weighted toward long-term
performance-based compensation, but it does not target a specific mix of annual and long-term compensation or cash and equity compensation and does not formulaically set compensation targets.
In
general, the Compensation Committee's goal is to achieve total compensation for the named executive officers as a group that falls within a range of the 50th to 75th percentiles of
the market data for our peer group (as discussed below), if paid at target. The Compensation Committee believes this range is an appropriate reflection of the Company's relative size, complexity and
consistently strong performance over the past several years. The following briefly summarizes the processes followed by the Compensation Committee to select competitive compensation benchmark data and
how the Compensation Committee uses these data.
At
the request of the Compensation Committee, Pay Governance conducts an annual review of the Company's compensation peer group. This review ensures that the peer group companies remain appropriate
from a business and talent perspective and occurs at the second quarter Compensation Committee meeting, because recent financial and compensation data are generally available at that time.
The
Compensation Committee uses the following methodology, which formulates a peer group focused on the industries reflected in the prior career experiences of approximately 250 of the Company's
senior leaders:
-
-
All U.S. publicly traded companies in the following industries as the starting point:
|
|
|
|
|
Health Care
|
|
Pharma/Biotech/Life
Sciences
|
|
Insurance
|
|
Financial
Services
|
|
Technology
|
|
Professional
Services
|
-
-
Limit the list to the largest companies by revenue and equity market capitalization to avoid companies of significantly smaller scope; and
-
-
Add major companies located near UnitedHealth Group's headquarters and primary operating locations to reflect relevant geographic markets for
talent.
31
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
This screening process resulted in the 54 companies set forth under "Peer Group and Managed Care Companies" below. As compared to the peer group, the Company
is:
-
-
At the 97th percentile on a revenue basis;
-
-
At the 78th percentile on a market capitalization basis;
-
-
At the 77th percentile in earnings from operations; and
-
-
At the 84th percentile in number of employees.
The
Compensation Committee also considers market data from the four largest publicly traded managed care companies with which we compete for business. However, the Compensation Committee does not use
this group as a primary reference point for benchmarking compensation practices because the Company is substantially larger, more complex and more diverse than these companies, and because we believe
that the Company competes primarily for talent and capital with other successful large companies across a broader group of sectors.
Once
the process is concluded and peer group companies are selected, the Compensation Committee generally uses the market data as follows:
-
-
At the fourth quarter Compensation Committee meeting, Pay Governance presents an annual review of the market competitiveness of the Company's
executive compensation program for the Company's executive officers. The review compares the compensation opportunities provided to the Company's executive officers to peer group companies on a
position-by-position basis and on an aggregate basis.
-
-
At the first quarter Compensation Committee meeting, the Compensation Committee determines pay opportunities for each officer using the market
competitiveness assessment from the previous fourth quarter as a reference point. In addition, the Compensation Committee takes into consideration the Company's performance against previously
established performance goals, each officer's individual performance, internal equity, the Executive Chairman and CEO's recommendations and other relevant business performance that may not be
adequately captured by the Company and individual officer goals.
Target
total compensation of our named executive officers as a group in 2018, consisting of base salary, target annual cash incentive award, target long-term cash incentive award and the grant date
fair value of equity awards (including performance shares at target) was between the 50th and the 75th percentiles of the market data for our peer group.
The
companies included in the 2018 peer group and the four managed care companies are listed at the end of this Compensation Discussion and Analysis.
Role of Management and CEO in Determining Executive Compensation
The Compensation Committee has the responsibility to approve and monitor all compensation for our executive officers. Management recommends
appropriate enterprise-wide financial and non-financial performance goals for use in incentive compensation. Our Executive Chairman and CEO assist the Compensation Committee by evaluating the
performance of the executive officers who report directly to them and recommending compensation levels for these executive officers.
32
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Use of Tally Sheets and Wealth Accumulation Analysis
When approving compensation decisions, the Compensation Committee reviews tally sheet information for each of our executive officers. These
tally sheets are prepared by management and quantify the elements of each executive officer's total compensation. The tally sheets include a summary of all equity awards previously granted to each
executive officer, the gain realized from past vesting or exercise of equity awards, and the projected value of accumulated equity awards based upon then current stock price scenarios. This is done to
analyze the compensation each executive officer has accumulated to date and to fully understand the amount the executive officer could potentially accumulate in the future.
Elements of our Compensation Program
Overview
The compensation program for our named executive officers consists of the following elements:
|
|
|
|
|
|
|
|
|
|
Compensation Element
|
|
Objective
|
|
Type of Compensation
|
|
|
|
|
|
Base salary
|
|
To provide a base level of cash compensation for executive officers based on role, scope of responsibilities and experience
|
|
Annual compensation, not variable
|
|
|
|
|
|
Annual cash incentive awards
|
|
To encourage and reward executive officers for achieving annual corporate performance goals and individual performance results
|
|
Annual performance compensation, variable
|
|
|
|
|
|
Equity awards
|
|
To motivate and retain executive officers and align their interests with shareholders through the use of:
|
|
Long-term performance compensation, variable
|
|
|
|
|
|
|
|
Performance shares to
encourage sustained performance and growth and potentially assist executives in building ownership in the Company
|
|
|
|
|
RSUs to retain executive
officers and build stock ownership positions
|
|
|
|
|
Non-qualified stock
options to encourage sustained stock price appreciation
|
|
|
|
|
|
|
|
Employee benefits
|
|
To promote the health, well-being and financial security of employees, including executive officers; constitutes the smallest part of total remuneration
|
|
Annual indirect compensation, not variable
|
|
|
|
|
|
33
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
As
reflected in the charts below, the mix of total target compensation granted in 2018 to our named executive officers was heavily weighted towards performance-based and long-term incentive
compensation, with long-term incentive awards making up approximately 75% of total target compensation for our named executive officers in aggregate.
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Excludes new hire grant made to Mr. Witty in connection with his appointment as CEO, Optum.
|
Appointment of Sir Andrew Witty as Chief Executive Officer of Optum
On March 13, 2018, the Company announced that, effective July 1, 2018, Sir Andrew Witty would replace Larry Renfro as
Chief Executive Officer of Optum. Sir Andrew is the former Chief Executive Officer of GlaxoSmithKline plc. (GSK), a Fortune Global 500 company and one of the largest pharmaceutical companies in
the world. In light of this appointment, Sir Andrew stepped down from the UnitedHealth Group Board of Directors on March 13, 2018.
Sir
Andrew was selected to be Optum's CEO because of his experience leading a complex, multinational business organization, global perspective and outstanding accomplishments in health care worldwide,
where he has distinguished himself as an internationally recognized business leader and drove some of the largest and most impactful decisions and innovations in health care around the globe. During
his nine-year tenure as GSK's CEO (from 2008 to 2017), Sir Andrew led the delivery of substantial portfolio change and growth across GSK's three business units while remaining disciplined on costs and
advancing the progression of the company's pipeline of innovative products. Sir Andrew led a number of ground breaking corporate transactions. Alongside acquisitions, the creation of important joint
ventures in the fields of HIV, Vaccines and Consumer Health allowed GSK to strengthen leading positions in important fields. He also led GSK in the adoption of an equitable pricing strategy to make
much needed medicines and vaccines more affordable to people in the world's poorest countries. Sir Andrew's deep experience with the use of data and analytics and new technologies to improve outcomes,
better serve consumers, lower costs and drive value across the health care system further qualified him as a unique candidate for the Optum CEO role.
34
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Sir Andrew's compensation is generally targeted at the 60th percentile of peer group companies. As part of his employment, he received an employment agreement with terms
similar to those provided to our other named executive officers. In addition, Sir Andrew received a new hire equity award consisting of restricted stock units with five-year ratable vesting and a
grant date fair value of $10 million. The vesting terms of this new hire award are one year longer than the Company's typical vesting provisions. In designing Sir Andrew's compensation package,
the Compensation Committee considered Sir Andrew's compensation while serving as GSK's CEO, current market data and equity-based alternatives to attract and retain Sir Andrew over the long-term. The
Compensation Committee also agreed to provide Sir Andrew with tax equalization payments to ensure that, as a U.S. non-resident, his overall tax obligation is the same as if he were taxed exclusively
in the United Kingdom where he resides, including assistance in tax return preparation due to the complexity of multi-jurisdictional filing requirements. The Compensation Committee believes Sir
Andrew's employment terms and compensation are appropriate due to his experience as the CEO of one of the world's largest companies and in light of his unique skill set as discussed above, and were
necessary to encourage Sir Andrew to join the Company. The elements of Sir Andrew's compensation and the terms of his employment agreement are discussed in more detail below in the applicable sections
of this CD&A.
Annual Compensation
Base Salary
The Compensation Committee generally determines base salary levels for our named executive officers early in the fiscal year. On
February 18, 2018, the Compensation Committee approved an increase in the base salary for Messrs. Rex and Nelson to $1,000,000. This increase reflected strong performance and aligned
these executives' salaries to market data.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
2018 Base Salary
($)
|
|
2017 Base Salary
($)
|
|
Increase From
2018 to 2017
(%)
|
|
Stephen J. Hemsley
|
|
|
1,000,000
|
|
|
|
1,000,000
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
1,300,000
|
|
|
|
1,300,000
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
|
1,000,000
|
|
|
|
850,000
|
|
|
|
18%
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
|
1,100,000
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
|
1,000,000
|
|
|
|
900,000
|
|
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive Awards
2018 Annual Incentive Plan Performance Goals
Annual cash incentive awards may be paid if our Company meets or exceeds annual performance goals established for the year as determined by
the Compensation Committee. In establishing the performance measures for the 2018 annual cash incentive awards, the Compensation Committee sought to align broadly the compensation of our executive
officers with key elements of the Company's 2018 business plan. Development of the Company's 2018 business plan was a robust process that involved input from all of the Company's business units and
was reviewed with the Company's Board of Directors in the fourth quarter of 2017 and the first quarter of 2018. These performance goals are based on enterprise-wide metrics because the Compensation
Committee believes that the named executive officers share responsibility to support the goals and performance of the Company as key members of the Company's leadership team.
35
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
The following table sets forth the performance measures and goals established for 2018, as well as actual 2018 performance results:
|
|
|
|
|
|
|
|
|
|
|
2018 Performance
Measure
|
|
Weight
|
|
Threshold
Performance
|
|
Target
Performance
|
|
Maximum
Performance
|
|
Actual 2018
Performance
|
Revenue*
|
|
1/3
|
|
$216.4 billion
|
|
$227.8 billion
|
|
$239.2 billion
|
|
$226.2 billion
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income*
|
|
1/3
|
|
$14.7 billion
|
|
$17.3 billion
|
|
$19.9 billion
|
|
$17.3 billion
|
Cash Flows from Operations*
|
|
|
|
$13.2 billion
|
|
$15.5 billion
|
|
$17.8 billion
|
|
$15.7 billion
|
|
|
|
|
|
|
|
|
|
|
|
Stewardship:
Net Promoter
Score
Employee Engagement
Employee
Teamwork
|
|
1/3
|
|
1 point above 2017 results for NPS; 1 point below 2017 results for employee engagement and; at 2017 results for teamwork;
|
|
4 points above 2017 results for NPS; at 2017 results for employee engagement and; 1 point above 2017 results for teamwork
|
|
6 points above 2017 results for NPS; 1 point above 2017 results for employee engagement and; 2 points above 2017 results for teamwork
|
|
Slightly below target for net promoter score;
at target for employee engagement; and at threshold for teamwork
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
The
Company's annual incentive plan allows for adjustments to the Company's reported results for the impact of changes in accounting principles, extraordinary items
and unusual or non-recurring gains or losses, including significant differences from the assumptions contained in the financial plan upon which the incentive targets were established. Adjustments to
reported results are intended to better reflect executives' line of sight/ability to affect payouts, align award payments with growth of the Company's business, avoid artificial inflation or deflation
of awards due to unusual or non-recurring items in the applicable period and emphasize the Company's preference for long-term and sustainable growth. No adjustments have been made to the Company's
reported results for 2018.
Context for the 2018 Annual Cash Incentive Plan Performance Goals
The 2018 financial performance measures at target level represented year-over-year growth in revenues of $26.6 billion, or 13.2%;
year-over-year growth in operating income of $2.1 billion, or 13.6%; and year-over-year increase in operating cash flows of $1.9 billion or 14.0%. These targets included expected
financial results from the acquisition of Empresas Banmedica in January 2018, the impact of the return of the Health Insurance Industry Tax, the impact of the Tax Cuts and Jobs Act enacted on
December 22, 2017, and the view that there would be a continued challenging business environment in 2018.
The
2018 non-financial performance measures were based on survey data results and, at target levels, represented levels at or above 2017 performance in all categories. These measures were viewed to be
important to longer-term financial success, customer satisfaction and employee welfare that might not be immediately reflected in annual financial results. The Compensation Committee was of the view
that the breadth of financial and non-financial performance measures for the 2018 annual cash incentive award would motivate executive officers to
achieve results that contribute to value creation for our shareholders on a long-term basis and avoid excessive risks.
36
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
At the beginning of 2018, the Compensation Committee believed that achievement of the annual incentive goals required substantial performance on a broad range of initiatives
contained in the 2018 business plan. These initiatives included the following:
-
-
Grow enrollment in UnitedHealthcare medical benefit plans by approximately 2.2 million to 2.9 million people (excluding the
planned TRICARE exit);
-
-
Continue to enhance the quality and operations of our government benefit businesses to compensate for continued expected funding pressures;
-
-
Continue to innovate in commercial benefit products, services and distribution;
-
-
Deliver more effective and comprehensive clinical management, and continue expanding the proportion of our spending with value-based elements
in our network;
-
-
Enhance customer service and increase the Company's net promoter score across all business platforms;
-
-
Execute on Optum's growth and alignment initiatives, with major focus areas including care delivery, technology-enabled services and pharmacy
care services; and
-
-
Further improve our consolidated operating cost ratio after considering the impact of the return of the Health Insurance Industry Tax and
changes in business mix.
With
respect to these initiatives, the Company met enrollment targets across all lines with the exception of Medicaid and Medicare Supplement businesses, adding a total of 2.4 million new
members in health benefits (excluding the planned TRICARE exit), and improved net promoter scores in many, but not all, of its 35 businesses. UnitedHealthcare demonstrated excellence in its Medicare
plans by sustaining the percentage of members in 4+ Star rated Medicare plans in the 80% range. Optum exceeded its revenue growth target and achieved double digit percentage revenue growth at its
OptumHealth and OptumInsight businesses and continued
strong growth at OptumRx of over 9%. Optum also exceeded earnings growth projections, consumers served growth and adjusted scripts growth targets. In addition, our contracts with value-based elements
totaled $74 billion in annual spending, including $18 billion through risk-transfer agreements. The consolidated operating cost ratio decreased to 14.1% excluding the impact of the
Health Insurance Industry Tax and the Company achieved or made substantial progress on all other initiatives listed above.
Revenues
for 2018 grew 12.5%, slightly below target, while operating income was at target. Cash flows from operations for 2018 were above target due to an improved working capital position.
Non-financial
performance measures were at target levels for Employee Engagement, slightly below target for Net Promoter Score (NPS) and at threshold for Teamwork. NPS improved significantly
year-over-year and the Company's current employee engagement and teamwork scores were within the top quartile of companies as measured by the external vendor who calculates this measure. Diluted
earnings per share increased 14% and adjusted earnings per share increased 28% in 2018. The Company's total shareholder return in 2018 was 15%, and was 119% from 2016-2018, reflecting continued strong
fundamental performance.
37
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
While the Company uses defined performance measures and weightings to determine an overall funding level for the Company's bonus pool, individual annual cash incentive awards
are not purely formulaic. In determining the amount of the actual annual incentive award to be paid, the Compensation Committee considers the CEO's recommendations for executive officers, the business
performance underlying each of the performance measures, macroeconomic factors disproportionately impacting business performance, individual executive performance, market positioning, teamwork and
related matters. The Compensation Committee retains discretion to pay an annual incentive award that is higher or lower than the performance level achieved based on these considerations if threshold
performance is achieved on any performance measure. However, the overall pool cannot be exceeded.
Determination of 2018 Annual Cash Incentive Award Opportunities
At the beginning of each year, the Compensation Committee approves an "annual cash incentive target opportunity" for each executive officer as
a percentage of the executive officer's base salary. In February 2018, the Compensation Committee approved an increase in the annual cash incentive target opportunity for Messrs. Rex and Nelson
to 150% and 200%, respectively. This increase reflected strong performance and aligned their incentive opportunities to market data for leaders in their positions.
The
target opportunities established for the named executive officers are intended to increase collaboration, teamwork and accountability across the enterprise, to recognize the skills and versatility
of each executive officer and to reflect relative contributions to the success of the overall enterprise. At the end of the fiscal year, the Compensation Committee reviews the Company's performance
against the goals set at the beginning of the year and determines annual cash incentive awards. The Compensation Committee has the discretion to increase or decrease the awards made in view of actual
performance, individual contributions and overall business and market conditions.
The
Compensation Committee evaluated the Company's 2018 performance against the performance goals, overall business results, economic conditions and individual performance objectives, and exercised
its discretion to adjust the 2018 annual cash incentive awards such that they represented between 100% and 173% of the targets set for named executive officers except Mr. Hemsley who did not
participate in any annual incentive opportunity. When Mr. Hemsley was appointed executive chair, the Compensation Committee determined to deliver all of Mr. Hemsley's incentive
compensation in equity to foster a long-term strategic orientation, consistent with the specifications of his role. In exercising this discretion, the Compensation Committee considered the dollar
amounts of the awards in addition to the percentage of target paid. The target percentages for annual cash incentive awards to our named
executive officers and the actual 2018 annual cash incentive awards paid are set forth in the table below. An explanation of how the individual amounts were determined follows the table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Annual Cash Incentive Awards
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Target
Percentage
(% of Salary)
|
|
Target
Award Value
($)
|
|
Actual
Award Paid
($)
|
|
Paid
Award
(% of Target)
|
|
David S. Wichmann
|
|
|
200
|
%
|
|
|
2,600,000
|
|
|
|
4,500,000
|
|
|
|
173
|
%
|
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
|
150
|
%
|
|
|
1,500,000
|
|
|
|
2,500,000
|
|
|
|
167
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
|
200
|
%
|
|
|
2,200,000
|
|
|
|
2,200,000
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
|
200
|
%
|
|
|
2,000,000
|
|
|
|
2,000,000
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
38
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
In determining the 2018 annual cash incentive award amounts for the named executive officers, the Compensation Committee took into account the Company's performance against the
2018 annual performance goals set forth in the table above, business results described under "Context for the 2018 Annual Cash Incentive Plan Performance Goals," including each executive officer's
role in achieving those results, and a qualitative assessment of individual performance and accomplishments. Individual factors considered are as follows:
-
-
Mr. Wichmann's individual performance evaluation was conducted by Mr. Hemsley with input from the independent members of the
Board of Directors. Mr. Wichmann's 2018 performance evaluation reflected exceptional performance in the following areas: strategic focus; vision and values; corporate performance, Board
relations; leadership and organization effectiveness; corporate reputation and government relations; and overall performance.
-
-
Mr. Rex's individual performance considerations included exceptional performance as Chief Financial Officer and additional enterprise
responsibilities as part of the Office of the Chief Executive; oversight of all finance, audit and financial compliance functions across the enterprise and responsibility for treasury, long-term
capital allocation and financial planning, mergers and acquisitions and venture and private equity investment activity; and high regard by the Company's investors.
-
-
Mr. Witty's individual performance considerations included his strategic vision for Optum, commitment to the Company's mission and
culture, the strong operational performance of Optum in 2018 as described above, including strong execution and engagement of Optum leaders and its employee base.
-
-
Mr. Nelson's individual performance considerations included progress in increasing the amount of medical spend covered under value-based
arrangements, commitment to the Company's mission and culture, inconsistent operating performance of UnitedHealthcare, including the business results described above that met or exceeded some, but not
all, of the targets set, and expansion into to new specialty business lines.
The
Compensation Committee did not make specific assessments of, quantify or otherwise assign relative weightings to the factors listed above as it reached its decisions with respect to any of the
named executive
officers. See the 2018 Summary Compensation Table and other related compensation tables below for details regarding 2018 total compensation for the named executive officers.
Long-Term Incentive Compensation
Long-term incentive compensation, consisting solely of equity awards in 2018, represents the largest portion of executive officer
compensation. The combination of long-term incentives we employ provides a compelling performance-based compensation opportunity, aids in aligning and retaining the senior management team and
accelerates the advancement of business unit capabilities across the enterprise.
The
Compensation Committee determined that long-term equity-based compensation for 2018 should include grants of performance shares, RSUs and non-qualified stock options to achieve balance and
effectiveness in our equity-based compensation and to align the interests of our executive officers and our shareholders. The mix of equity-based compensation granted in February 2018 was as follows,
based on the grant date fair value of the total award: 50% performance shares, 25% RSUs and 25% non-qualified stock options. Performance share grants were selected to ensure a strong
pay-for-performance alignment of the Company's compensation program with drivers of shareholder value. RSU grants were selected because they are full value shares with time vesting and, as such,
provide added retention value. Non-qualified stock options were selected because they have value only if the Company's stock price increases and, as such, provide incentives for sustained long-term
stock price appreciation.
39
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Long-Term Awards
2016-2018 Long-Term Goals and Context
The long-term program creates financial incentives for achieving or exceeding three-year financial goals for the enterprise as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016-2018
Performance Measure
|
|
Weight
|
|
Threshold
Performance
|
|
Target
Performance
|
|
Maximum
Performance
|
|
Actual
2016-2018
Performance
|
|
Cumulative Adjusted Earnings Per Share
|
|
50%
|
|
$25.16
|
|
|
$26.55
|
|
|
$28.48
|
|
|
$28.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on Equity
|
|
50%
|
|
|
18.5%
|
|
|
|
20.5%
|
|
|
|
22.5%
|
|
|
|
20.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
performance measures and goals for the 2016-2018 performance period were established during the first quarter of 2016 based on the Company's long-term business plan. The first year of the
long-term business plan was based on the Company's 2016 business plan. Subsequent years were based on assumptions and growth initiatives developed by the Company's business units and reviewed by the
Board of Directors.
Key
assumptions and elements of the 2016-2018 long-term business plan were:
-
-
Modest US economic growth with a gradual increase in interest rates, and a more rapidly growing economy in Brazil, with a stable Brazilian
Real U.S. Dollar exchange rate;
-
-
Medicaid, Medicare Advantage, Medicare Supplement, Part D and Global enrollment growth over the three-year period;
-
-
Commercial risk-based health insurance growth from expansion into exchanges and growth in existing markets, leveraging enhanced products,
services and distribution. Commercial fee-based health insurance enrollment growth in all years;
-
-
Continued funding pressure in government businesses;
-
-
An expectation that medical cost trends would be consistent with historical levels and that there would not be net favorable or unfavorable
development in previously reported medical cost payable estimates;
-
-
Delivery of more effective and comprehensive clinical management;
-
-
Continued growth and enhancement of the quality and operations of our government businesses to compensate for continued expected funding
pressures;
-
-
Continued growth and alignment of the Optum businesses, including growth in technology-enabled services and specialty networks products and
services, driving distinctive revenue, margin and earnings performance;
-
-
Development and expansion of the Optum Care Delivery platform and capabilities;
-
-
Ongoing improvements to our consolidated operating cost ratio on a comparable business mix basis; and
-
-
Effective cross-enterprise collaboration among various business units for the benefit of customers and our overall reputation and performance.
40
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
To achieve maximum performance for both the long-term cash incentive plan and the performance share plan, the Company would have had to achieve cumulative three-year adjusted
earnings per share ("AEPS") performance of $28.48 and an average return on equity ("ROE") of 22.5%. These maximum performance levels corresponded to a compound annual growth rate in AEPS of 18.1% over
the three-year period. For long-term compensation purposes (see adjustments described below), the Company generated cumulative AEPS of $28.49, which was above maximum performance levels, and
accompanying ROE of 20.5%, which was at target levels. This represented a compound annual AEPS growth rate of 18.8% over the three-year performance period.
Factors
that positively or negatively influenced our results subsequent to the approval of the long-term business plan in early 2016 included:
-
-
Continued relatively favorable medical cost trend experience over the three-year period;
-
-
Significant losses from several state Medicaid managed care contracts;
-
-
A number of acquisitions, including Surgical Care Affiliates, Inc. in 2017 and Empresas Banmedica in 2018;
-
-
Challenging Brazilian economy and significant devaluation of the Brazilian Real against the U.S. Dollar; and
-
-
Greater than anticipated downward rate pressure in Medicare Advantage payment rates received from the federal government in 2017.
Similar
to the annual incentive plan, the Company's long-term incentive plan allows for adjustments to the Company's reported results in determining long-term incentive plan awards, namely adjustments
that account for the impact of changes in accounting principles, extraordinary items and unusual or non-recurring gains or losses. Two adjustments were made in measuring 2016-2018 performance, which
resulted in lowering the payouts to the named executive officers:
-
-
Excluded from 2018 results was the income tax benefit as a result of the Tax Cuts and Jobs Act enacted on December 22, 2017, which
lowered the federal statutory income tax rate to 21%.
-
-
Excluded from 2016 and 2017 results was the income tax benefit from adoption of Accounting Standards Update 2016-09, which modifies several
aspects of the accounting for share-based payment awards, including income tax consequences.
Since
these two events were outside of the control of management, resulting in a net benefit to management, they were excluded from final results.
2016-2018 Long-Term Cash Incentive Awards
The Long-Term Cash Incentive program has been phased out and the 2016-2018 performance period is the last cycle of the Long-Term Cash Incentive Award program.
No new participants were added to the Long-Term Cash Incentive program after 2016. At the beginning of each three-year performance period, the Compensation Committee approved a "long-term cash
incentive target opportunity" for each participating executive officer as a percentage of the executive officer's average base salary over the performance period. At the end of the performance period,
the Compensation Committee reviewed the Company's achievement of the performance goals set at the beginning of the performance period and determined long-term cash incentive awards based on such
performance. In determining these awards, the Compensation Committee can use discretion to increase or decrease the actual awards in view of actual performance and individual contributions, but did
not exercise such discretion for these awards.
41
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
For
the 2016-2018 performance period, the target opportunity for each participating executive officer was 50% of average base salary, and the maximum cash incentive award that an executive officer
could earn was set by the Compensation Committee to be equal to two times the applicable long-term cash incentive target opportunity. In choosing this target opportunity, the Compensation Committee
believed it was important to provide the same relative target opportunity to all of the named executive officers to increase collaboration, teamwork and accountability across the enterprise and to
recognize the skills and versatility of each executive officer.
The
target percentages for long-term cash incentive awards to our named executive officers and the actual long-term cash incentive awards paid for the 2016-2018 performance period are set forth in the
table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Cash Incentive Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Target
Percentage
(% of 3-Year
Average
Base Salary)
|
|
Threshold
Award
Value
($)
|
|
Target
Award
Value
($)
|
|
Maximum
Award
Value
($)
|
|
Actual
Award
Paid
($)
|
|
Paid
Award
(% of
Target)
|
|
Stephen J. Hemsley
|
|
|
50%
|
|
|
|
2,102
|
|
|
584,423
|
|
|
1,168,846
|
|
|
876,700
|
|
|
150%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
50%
|
|
|
|
2,136
|
|
|
593,718
|
|
|
1,187,436
|
|
|
890,600
|
|
|
150%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
primary factors considered by the Compensation Committee in the determination of the long-term cash incentive award amounts were achievement of the 2016-2018 AEPS and ROE goals between target and
maximum performance levels. Because the Long-Term Cash Incentive Award program is being phased out, with no new participants added after 2016, Messrs. Rex, Witty and Nelson did not participate
in the program.
2016-2018 Performance Share Awards
The use of performance shares as a component of the overall equity awards granted was based upon the Compensation Committee's desire to
encourage superior performance and build executive ownership; consideration of competitive market data; the value of utilizing a balanced system to facilitate prudent decision-making and mitigate
risk; and past conversations with shareholders about the desirability of this type of equity award as a central component of a pay-for-performance program. The actual shares that were earned for the
2016-2018 performance period were above target due to the Company's strong ROE and earnings growth performance and are set forth in the table below as well as reflected in the 2018 Option Exercises
and Stock Vested table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Performance Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Threshold
Shares
(#)
|
|
Target
Shares
(#)
|
|
Maximum
Shares
(#)
|
|
Actual
Shares Paid
(#)
|
|
Paid
Award
(% of
Target)
|
|
Stephen J. Hemsley
|
|
|
151
|
|
|
|
42,057
|
|
|
|
84,114
|
|
|
|
63,086
|
|
|
|
150
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
107
|
|
|
|
29,687
|
|
|
|
59,374
|
|
|
|
44,531
|
|
|
|
150
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
|
40
|
|
|
|
11,246
|
|
|
|
22,492
|
|
|
|
16,869
|
|
|
|
150
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
|
53
|
|
|
|
14,844
|
|
|
|
29,688
|
|
|
|
22,266
|
|
|
|
150
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Equity Awards
Equity Award Practices
The Compensation Committee's equity award policy requires that all grants of equity be made at set times. We do not have a specific program, plan or practice
to time equity compensation awards to named executive officers in coordination with our release of material information.
The
Company does not pay dividend equivalents on performance shares granted to employees. Unvested shares of RSUs receive dividend equivalents, which are subject to the same terms as the RSUs and will
be forfeited if the underlying RSUs do not vest. The determination to pay dividend equivalents on RSUs was made after considering market practices.
The
aggregate number of shares subject to equity awards made in 2018 for all employees was approximately 1% of the Company's shares outstanding at the end of 2018.
Equity Awards 2018
In February 2018, the Compensation Committee granted the following target number of performance shares, RSUs and stock options to our named
executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Target Number of Performance Shares
(#)
|
|
Annual RSU Award
(#)
|
|
Annual Stock Option Award
(#)
|
|
Stephen J. Hemsley
|
|
|
19,856
|
|
|
|
9,928
|
|
|
|
53,042
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
24,489
|
|
|
|
12,245
|
|
|
|
65,418
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
|
11,031
|
|
|
|
5,516
|
|
|
|
29,468
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
|
17,183
|
|
|
|
8,592
|
|
|
|
47,096
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
|
14,892
|
|
|
|
7,446
|
|
|
|
39,781
|
|
|
|
|
|
|
|
|
|
|
The
grant date fair values and terms of these equity awards are discussed in the 2018 Grants of Plan-Based Awards table.
43
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Other Compensation
Supplemental Retirement Benefits
In 2006, the accrued value of the benefit payable under Mr. Hemsley's individual supplemental executive retirement plan agreement (the
"SERP") was frozen based on his then-current age and average base salary and converted into a lump sum cash benefit of $10,703,229. On June 7, 2016, the Company amended Mr. Hemsley's
SERP to convert the $10,703,229 cash benefit into deferred stock units ("DSUs") to further align Mr. Hemsley's interests with those of shareholders, allow Mr. Hemsley to earn a return on
the SERP balance that will be tied to the Company's stock price performance, and provide the opportunity for Mr. Hemsley to receive deferred dividend equivalents on the SERP balance. Pursuant
to the amended SERP, the number of DSUs issued was based on the amount of the cash benefit divided by the average closing price of the Company's common stock over the preceding five trading days from
the date of conversion of the cash balance. Mr. Hemsley is eligible to receive dividend equivalents in the form of additional DSUs, which are paid at the same rate and at the same time that
dividends are paid to the Company's shareholders. During 2018, Mr. Hemsley received dividend equivalents in the form of an additional 1,110 DSUs that were added to the SERP balance. Upon
termination of Mr. Hemsley's employment for any reason, the DSUs held in the SERP will be converted into shares of common stock and will be paid six months and one day after his termination.
Benefits
In addition to generally available benefits, our executive officers are eligible to receive supplemental long-term disability coverage equal
to 60% of base salary, and all of our named executive officers, other than Mr. Hemsley, receive supplemental group term life insurance coverage of $2 million. Executive officers are also
eligible to participate in our non-qualified Executive Savings Plan. See the 2018 Non-Qualified Deferred Compensation table for additional information regarding contributions, earnings and
distributions for each named executive officer under the Executive Savings Plan. Our Executive Savings Plan does not provide for guaranteed or above-market interest.
Perquisites
We do not provide perquisites such as excise tax gross-ups, company automobiles, security services, private jet services, financial planning
services or club memberships to our executive officers. We have agreed to provide Mr. Witty with tax equalization payments to ensure that, as a U.S. non-resident, his overall tax obligation is
the same as if he were taxed exclusively in the United Kingdom where he resides, including assistance in tax return preparation due to the complexity of multi-jurisdictional filing requirements. We
prohibit personal use of corporate aircraft by any executive officer unless the Company is reimbursed for the full incremental cost to the Company of such use. Because there is essentially no
incremental cost to the Company, we permit an executive officer's family member to accompany the executive officer on a business flight on Company aircraft provided a seat is available.
Employment Agreements and Post-Employment Payments and Benefits
The Company has a policy of entering into employment agreements with each of our named executive officers. These employment agreements are
described in greater detail in "Executive Employment Agreements."
44
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Other Compensation Practices
Executive Stock Ownership Guidelines and Stock Retention Policy
The Compensation Committee believes that executive stock ownership aligns management's interests with those of shareholders and fosters a
long-term outlook, while also mitigating compensation risk. Under our stock ownership guidelines, each executive officer must beneficially own at least the following amounts of the Company's common
stock within five years of the executive officer's election or appointment as an executive officer:
-
-
for the Executive Chairman, eight times base salary;
-
-
for the CEO, eight times base salary;
-
-
for executive officers who are direct reports of the CEO, three times base salary; and
-
-
for other executive officers who are not direct reports of the CEO, two times base salary.
Stock
options and stock appreciation rights ("SARs") do not count towards satisfying the ownership requirements under the guidelines, regardless of their vesting status, and performance shares do not
count towards satisfying the ownership requirements until they are vested. Time-based RSUs and restricted stock awards are counted toward the satisfaction of the ownership requirements. The
Compensation Committee periodically reviews compliance with the ownership requirements. As of April 9, 2019, all of our named executive officers were in compliance with the ownership
requirements, including Mr. Wichmann, who owned shares with a value equal to 169 times his base salary.
The
Board has established a stock retention policy for executive officers that are subject to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which includes
our named executive officers. Under this policy, Section 16 officers are generally required to retain for at least one year one-third of the net shares acquired upon the vesting or exercise of
any equity awards.
Transactions in Company Securities; Prohibition on Hedging and Short Sales
In general, SEC rules prohibit uncovered short sales of our common stock by our executive officers, including the named executive officers.
Accordingly, our insider trading policy prohibits short sales of our common stock by all employees and directors. Our insider trading policy prohibits hedging transactions by all directors, executive
officers and employees and requires advance approval of the Compensation Committee of any pledging of common stock by directors, executive officers and other members of management. In 2018, no
executive officer or director sought or received advance approval from the Compensation Committee regarding pledging transactions, and no executive officer had any pledges outstanding.
45
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Potential Impact on Compensation from Executive Misconduct/Compensation Clawbacks
If the Board of Directors determines that an executive officer has engaged in fraud or misconduct, the Board of Directors may take a range of
actions to remedy the misconduct, prevent its recurrence
and impose such discipline as would be appropriate, including, without limit: (i) terminating employment and (ii) initiating legal action against the executive officer. In addition, with
respect to our senior executives, including our named executive officers, if the fraud or misconduct causes, in whole or in part, a material restatement of the Company's financial statements, action
may include (a) seeking reimbursement of the entire amount of cash incentive compensation awarded to the executive officer, if the executive officer would have received a lower (or no) cash
incentive award if calculated based on the restated financial results; (b) canceling all outstanding vested and unvested equity awards subject to the clawback policy and requiring the executive
officer to return to the Company all gains from equity awards realized during the 12-month period following the filing of the incorrect financial statements; and (c) seeking reimbursement of
the entire amount of any bonus paid.
Consideration of Risk in Named Executive Officer Compensation
Our compensation programs are balanced, focused on long-term pay-for-performance, allow for discretion and are overseen by an independent
Compensation Committee. The Compensation Committee believes that the design of the compensation program for our executive officers does not encourage excessive or unnecessary risk-taking, as
illustrated by the following list of features:
-
-
Our annual cash bonus program includes a variety of financial and non-financial measures that require substantial performance on a broad range
of initiatives;
-
-
Our equity awards are delivered through a balanced mix of performance shares, RSUs and stock options to encourage sustained performance over
time;
-
-
We have stock ownership guidelines for our executive officers;
-
-
We generally require executive officers to hold, for at least one year, one-third of the net shares acquired upon vesting or exercise of any
equity award granted; and
-
-
We have a clawback policy that entitles the Board of Directors to seek reimbursement from any executive involved in fraud or misconduct causing
a restatement of financials, or violation of certain employment agreement provisions, including any non-compete, non-solicit or confidentiality provisions. The executive would be required to reimburse
the Company the entire amount of a bonus paid, not just the amount that would not have been earned had the executive received a lower award based on the restated earnings.
In
addition, our Compensation Committee retains discretion to adjust compensation for quality of performance, adherence to Company values and other factors.
As
discussed in "Enterprise-Wide Incentive Compensation Risk Assessment," a compensation risk assessment is performed annually and the results are reviewed with the Compensation Committee.
46
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Accounting and Tax Considerations
Internal Revenue Code Section 162(m)(6) addresses the tax deductibility of compensation paid by health insurance providers, including
the Company. Section 162(m)(6) provides an annual tax deduction limit of $500,000 per person per year for compensation that we pay to any of our employees, directors, officers and any other
individuals who provide services to or on behalf of the Company. Any outstanding stock options and SARs that were granted prior to 2010 are not subject to the tax deduction limitation. While the
Committee considers the impact of Section 162(m)(6), it believes that shareholder interests are best served by not restricting the Committee's discretion and flexibility in crafting the
executive compensation program, even if non-deductible compensation expenses could result. The Committee also considers the accounting consequences of its compensation decisions.
Peer Group and Managed Care Companies
|
|
|
|
|
Peer Group
|
|
Managed Care Companies
|
3M Company
|
|
Gilead Sciences Inc.
|
|
Aetna Inc.
|
Abbott Laboratories
|
|
HCA Healthcare
|
|
Anthem Inc.
|
AbbVie Inc.
|
|
Hewlett-Packard Company
|
|
CIGNA Corp.
|
Accenture, plc
|
|
Humana Inc.
|
|
Humana Inc.
|
Aetna Inc.
|
|
International Business Machines Corp.
|
|
|
American Express Company
|
|
Johnson & Johnson
|
|
|
American International Group, Inc.
|
|
JPMorgan Chase & Co.
|
|
|
Ameriprise Financial, Inc.
|
|
MasterCard Incorporated
|
|
|
AmerisourceBergen Corporation
|
|
McKesson Corporation
|
|
|
Amgen Inc.
|
|
Medtronic plc
|
|
|
Anthem Inc.
|
|
Merck & Co. Inc.
|
|
|
Bank of America Corporation
|
|
MetLife, Inc.
|
|
|
Berkshire Hathaway Inc.
|
|
Microsoft Corporation
|
|
|
Best Buy Co., Inc.
|
|
Morgan Stanley
|
|
|
Biogen Inc.
|
|
Oracle Corporation
|
|
|
Bristol-Myers Squibb Company
|
|
Pfizer Inc.
|
|
|
Cardinal Health, Inc.
|
|
Procter & Gamble Co.
|
|
|
Cargill, Incorporated
|
|
Prudential Financial, Inc.
|
|
|
CIGNA Corp.
|
|
Target Corp.
|
|
|
Cisco Systems, Inc.
|
|
The Allstate Corporation
|
|
|
Citigroup, Inc.
|
|
The Goldman Sachs Group, Inc.
|
|
|
CVS Health Corporation
|
|
The Travelers Companies, Inc.
|
|
|
Eli Lilly and Company
|
|
U.S. Bancorp
|
|
|
Express Scripts Holding Company
|
|
United Parcel Service, Inc.
|
|
|
FedEx Corporation
|
|
Visa, Inc.
|
|
|
General Electric Company
|
|
Walgreens Boots Alliance, Inc.
|
|
|
General Mills, Inc.
|
|
Wells Fargo & Company
|
|
|
47
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Compensation Committee Report
The Compensation Committee has reviewed and discussed the above Compensation Discussion and Analysis with management. Based on its review and
discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the proxy statement and incorporated by reference into the
Company's Annual Report on Form 10-K for the year ended
December 31, 2018. This report was provided by the following independent directors who comprise the Compensation Committee:
William
C. Ballard, Jr. (Chair)
Richard T. Burke
Timothy P. Flynn
Gail R. Wilensky, Ph.D.
Compensation Committee Interlocks and Insider Participation
During fiscal 2018, Messrs. Ballard, Burke, Flynn, Witty and Dr. Wilensky served on the Compensation Committee. Mr. Witty
stepped down from the Board on March 13, 2018. None of these persons had ever been an officer or employee of the Company or any of its subsidiaries while serving on the Compensation Committee.
Furthermore, during 2018, none of these persons served as a member of the compensation committee (or other board committee performing equivalent functions) or as a director of another entity where an
executive officer of such entity served on our Compensation Committee or Board.
48
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
2018 Summary Compensation Table*
The following table provides certain summary information for the years ended December 31, 2018, 2017 and 2016 relating to compensation
paid or granted to, or accrued by us on behalf of our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
(1)
|
|
Bonus
($)
|
|
Stock
Awards
($)
(2)
|
|
Option
Awards
($)
(3)
|
|
Non-Equity
Incentive Plan
Compensation
($)
(4)
|
|
Change in
Pension Value
and
Non-Qualified
Deferred
Compensation
Earnings
($)
(5)
|
|
All Other
Compensation
($)
(6)
|
|
Total
($)
|
|
Stephen J. Hemsley
|
|
2018
|
|
1,000,000
|
|
|
|
|
|
6,750,246
|
|
2,250,042
|
|
|
876,700
|
|
|
|
281,015
|
|
|
|
194,510
|
|
|
11,352,513
|
|
Executive Chairman
|
|
2017
|
|
1,206,538
|
|
|
|
|
|
8,325,219
|
|
2,775,462
|
|
|
5,745,600
|
|
|
|
230,853
|
|
|
|
170,481
|
|
|
18,454,153
|
|
|
|
2016
|
|
1,300,000
|
|
|
|
|
|
7,012,640
|
|
2,337,015
|
|
|
4,908,500
|
|
|
|
148,398
|
|
|
|
137,358
|
|
|
15,843,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
2018
|
|
1,300,000
|
|
|
|
|
|
8,325,394
|
|
2,775,032
|
|
|
5,390,600
|
|
|
|
|
|
|
|
316,330
|
|
|
18,107,356
|
|
CEO
|
|
2017
|
|
1,162,308
|
|
|
|
|
|
8,325,566
|
|
2,775,328
|
|
|
4,909,800
|
|
|
|
|
|
|
|
216,974
|
|
|
17,389,976
|
|
|
|
2016
|
|
1,100,000
|
|
|
|
|
|
4,950,066
|
|
1,649,664
|
|
|
4,474,500
|
|
|
|
|
|
|
|
142,216
|
|
|
12,316,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
2018
|
|
976,923
|
|
|
|
|
|
3,750,212
|
|
1,250,033
|
|
|
2,500,000
|
|
|
|
|
|
|
|
110,744
|
|
|
8,587,912
|
|
Executive Vice President and CFO
|
|
2017
|
|
842,308
|
|
|
|
|
|
3,750,131
|
|
1,250,201
|
|
|
2,000,000
|
|
|
|
|
|
|
|
88,205
|
|
|
7,930,845
|
|
|
|
2016
|
|
721,923
|
|
|
|
|
|
3,125,283
|
|
1,875,049
|
|
|
1,400,000
|
|
|
|
|
|
|
|
62,968
|
|
|
7,185,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
2018
|
|
613,462
|
|
|
|
|
|
16,300,304
|
|
2,100,011
|
|
|
2,200,000
|
|
|
|
|
|
|
|
18,773
|
|
|
21,232,550
|
|
Executive Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and CEO, Optum
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
2018
|
|
984,615
|
|
|
|
|
|
5,062,684
|
|
1,687,510
|
|
|
2,000,000
|
|
|
|
|
|
|
|
28,215
|
|
|
9,763,024
|
|
Executive Vice President
|
|
2017
|
|
857,692
|
|
|
|
|
|
3,150,092
|
|
1,050,190
|
|
|
2,500,000
|
|
|
|
|
|
|
|
22,470
|
|
|
7,580,444
|
|
and CEO, UnitedHealthcare
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
Please
see "Compensation Discussion and Analysis" above for a description of our executive compensation program necessary for an understanding of the information
disclosed in this table. Please see "Executive Employment Agreements" below for a description of the material terms of each named executive officer's employment agreement.
-
(1)
-
Amounts
reported reflect the base salary earned by named executive officers in the years ended December 31, 2018, 2017 and 2016. Amounts reported for 2018
include the following amounts deferred by the named executive officers under our Executive Savings Plan. Mr. Witty was ineligible to participate in the Executive Savings Plan during his tenure
as a director from the beginning of the fiscal year through March 13, 2018.
|
|
|
|
|
|
|
Name
|
|
Amount
Deferred
|
|
Stephen J. Hemsley
|
|
|
$
|
60,000
|
|
|
David S. Wichmann
|
|
|
$
|
78,000
|
|
|
John F. Rex
|
|
|
$
|
58,615
|
|
|
Andrew P. Witty
|
|
|
|
|
|
Steven H. Nelson
|
|
|
|
|
|
49
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
-
(2)
-
The
amounts reported in this column reflect the aggregate grant date fair value of the RSUs and performance shares (at target) granted in 2018, 2017 and 2016 and are
computed in accordance with FASB ASC Topic 718, based on the closing stock price on the grant date. The grant date fair value of RSUs granted in 2018 and the grant date fair value of performance
shares granted in 2018 if target performance and maximum performance is achieved are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
|
|
Restricted
Stock Units
|
|
Name
|
|
Target
|
|
Maximum
|
|
Stephen J. Hemsley
|
|
|
$
|
2,250,082
|
|
|
|
$
|
4,500,164
|
|
|
|
$
|
9,000,328
|
|
|
David S. Wichmann
|
|
|
$
|
2,775,207
|
|
|
|
$
|
5,550,187
|
|
|
|
$
|
11,100,374
|
|
|
John F. Rex
|
|
|
$
|
1,250,146
|
|
|
|
$
|
2,500,066
|
|
|
|
$
|
5,000,132
|
|
|
Andrew P. Witty
|
|
|
$
|
12,100,263
|
|
|
|
$
|
4,200,041
|
|
|
|
$
|
8,400,082
|
|
|
Steven H. Nelson
|
|
|
$
|
1,687,561
|
|
|
|
$
|
3,375,123
|
|
|
|
$
|
6,750,246
|
|
|
-
-
See
the 2018 Grants of Plan-Based Awards table for more information on stock awards granted in 2018.
-
(3)
-
The
actual value to be realized by a named executive officer depends upon the performance of the Company's stock and the length of time the award is held. No value
will be realized with respect to any award if the Company's stock price does not increase following the award's grant date or if the executive officer does not satisfy the vesting criteria.
-
-
The
amounts reported in this column for 2018 reflect the aggregate grant date fair value of stock options granted in 2018 computed in accordance with
FASB ASC Topic 718. For a description of the assumptions used in computing the aggregate grant date fair value, see Note 11 to the Consolidated Financial Statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2018.
-
(4)
-
Amounts
reported include both annual and long-term cash incentive awards to our named executive officers under our 2008 Executive Incentive Plan. The 2018 annual
incentive awards, including amounts deferred by the named executive officers, were the following:
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Total Amount of
Annual Cash
Incentive Award
|
|
Amount of Annual
Cash Incentive
Award Deferred
|
|
Stephen J. Hemsley
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
$
|
4,500,000
|
|
|
|
$
|
270,000
|
|
|
John F. Rex
|
|
|
$
|
2,500,000
|
|
|
|
$
|
150,000
|
|
|
Andrew P. Witty
|
|
|
$
|
2,200,000
|
|
|
|
|
|
|
Steven H. Nelson
|
|
|
$
|
2,000,000
|
|
|
|
|
|
|
-
-
The
long-term cash incentive awards for the 2016-2018 incentive period under our 2008 Executive Incentive Plan, including amounts deferred by the named
executive officers, are set forth below. Because the long-term cash incentive award program is being phased out, with no new participants added after 2016, Messrs. Rex, Witty and Nelson did not
participate in the program.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Period
|
|
Total Amount of
Long-Term Cash
Incentive Award
|
|
Amount of
Long-Term Cash
Incentive Award
Deferred
|
|
Stephen J. Hemsley
|
|
|
2016-2018
|
|
|
|
$
|
876,700
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
2016-2018
|
|
|
|
$
|
890,600
|
|
|
|
$
|
53,436
|
|
|
50
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
-
(5)
-
Named
executive officers participate in our Executive Savings Plan, which is a non-qualified deferred compensation plan. The Executive Savings Plan does not credit
above-market earnings or preferential earnings to the amounts deferred, and accordingly, no non-qualified deferred compensation earnings have been reported. Under the Executive Savings Plan, there are
no measuring investments tied to Company stock performance. The measuring investments are a predetermined collection of unaffiliated mutual funds identified by the Company.
-
-
As
described in the Compensation Discussion and Analysis section of the 2017 proxy statement, on June 7, 2016, the Company amended
Mr. Hemsley's SERP to convert the cash benefit into DSUs. The DSUs held in the SERP are eligible to receive dividend equivalents in the form of additional DSUs, which are paid at the same rate
and at the same time that dividends are paid to the Company's shareholders. The amounts reported in the table reflect the value of dividend equivalents granted.
-
(6)
-
All
other compensation includes the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
Company Matching
Contributions
Under 401(k)
Savings Plan
|
|
Company Matching
Contributions
Under Executive
Savings Plan
|
|
Insurance
Premiums
|
|
Hart-Scott-
Rodino
Filing Fee
|
|
Employment
Onboarding
and Tax
Equalization
|
|
Stephen J. Hemsley
|
|
|
2018
|
|
|
|
$
|
12,375
|
|
|
|
$
|
180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
2018
|
|
|
|
$
|
12,375
|
|
|
|
$
|
166,500
|
|
|
|
$
|
12,455
|
|
|
|
$
|
125,000
|
|
|
|
|
|
|
John F. Rex
|
|
|
2018
|
|
|
|
$
|
8,981
|
|
|
|
$
|
89,308
|
|
|
|
$
|
12,455
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
15,588
|
|
|
Steven H. Nelson
|
|
|
2018
|
|
|
|
$
|
12,375
|
|
|
|
|
|
|
|
$
|
15,840
|
|
|
|
|
|
|
|
|
|
|
-
-
As
permitted by SEC rules, we have omitted perquisites and other personal benefits that we provided to certain named executive officers in 2018 if the
aggregate amount of such compensation to each of such named executive officers was less than $10,000. The Company provides each of Messrs. Wichmann, Rex, Witty and Nelson a $2 million
face value term life insurance policy. The value of Company stock owned by Mr. Wichmann exceeded limits set forth in the Hart-Scott-Rodino (HSR) regulations and he was required to make an HSR
filing in 2018 in order to maintain and increase his stock ownership levels in the Company. Due to Mr. Wichmann's position as CEO and a director of the Company, he is not able to rely on the
passive investor exemption contained in the HSR regulations. Pursuant to a policy approved by the Compensation Committee, the Company made the payment of the $125,000 HSR filing fee on
Mr. Wichmann's behalf. This amount was imputed as income to Mr. Wichmann, and Mr. Wichmann did not receive any tax gross-up on this amount. The employment onboarding payments for
Mr. Witty were made to assist him in finding temporary housing in the United States as part of the commencement of his employment with the Company. Mr. Witty is also provided with tax
equalization pursuant to the Company's tax equalization policy to ensure that as a U.S. non-resident, his overall tax obligation is the same as if he were taxed exclusively in the United Kingdom where
he resides. This policy also provides assistance in preparation of tax returns due to the complexity of multi-jurisdictional filing requirements.
-
(7)
-
Mr. Witty
became CEO of Optum, effective July 1, 2018. Compensation paid in connection with Mr. Witty's service as a director, from the
beginning of the fiscal year through March 13, 2018, is reported in the Director Compensation Table.
51
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
2018 Grants of Plan-Based Awards*
The following table presents information regarding each grant of an award under our compensation plans made during 2018 to our named executive
officers for fiscal year 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
|
|
All Other
Stock
Awards:
Number
of Shares
of Stock
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
|
|
Exercise
or Grant
Price of
Option
|
|
Grant Date
Fair Value
of Stock
or Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
or Units
(#)
|
|
Options
(#)
|
|
Awards
($/Sh)
|
|
Awards
($)
(1)
|
|
Stephen J. Hemsley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Award
(3)(4)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
46
|
|
|
19,856
|
|
|
39,712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500,164
|
|
|
RSU Award
(3)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,928
|
|
|
|
|
|
|
|
|
|
|
|
2,250,082
|
|
|
Stock Option Award
(3)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,042
|
|
|
|
226.64
|
|
|
|
2,250,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive Award
(2)
|
|
|
|
|
2,340,000
|
|
|
2,600,000
|
|
|
5,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Award
(3)(4)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
57
|
|
|
24,489
|
|
|
48,978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,550,187
|
|
|
RSU Award
(3)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,245
|
|
|
|
|
|
|
|
|
|
|
|
2,775,207
|
|
|
Stock Option Award
(3)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,418
|
|
|
|
226.64
|
|
|
|
2,775,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive Award
(2)
|
|
|
|
|
1,350,000
|
|
|
1,500,000
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Award
(3)(4)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
26
|
|
|
11,031
|
|
|
22,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,500,066
|
|
|
RSU Award
(4)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,516
|
|
|
|
|
|
|
|
|
|
|
|
1,250,146
|
|
|
Stock Option Award
(4)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,468
|
|
|
|
226.64
|
|
|
|
1,250,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive Award
(2)
|
|
|
|
|
1,980,000
|
|
|
2,200,000
|
|
|
4,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Award
(3)(4)
|
|
6/5/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
40
|
|
|
17,183
|
|
|
34,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,200,041
|
|
|
RSU Award
(3)
|
|
6/5/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,592
|
|
|
|
|
|
|
|
|
|
|
|
2,100,143
|
|
|
RSU Award
(5)
|
|
6/5/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,912
|
|
|
|
|
|
|
|
|
|
|
|
10,000,120
|
|
|
Stock Option Award
(3)
|
|
6/5/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,096
|
|
|
|
244.43
|
|
|
|
2,100,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive Award
(2)
|
|
|
|
|
1,800,000
|
|
|
2,000,000
|
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Award
(3)(4)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
34
|
|
|
14,892
|
|
|
29,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,375,123
|
|
|
RSU Award
(3)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,446
|
|
|
|
|
|
|
|
|
|
|
|
1,687,561
|
|
|
Stock Option Award
(3)
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,781
|
|
|
|
226.64
|
|
|
|
1,687,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
Please
see "Compensation Discussion and Analysis" above for a description of our executive compensation program necessary for an understanding of the information
disclosed in this table.
-
(1)
-
The
actual value to be realized by a named executive officer depends upon the appreciation in value of the Company's stock and the length of time the award is held.
No value will be realized with respect to any stock option award if the Company's stock price does not increase following the grant date. For a description of the assumptions used in computing grant
date fair value for stock option awards pursuant to FASB ASC Topic 718, see Note 11 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K
for the year ended December 31, 2018. The grant date fair value of each RSU award and targeted grant date value of each performance share award were computed in accordance with FASB ASC
Topic 718 based on the closing stock price on the grant date. Under the 2011 Stock Incentive Plan, all equity-based compensation awards are subject to one year minimum vesting and
exercisability requirements, subject to an exception for a limited number of shares not to exceed 5%.
-
(2)
-
Amounts
represent estimated payouts of annual cash incentive awards granted under our Executive Incentive Plan in 2018. The Executive Incentive Plan permits a
maximum annual bonus pool for executive officers equal to 2% of the Company's net income (as defined in the plan) and no executive officer may receive more than 25% of such annual bonus pool. The
Compensation Committee has generally limited annual cash incentive payouts to not more than two times the target amount, and the maximum amounts shown for each named
52
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
executive
officer equal two times each executive officer's target amount. In order for any amount to be paid, the Company must achieve approved performance measures of (i) revenue,
(ii) operating income, (iii) cash flow, (iv) net promoter score, (v) employee engagement and (vi) employee teamwork. The estimated threshold award represents the
amount that may be paid if threshold performance is achieved on each of the performance measures. Once threshold performance is achieved, the Compensation Committee has the discretion to pay an award.
The actual annual cash incentive amounts earned in connection with the 2018 awards are reported in the 2018 Summary Compensation Table.
-
(3)
-
Amounts
represent grants under the 2011 Stock Incentive Plan with the terms set forth below. In addition, the RSUs are eligible to receive dividend equivalents,
which are subject to the same terms as the RSUs and will be forfeited if the underlying RSUs do not vest. No dividend equivalents are paid on performance shares.
|
|
|
|
|
Award Type and Vesting Terms
|
|
Termination Provisions
|
|
Performance Share Award (3-year performance period with cliff vesting)
|
|
Unvested performance share
awards will vest if, within two years of a change in control, an executive terminates employment for Good Reason or is terminated without Cause (
i.e.,
"double trigger" vesting). The number of
performance awards that vest will be dependent upon the performance vesting criteria that have been satisfied.
If the executive officer is retirement-eligible, upon retirement, the number of performance shares that are earned at the end of the performance period based on
actual performance, if any, will vest as if the executive officer had been continuously employed throughout the entire performance period, provided the executive officer had served for at least one year of the performance period.
Upon death, disability or termination of
employment for Good Reason or other than for Cause (as these terms are defined in the award agreement), the executive officer will receive at the end of the applicable performance period, a pro rata number of performance shares that are earned, if
any, based on the number of full months employed plus, if applicable, the number of months for any severance period.
|
|
|
|
|
|
RSU Award
(4-year ratable vesting*)
|
|
Unless the executive
officer is retirement-eligible, award is subject to earlier termination upon certain events related to termination of employment.
|
|
and
|
|
Unvested award will vest
in full upon death or disability.
|
|
Stock Option Award
(4-year ratable vesting)
|
|
Unvested award will vest
in full if, within two years of a change in control, an executive terminates employment for Good Reason or is terminated without Cause (
i.e.
, "double trigger" vesting), as these terms are defined in the
award agreement.
|
|
|
|
|
-
*
-
Except as provided in footnote 4 to the Outstanding Equity Awards at 2018 Fiscal Year-End table with respect to
Messrs. Hemsley, Wichmann, and Nelson.
53
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
-
(4)
-
Amounts
represent the estimated future number of performance shares that may be earned under our 2011 Stock Incentive Plan at each of the threshold, target and
maximum levels. The performance share award will be paid out in shares of Company common stock. The number of performance shares that the executive officer will receive will be determined at the
conclusion of the 2018-2020 performance period and will be dependent upon the Company's achievement of a cumulative AEPS measure and an average ROE measure approved by the Compensation Committee. The
Compensation Committee has the discretion to reduce the number of performance shares an executive officer is entitled to receive. The estimated threshold award represents the number of performance
shares that may be awarded if threshold performance is achieved on one of the performance measures.
-
(5)
-
Represents
a grant made to Mr. Witty in connection with his appointment as Chief Executive Officer, Optum. These RSUs vest ratably over 5 years.
Compensation paid in connection with Mr. Witty's service as a director, from the beginning of the fiscal year through March 13, 2018, is reported in the Director Compensation Table.
54
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Outstanding Equity Awards at 2018 Fiscal Year-End
The following table presents information regarding outstanding equity awards held at the end of fiscal year 2018 by our named executive
officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option/SAR Awards
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date of
Option/
SAR
Grant
|
|
Number of
Securities
Underlying
Unexercised
Options/
SARs (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options/
SARs (#)
Unexercisable
|
|
Option/
SAR
Exercise/
Grant
Price ($)
|
|
Option/
SAR
Expiration
Date
(1)
|
|
|
|
Stock
Award
Grant Date
|
|
Number
of
Shares or
Units of
Stock
That
Have Not
Vested (#)
|
|
Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)
(2)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares or
Units That
Have Not
Vested (#)
|
|
Equity
Incentive
Plan
Awards:
Market
Value of
Unearned
Shares or
Units That
Have Not
Vested ($)
(2)
|
|
Stephen J. Hemsley
|
|
2/13/2018
|
|
|
|
|
|
|
53,042
|
(3)
|
|
|
226.64
|
|
|
|
2/13/2028
|
|
|
|
|
|
2/13/2018
|
|
|
|
9,629
|
(4)
|
|
|
2,398,776
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2017
|
|
|
24,176
|
|
|
|
72,530
|
(3)
|
|
|
160.31
|
|
|
|
2/8/2027
|
|
|
|
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
19,856
|
(5)
|
|
|
4,946,527
|
|
|
|
|
2/9/2016
|
|
|
59,135
|
|
|
|
59,135
|
(3)
|
|
|
111.16
|
|
|
|
2/9/2026
|
|
|
|
|
|
2/8/2017
|
|
|
|
13,361
|
(4)
|
|
|
3,328,492
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/2015
|
|
|
77,758
|
|
|
|
25,920
|
(3)
|
|
|
108.97
|
|
|
|
2/10/2025
|
|
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
34,621
|
(5)
|
|
|
8,624,784
|
|
|
|
|
2/12/2014
|
|
|
83,918
|
|
|
|
|
|
|
|
70.24
|
|
|
|
2/12/2024
|
|
|
|
|
|
2/9/2016
|
|
|
|
11,004
|
(4)
|
|
|
2,741,316
|
|
|
|
|
|
|
|
|
|
|
|
|
2/6/2013
|
|
|
99,312
|
|
|
|
|
|
|
|
57.38
|
|
|
|
2/6/2023
|
|
|
|
|
|
2/10/2015
|
|
|
|
5,701
|
(4)
|
|
|
1,420,233
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2010
|
|
|
114,036
|
|
|
|
|
|
|
|
33.00
|
|
|
|
2/9/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
2/13/2018
|
|
|
|
|
|
|
65,418
|
(3)
|
|
|
226.64
|
|
|
|
2/13/2028
|
|
|
|
|
|
2/13/2018
|
|
|
|
11,877
|
(4)
|
|
|
2,958,798
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2017
|
|
|
7,507
|
|
|
|
22,524
|
(3)
|
|
|
194.50
|
|
|
|
8/15/2027
|
|
|
|
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
24,489
|
(5)
|
|
|
6,100,700
|
|
|
|
|
2/8/2017
|
|
|
15,932
|
|
|
|
47,798
|
(3)
|
|
|
160.31
|
|
|
|
2/8/2027
|
|
|
|
|
|
8/15/2017
|
|
|
|
3,727
|
(4)
|
|
|
928,470
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2016
|
|
|
41,742
|
|
|
|
41,743
|
(3)
|
|
|
111.16
|
|
|
|
2/9/2026
|
|
|
|
|
|
8/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
9,731
|
(5)
|
|
|
2,424,187
|
|
|
|
|
2/10/2015
|
|
|
54,888
|
|
|
|
18,297
|
(3)
|
|
|
108.97
|
|
|
|
2/10/2025
|
|
|
|
|
|
2/8/2017
|
|
|
|
8,804
|
(4)
|
|
|
2,193,252
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2014
|
|
|
50,351
|
|
|
|
|
|
|
|
70.24
|
|
|
|
2/12/2024
|
|
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
22,816
|
(5)
|
|
|
5,683,922
|
|
|
|
|
2/6/2013
|
|
|
59,587
|
|
|
|
|
|
|
|
57.38
|
|
|
|
2/6/2023
|
|
|
|
|
|
2/9/2016
|
|
|
|
7,767
|
(4)
|
|
|
1,934,915
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2010
|
|
|
76,024
|
|
|
|
|
|
|
|
33.00
|
|
|
|
2/9/2020
|
|
|
|
|
|
2/10/2015
|
|
|
|
4,024
|
(4)
|
|
|
1,002,459
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2009
|
|
|
113,122
|
|
|
|
|
|
|
|
29.74
|
|
|
|
2/23/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
2/13/2018
|
|
|
|
|
|
|
29,468
|
(3)
|
|
|
226.64
|
|
|
|
2/13/2028
|
|
|
|
|
|
2/13/2018
|
|
|
|
5,592
|
(4)
|
|
|
1,393,079
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2017
|
|
|
10,890
|
|
|
|
32,671
|
(3)
|
|
|
160.31
|
|
|
|
2/8/2027
|
|
|
|
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
11,031
|
(5)
|
|
|
2,748,043
|
|
|
|
|
6/7/2016
|
|
|
28,208
|
|
|
|
28,208
|
(3)
|
|
|
136.94
|
|
|
|
6/7/2026
|
|
|
|
|
|
2/8/2017
|
|
|
|
6,019
|
(4)
|
|
|
1,499,453
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2016
|
|
|
15,811
|
|
|
|
15,812
|
(3)
|
|
|
111.16
|
|
|
|
2/9/2026
|
|
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
15,595
|
(5)
|
|
|
3,885,026
|
|
|
|
|
2/10/2015
|
|
|
19,128
|
|
|
|
6,376
|
(3)
|
|
|
108.97
|
|
|
|
2/10/2025
|
|
|
|
|
|
6/7/2016
|
|
|
|
4,759
|
(4)
|
|
|
1,185,562
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2014
|
|
|
44,757
|
|
|
|
|
|
|
|
70.24
|
|
|
|
2/12/2024
|
|
|
|
|
|
2/9/2016
|
|
|
|
2,943
|
(4)
|
|
|
733,160
|
|
|
|
|
|
|
|
|
|
|
|
|
2/6/2013
|
|
|
52,972
|
|
|
|
|
|
|
|
57.38
|
|
|
|
2/6/2023
|
|
|
|
|
|
2/10/2015
|
|
|
|
1,403
|
(4)
|
|
|
349,515
|
|
|
|
|
|
|
|
|
|
|
|
|
6/5/2012
|
|
|
80,000
|
|
|
|
|
|
|
|
56.04
|
|
|
|
6/5/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
6/5/2018
|
|
|
|
|
|
|
47,096
|
(3)
|
|
|
244.43
|
|
|
|
6/5/2028
|
|
|
|
|
|
6/5/2018
|
|
|
|
8,681
|
(4)
|
|
|
2,162,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/5/2018
|
|
|
|
|
|
|
|
|
|
|
|
17,183
|
(5)
|
|
|
4,280,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/5/2018
|
|
|
|
41,336
|
(6)
|
|
|
10,297,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
2/13/2018
|
|
|
|
|
|
|
39,781
|
(3)
|
|
|
226.64
|
|
|
|
2/13/2028
|
|
|
|
|
|
2/13/2018
|
|
|
|
7,222
|
(4)
|
|
|
1,799,145
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
27,444
|
(3)
|
|
|
160.31
|
|
|
|
2/8/2027
|
|
|
|
|
|
2/13/2018
|
|
|
|
|
|
|
|
|
|
|
|
14,892
|
(5)
|
|
|
3,709,895
|
|
|
|
|
2/9/2016
|
|
|
|
|
|
|
20,872
|
(3)
|
|
|
111.16
|
|
|
|
2/9/2026
|
|
|
|
|
|
2/8/2017
|
|
|
|
5,056
|
(4)
|
|
|
1,259,551
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/2015
|
|
|
|
|
|
|
8,594
|
(3)
|
|
|
108.97
|
|
|
|
2/10/2025
|
|
|
|
|
|
2/8/2017
|
|
|
|
|
|
|
|
|
|
|
|
13,100
|
(5)
|
|
|
3,263,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2016
|
|
|
|
3,883
|
(4)
|
|
|
967,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/2015
|
|
|
|
1,891
|
(4)
|
|
|
471,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
expiration date shown is the latest date that stock options/SARs may be exercised. Stock options/SARs may terminate earlier in certain circumstances, such as in
connection with the named executive officer's termination of employment.
-
(2)
-
Based
on the per share closing market price of our common stock on December 31, 2018 of $249.12.
-
(3)
-
Vest
25% annually over a four-year period beginning on the first anniversary of the grant date.
55
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
-
(4)
-
Vest
25% annually over a four-year period beginning on the first anniversary of the grant date, other than for retirement eligible executive officers. A portion of a
retirement eligible executive officer's award that otherwise would have vested on the next specified vesting date is cancelled to pay applicable FICA taxes owed by the executive officer. The
cancellation occurs in the year of grant if the executive officer is retirement eligible during that year or in the first year the executive officer becomes retirement eligible. The remainder of the
award vests proportionally over the remaining vesting period. Messrs. Hemsley, Wichmann and Nelson are retirement eligible. These RSUs are eligible to and did receive dividend equivalents
converted into additional shares; accordingly, the number of shares shown has been rounded up to the nearest whole share. For more information on RSUs cancelled in 2018, please see the 2018 Option
Exercises and Stock Vested table.
-
(5)
-
Vest
100% at the end of the three-year performance period. The number of performance shares that the executive officer will receive is dependent upon the achievement
of a cumulative EPS measure and an average ROE measure approved by the Compensation Committee. The number of performance shares reported above for grants made in 2018 and 2017 is at the target number
established by the Compensation Committee because we currently believe that is the probable outcome of the performance conditions based on the Company's performance through December 31, 2018.
-
(6)
-
Vest
20% annually over a five-year period beginning on the first anniversary of the grant date.
2018 Option Exercises and Stock Vested
The following table presents information regarding the exercise of stock options during fiscal year 2018 by our named executive officers and
vesting of restricted stock awards held by our named executive officers for fiscal year 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
Value
Realized on
Exercise
($)
(1)
|
|
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
|
Value
Realized on
Vesting
($)
|
|
Stephen J. Hemsley
|
|
|
169,683
|
|
|
|
42,897,559
|
(2)
|
|
|
|
|
85,279
|
|
|
|
20,656,413
|
(3)(4)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
|
|
|
|
|
|
|
|
|
|
59,439
|
|
|
|
14,459,960
|
(3)(4)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
|
|
|
|
|
|
|
|
|
|
|
27,830
|
|
|
|
6,699,437
|
(3)(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
|
38,249
|
|
|
|
6,087,629
|
(2)
|
|
|
|
|
30,555
|
|
|
|
7,402,019
|
(3)(4)(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Computed
by determining the market value per share of the shares acquired based on the difference between: (a) the per share market value of our common stock
at exercise, defined as the closing price on the date of exercise, or the weighted average selling price if same-day sales occurred, and (b) the exercise price of the stock options.
56
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
-
(2)
-
The
value was computed as described in footnote 1 above and was based on the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date of
Award
|
|
Exercise
Date
|
|
Number of
Options
Exercised
|
|
Market Price
at Exercise
|
|
Exercise
Price
|
|
Stephen J. Hemsley
|
|
2/23/2009
|
|
11/30/2018
|
|
|
169,683
|
|
|
|
$
|
282.55
|
|
|
|
$
|
29.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
2/12/2014
|
|
9/7/2018
|
|
|
10,071
|
|
|
|
$
|
270.88
|
|
|
|
$
|
70.24
|
|
|
|
|
2/10/2015
|
|
9/7/2018
|
|
|
8,594
|
|
|
|
$
|
270.80
|
|
|
|
$
|
108.97
|
|
|
|
|
2/9/2016
|
|
9/7/2018
|
|
|
10,436
|
|
|
|
$
|
270.82
|
|
|
|
$
|
111.16
|
|
|
|
|
2/8/2017
|
|
9/7/2018
|
|
|
9,148
|
|
|
|
$
|
270.72
|
|
|
|
$
|
160.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(3)
-
Reflects
the vesting of a portion of the RSUs granted. The value realized on vesting was computed based on the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date of
Award
|
|
Vesting
Date
|
|
Number of
Shares Acquired
on Vesting
|
|
Market Price
at Vesting
|
|
Value Realized
on Vesting
|
|
Stephen J. Hemsley
|
|
2/12/2014
|
|
2/12/2018
|
|
|
7,113
|
|
|
|
$
|
225.69
|
|
|
|
$
|
1,605,287
|
|
|
|
|
2/10/2015
|
|
2/10/2018
|
|
|
5,624
|
|
|
|
$
|
220.96
|
|
|
|
$
|
1,242,603
|
|
|
|
|
2/9/2016
|
|
2/9/2018
|
|
|
5,427
|
|
|
|
$
|
220.96
|
|
|
|
$
|
1,199,120
|
|
|
|
|
2/8/2017
|
|
2/8/2018
|
|
|
3,595
|
|
|
|
$
|
216.46
|
|
|
|
$
|
778,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
2/12/2014
|
|
2/12/2018
|
|
|
4,075
|
|
|
|
$
|
225.69
|
|
|
|
$
|
919,615
|
|
|
|
|
2/10/2015
|
|
2/10/2018
|
|
|
3,609
|
|
|
|
$
|
220.96
|
|
|
|
$
|
797,400
|
|
|
|
|
2/9/2016
|
|
2/9/2018
|
|
|
3,310
|
|
|
|
$
|
220.96
|
|
|
|
$
|
731,272
|
|
|
|
|
2/8/2017
|
|
2/8/2018
|
|
|
2,370
|
|
|
|
$
|
216.46
|
|
|
|
$
|
512,946
|
|
|
|
|
8/15/2017
|
|
8/15/2018
|
|
|
1,009
|
|
|
|
$
|
260.61
|
|
|
|
$
|
263,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
2/12/2014
|
|
2/12/2018
|
|
|
3,794
|
|
|
|
$
|
225.69
|
|
|
|
$
|
856,281
|
|
|
|
|
2/10/2015
|
|
2/10/2018
|
|
|
1,383
|
|
|
|
$
|
220.96
|
|
|
|
$
|
305,611
|
|
|
|
|
2/9/2016
|
|
2/9/2018
|
|
|
1,451
|
|
|
|
$
|
220.96
|
|
|
|
$
|
320,708
|
|
|
|
|
6/7/2016
|
|
6/7/2018
|
|
|
2,354
|
|
|
|
$
|
248.98
|
|
|
|
$
|
586,182
|
|
|
|
|
2/8/2017
|
|
2/8/2018
|
|
|
1,978
|
|
|
|
$
|
216.46
|
|
|
|
$
|
428,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
2/12/2014
|
|
2/12/2018
|
|
|
3,258
|
|
|
|
$
|
225.69
|
|
|
|
$
|
735,384
|
|
|
|
|
2/10/2015
|
|
2/10/2018
|
|
|
1,694
|
|
|
|
$
|
220.96
|
|
|
|
$
|
374,245
|
|
|
|
|
2/9/2016
|
|
2/9/2018
|
|
|
1,653
|
|
|
|
$
|
220.96
|
|
|
|
$
|
365,240
|
|
|
|
|
2/8/2017
|
|
2/8/2018
|
|
|
1,357
|
|
|
|
$
|
216.46
|
|
|
|
$
|
293,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(4)
-
Also
reflects the performance shares earned for the 2016-2018 performance period that ended on December 31, 2018 because performance targets were met. The
value shown as realized on December 31, 2018 is based on the number of shares earned for the 2016-2018 performance period using the per share closing market price of our common stock on
December 31, 2018, although shares were not issued until the Compensation Committee certified the performance results on February 26, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date of
Award
|
|
Performance
Period
Completion Date
|
|
Number of
Shares Acquired
on Vesting
|
|
Market Price
at End of
Performance
Period
|
|
Value Realized
on Vesting
|
|
Stephen J. Hemsley
|
|
2/9/2016
|
|
|
12/31/2018
|
|
|
|
63,086
|
|
|
|
$
|
249.12
|
|
|
|
$
|
15,715,984
|
|
|
David S. Wichmann
|
|
2/9/2016
|
|
|
12/31/2018
|
|
|
|
44,531
|
|
|
|
$
|
249.12
|
|
|
|
$
|
11,093,563
|
|
|
John F. Rex
|
|
2/9/2016
|
|
|
12/31/2018
|
|
|
|
16,869
|
|
|
|
$
|
249.12
|
|
|
|
$
|
4,202,405
|
|
|
Steven H. Nelson
|
|
2/9/2016
|
|
|
12/31/2018
|
|
|
|
22,266
|
|
|
|
$
|
249.12
|
|
|
|
$
|
5,546,906
|
|
|
-
(5)
-
Reflects
the cancellation on December 14, 2018 of RSUs for the payment of FICA tax liability. The value realized was computed based on a closing stock price
of $265.02 on December 14, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Date of
Award
|
|
Vesting
Date
|
|
Number of
Shares
Acquired
on Vesting
|
|
Market Price
at Vesting
|
|
Value Realized
on Vesting
|
|
Stephen J. Hemsley
|
|
2/13/2018
|
|
12/14/2018
|
|
|
435
|
|
|
|
$
|
265.02
|
|
|
|
$
|
115,218
|
|
|
David S. Wichmann
|
|
2/13/2018
|
|
12/14/2018
|
|
|
536
|
|
|
|
$
|
265.02
|
|
|
|
$
|
142,108
|
|
|
Steven H. Nelson
|
|
2/13/2018
|
|
12/14/2018
|
|
|
326
|
|
|
|
$
|
265.02
|
|
|
|
$
|
86,414
|
|
|
-
(6)
-
For
information regarding DSUs held by Mr. Witty in connection with this service as a director, please see the Director Compensation Table.
57
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
2018 Pension Benefits
The following table presents information regarding the present value of accumulated benefits payable under our non-qualified defined-benefit
pension plans covering our named executive officers for fiscal year 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of
Years
Credited
Service (#)
|
|
Present
Value of
Accumulated
Benefit ($)
|
|
Payments
During Last
Fiscal Year
($)
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Hemsley
|
|
Individual Agreement for Supplemental Executive Retirement Pay
|
|
|
|
(1)
|
|
|
20,459,928
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
In
2006, the amount of Mr. Hemsley's supplemental retirement benefit was frozen based on his age and average base salary at the time and converted into a lump
sum of $10,703,229. On June 7, 2016, the Company amended Mr. Hemsley's SERP to convert the $10,703,229 cash benefit into a number of DSUs based on the average closing price of the
Company's common stock over the preceding five trading days from the date of conversion ($135.846), which resulted in 78,789 DSUs issued on June 7, 2016. The DSUs held in the SERP are eligible
to receive dividend equivalents in the form of additional DSUs, which are paid at the same rate and at the same time that dividends are paid to the Company's shareholders. During 2018,
Mr. Hemsley received dividend equivalents equal to 1,110 DSUs, which were added to the SERP. As of December 31, 2018, the amount of the benefit to which Mr. Hemsley is entitled is
82,129 DSUs, which had a value of $20,459,928 as of December 31, 2018. The SERP balance will be paid six months and one day after termination of his employment for any reason.
58
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
2018 Non-Qualified Deferred Compensation
The following table presents information as of the end of 2018 regarding the non-qualified deferred compensation arrangements for our named
executive officers for fiscal year 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name (a)
|
|
Executive
Contributions
in Last FY
($)
(1)(2)
(b)
|
|
Registrant
Contributions
in Last FY
($)
(1)(3)
(c)
|
|
Aggregate
Earnings
in Last FY
($)
(4)
(d)
|
|
Aggregate
Withdrawals/
Distributions
($)
(5)
(e)
|
|
Aggregate
Balance at
Last FYE
($)
(6)
(f)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen J. Hemsley
|
|
|
360,000
|
|
|
|
180,000
|
|
|
|
(683,465
|
)
|
|
|
|
|
|
|
14,463,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
372,588
|
|
|
|
166,500
|
|
|
|
(373,466
|
)
|
|
|
|
|
|
|
7,765,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
|
178,615
|
|
|
|
89,308
|
|
|
|
(81,393
|
)
|
|
|
|
|
|
|
994,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
All
amounts in these columns have been reported as compensation in the 2018 Summary Compensation Table.
-
(2)
-
Named
executive officers are eligible to participate in our Executive Savings Plan, which is a non-qualified deferred compensation plan. Under the plan, employees
may generally defer up to 80% of their eligible annual base salary (100% prior to January 1, 2007) and up to 100% of their annual and long-term cash incentive awards. Amounts deferred,
including Company credits, are credited to a bookkeeping account maintained for each participant, and are distributable pursuant to an election made by the participant as to time and form of payment
that is made prior to the time of deferral. The Company maintains a Rabbi Trust for the plan. The Company's practice is to set aside amounts in the Rabbi Trust to be used to pay for all benefits under
the plan, but the Company is under no obligation to do so except in the event of a change in control.
-
(3)
-
For
the first 6% of the employee's base salary and annual incentive award deferrals under our Executive Savings Plan, the Company provides a matching credit of up to
50% of amounts deferred at the time of each deferral. This matching credit does not apply to deferrals of long-term cash incentive awards or other special incentive awards.
-
(4)
-
Amounts
deferred are credited with earnings from measuring investments selected by the employee from a predetermined collection of unaffiliated mutual funds
identified by the Company. The Executive Savings Plan does not credit above market earnings or preferential earnings to amounts deferred. The returns on the mutual funds available to employees during
2018 ranged from 14.91% to 1.75%, with a median return of 6.18% for the year ended December 31, 2018. Employees may change their selection of measuring
investments on a daily basis.
-
(5)
-
Under
our Executive Savings Plan, unless an employee in the plan elects to receive distributions during the term of his or her employment with the Company, benefits
will be paid no earlier than at the beginning of the year following the employee's termination. However, upon a showing of severe financial hardship, an employee may be allowed to access funds in his
or her deferred compensation account earlier. Benefits can be received either as a lump sum payment, in five or ten annual installments, in pre-selected amounts and on pre-selected dates or a
combination thereof. An employee may change his or her election with respect to the timing and form of distribution for such deferrals under certain conditions. However, for deferrals relating to
services performed on or after January 1, 2004, employees may not accelerate the timing of the distributions.
59
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
-
(6)
-
This
column includes the amounts shown in columns (b) and (c) as well as the following amounts reported in the summary compensation table for prior
years:
|
|
|
|
|
|
|
|
|
|
Name
|
|
Amount
Previously
Reported
|
|
|
|
|
Stephen J. Hemsley
|
|
$
|
8,685,064
|
|
|
|
|
David S. Wichmann
|
|
$
|
3,257,315
|
|
|
|
|
John F. Rex
|
|
$
|
412,280
|
|
|
|
|
Andrew P. Witty
|
|
|
|
|
|
|
Steven H. Nelson
|
|
|
|
|
Executive Employment Agreements
We have entered into an employment agreement with each of the named executive officers. The following is a summary of the material terms of
those agreements.
Stephen J. Hemsley
On November 7, 2006, the Board of Directors entered into an employment agreement with Mr. Hemsley. On December 14, 2010,
the employment agreement was amended to extend the employment period to December 1, 2014. The employment agreement extends automatically for additional one-year periods after December 1,
2014, unless sooner terminated in accordance with its terms. During the period of his employment, the Board of Directors will nominate Mr. Hemsley for election to the Board of Directors by the
shareholders of the Company.
Summary of Compensation Components
Under his employment agreement, any increases to Mr. Hemsley's base salary are at the sole discretion of the Compensation Committee and
ultimately the independent members of the Board of Directors. Mr. Hemsley's employment agreement does not set any minimum or target level for any bonus or other incentive compensation. All
bonus and incentive compensation awards are solely at the discretion of the Compensation Committee. Mr. Hemsley is eligible to participate in the Company's generally available employee benefit
programs.
Termination Provisions
Upon termination of Mr. Hemsley's employment for any reason, he is entitled to a supplemental retirement benefit, payable in common
stock upon settlement of DSUs, which will be paid six months and one day after his termination. See "Compensation Discussion and Analysis Other Compensation
Supplemental Retirement Benefits" and "2018 Pension Benefits" for more information.
If
Mr. Hemsley's employment is terminated by the Company without Cause, other than upon expiration of the term of the employment agreement, or by Mr. Hemsley for Good Reason, the Company
will pay Mr. Hemsley a lump sum in an amount equal to his annual base salary for 12 months.
If
Mr. Hemsley's employment is terminated because of his death or permanent disability, the Company will pay him or his beneficiaries a lump sum in an amount equal to two years total
compensation of base salary plus the
average bonus for the last two calendar years, excluding any special or one-time bonus or incentive compensation payments.
60
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
If Mr. Hemsley's employment is terminated by the Company for Cause, by Mr. Hemsley without Good Reason or because of his retirement or upon expiration of the term
of the employment agreement, he will not be entitled to any further compensation from the Company other than earned but unpaid salary and benefits.
Material Definitions
As defined in the employment agreement, "Cause" generally means (a) willful and continued failure to perform his duties after written
notice and a failure to remedy the deficiency, (b) a violation of the Company's Code of Conduct that is materially detrimental to the Company and is not remedied after written notice,
(c) engaging in fraud, material dishonesty or gross misconduct in connection with the Company's business, (d) conviction of a felony, or (e) willful and material breach of the
employment agreement that is not remedied after written notice.
As
defined in the employment agreement, "Good Reason" generally means (a) an assignment of duties inconsistent with his position or duties or other diminution of duties, (b) a relocation
of primary work location by more than 25 miles, (c) failure by the Board of Directors to nominate Mr. Hemsley to serve on the Board of Directors, (d) the Company's failure to pay
or provide Mr. Hemsley's base salary, incentive compensation or other benefits, or (e) any other material breach of Mr. Hemsley's employment agreement that is not remedied.
Non-Solicitation, Non-Competition and Confidentiality Provisions
Pursuant to the employment agreement, Mr. Hemsley is subject to provisions prohibiting his solicitation of the Company's employees and
customers or competing with the Company during the term of the employment agreement and the longer of two years following termination or the period that severance payments are made to him under the
employment agreement. In addition, he is prohibited at all times from disclosing confidential information related to the Company.
David S. Wichmann
On December 1, 2006, the Company entered into an employment agreement with Mr. Wichmann. On August 16, 2017, the
employment agreement was amended to reflect Mr. Wichmann serving as CEO.
Summary of Compensation Components
Under his employment agreement, any adjustments to Mr. Wichmann's base salary are at the sole discretion of the Compensation Committee
and ultimately the independent members of the Board of Directors. Mr. Wichmann's employment agreement does not set any minimum or target level for any bonus or other incentive compensation. All
bonus and incentive compensation awards are solely at the discretion of the Compensation Committee. Mr. Wichmann is eligible to participate in the Company's generally available employee benefit
programs. In addition, the Company provides Mr. Wichmann with a $2 million term life insurance policy and additional long-term disability coverage, which covers 60% of eligible base
salary subject to the terms of the policy.
61
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Termination Provisions
If Mr. Wichmann's employment is terminated by the Company without Cause, or by Mr. Wichmann for Good Reason, the Company will
provide Mr. Wichmann with outplacement services and will pay Mr. Wichmann severance compensation equal to the sum of (a) 200% of his annualized base salary as of his termination
date, (b) 200% of the average of his last two calendar year bonuses, excluding any equity awards and any special or one-time bonus or incentive compensation payments, and (c) $12,000 to
offset the costs of benefit continuation coverage. The severance compensation will be payable over a 24-month period.
If
Mr. Wichmann's employment is terminated because of his death or disability, by the Company for Cause, or by Mr. Wichmann without Good Reason, he will not be entitled to any further
compensation from the Company other than earned but unpaid salary and benefits.
Material Definitions
As defined in the employment agreement, "Cause" means (a) material failure to follow the Company's reasonable direction, or to perform
any duties reasonably required on material matters; (b) material violation of, or failure to act upon or report known or suspected violations of, the Company's Code of Conduct;
(c) conviction of any felony, commission of any criminal, fraudulent or dishonest act, or any conduct that is materially detrimental to the Company's interests, or (d) material breach of
the employment agreement. The Company must provide Mr. Wichmann with written notice of Cause within 120 days of discovery, and Mr. Wichmann will have 60 days to remedy the
conduct, if the conduct is reasonably capable of being remedied.
As
defined in the employment agreement, "Good Reason" exists if the Company (a) reduces Mr. Wichmann's base salary or long- or short-term target bonus percentage other than in connection
with a general reduction affecting a group of similarly situated employees, (b) moves Mr. Wichmann's primary work location more than 50 miles, (c) makes changes that substantially
diminish Mr. Wichmann's duties or responsibilities, or (d) changes Mr. Wichmann's reporting relationship.
Non-Solicitation, Non-Competition and Confidentiality Provisions
Pursuant to the employment agreement, Mr. Wichmann is subject to provisions prohibiting his solicitation of the Company's employees and
customers or competing with the Company during the term of the employment agreement and for two years following termination of his employment for any reason. In addition, he is prohibited at all times
from disclosing confidential information related to the Company.
John F. Rex, Andrew P. Witty and Steven H. Nelson
Messrs. Rex, Witty and Nelson have entered into employment agreements with the Company. Under those agreements, each reports to the CEO
of the Company. The table below and the narrative that follows summarize the material terms of their respective employment agreements.
62
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Summary of Compensation Components
-
(1)
-
Any
adjustments to base salary, actual bonuses payable and stock-based awards are at the discretion of the Compensation Committee.
-
(2)
-
Benefit
provided at the Company's expense.
-
(3)
-
Annual
benefit covers 60% of eligible base salary in the event of a qualifying long-term disability, subject to the terms of the policy.
Termination Provisions and Material Definitions
Each employment agreement and each executive officer's employment may be terminated (a) by mutual agreement (b) by the Company
with or without Cause, (c) by the executive officer and (d) upon the executive officer's death or disability that renders him incapable of performing the essential functions of his job,
with or without reasonable accommodation. Each executive officer may also terminate his employment agreement and employment at any time for Good Reason. If the executive officer's employment is
terminated by the Company without Cause or by the executive officer for Good Reason, the Company will provide the executive officer with outplacement services consistent with those provided to
similarly situated executives and pay the executive officer severance compensation equal to the sum of (a) 200% of his annualized base salary as of his termination date, (b) 200% of the
average of his last two calendar year bonuses, or if termination occurs within two years from the start of employment with the Company, 200% of his target incentive, excluding any equity awards and
any special or one-time bonus or incentive compensation payments, and (c) $12,000 to offset the costs of benefit continuation coverage. The severance compensation will be payable over a
24-month period. In addition, if the Company terminates Mr. Rex's employment without Cause or if Mr. Rex terminates employment for Good Reason, Mr. Rex has the option to remain
employed in an advisory capacity for one year (at his then-current annual base salary and target bonus) following notification of termination.
63
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Applicable definitions for the employment agreements follow.
|
|
|
|
|
|
Term
|
|
Definition
|
|
|
|
Cause
|
|
Means:
|
|
|
Material failure to follow
the Company's reasonable direction or to perform any duties reasonably required on material matters;
|
|
|
A material violation of,
or failure to act upon known or suspected violations of, the Company's Code of Conduct;
|
|
|
Conviction of any felony,
commission of any criminal, fraudulent or dishonest act, or any conduct that is materially detrimental to the Company's interests; or
|
|
|
Material breach of the
employment agreement.
|
|
|
The Company must provide the executive officer with written notice of Cause within 120 days of discovery, and the executive officer will have 60 days to remedy the conduct, if the conduct is reasonably capable
of being remedied.
|
|
|
|
Good Reason
|
|
Exists if the Company:
|
|
|
Reduces the executive
officer's base salary or long- or short-term target bonus percentage other than in connection with a general reduction affecting a group of similarly situated employees;
|
|
|
Moves the executive
officer's primary work location more than 50 miles; or
|
|
|
Makes changes that
substantially diminish the executive officer's duties or responsibilities.*
|
|
|
The executive officer must give the Company written notice of the circumstances constituting Good Reason within 120 days of becoming aware of the circumstances, and the Company will have 60 days to remedy the
circumstances.
|
|
|
|
-
*
-
For
Messrs. Rex and Nelson, "Good Reason" also exists if the Company changes either executive officer's reporting relationship, and for Mr. Rex, "Good
Reason" also exists if the Company makes a change so that he no longer serves as both CFO and a member of the Office of the CEO of the Company.
Non-Solicitation, Non-Competition and Confidentiality Provisions
Pursuant to their respective employment agreements, each executive officer is subject to provisions prohibiting his solicitation of the
Company's employees or competing with the Company during the term of the employment agreement and for two years following termination for any reason. In addition, each executive officer is prohibited
at all times from disclosing confidential information related to the Company.
64
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Potential Payments Upon Termination or Change in Control
The following table describes the potential payments to named executive officers upon termination of employment or a change in control of the
Company as of December 31, 2018. Amounts are calculated based on the benefits available to the named executive officers under existing plans and arrangements, including each of their employment
agreements described under "Executive Employment Agreements."
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
For Good Reason
or Not For Cause
($)
|
|
Death
($)
|
|
Disability
($)
|
|
Retirement
($)
|
|
Change
In Control
($)
|
|
Stephen J. Hemsley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payments
|
|
|
1,000,000
|
|
|
11,000,000
|
|
11,000,000
|
|
|
|
|
|
|
|
Annual Cash Incentive
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DSUs in the SERP
|
|
|
20,459,928
|
|
|
20,459,928
|
|
20,459,928
|
|
|
20,459,928
|
|
|
20,459,928
|
|
Insurance Benefits
|
|
|
|
|
|
|
|
420,000
|
|
|
|
|
|
|
|
Acceleration of Equity
(2)
|
|
|
42,884,671
|
|
|
36,712,225
|
|
36,712,225
|
|
|
42,884,671
|
|
|
42,884,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(3)
|
|
|
64,344,599
|
|
|
68,172,153
|
|
68,592,153
|
|
|
63,344,599
|
|
|
63,344,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payments
|
|
|
10,612,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive
(1)
|
|
|
|
|
|
5,200,000
|
|
5,200,000
|
|
|
5,200,000
|
|
|
|
|
Insurance Benefits
|
|
|
|
|
|
2,000,000
|
|
780,000
|
|
|
|
|
|
|
|
Acceleration of Equity
(2)
|
|
|
38,495,661
|
|
|
31,726,074
|
|
31,726,074
|
|
|
38,495,661
|
|
|
38,495,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(3)
|
|
|
49,107,661
|
|
|
38,926,074
|
|
37,706,074
|
|
|
43,695,661
|
|
|
38,495,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payments
|
|
|
5,412,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive
(1)
|
|
|
|
|
|
3,000,000
|
|
3,000,000
|
|
|
3,000,000
|
|
|
|
|
Insurance Benefits
|
|
|
|
|
|
2,000,000
|
|
600,000
|
|
|
|
|
|
|
|
Acceleration of Equity
(2)
|
|
|
19,102,186
|
|
|
18,469,874
|
|
18,469,874
|
|
|
|
|
|
21,596,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(3)
|
|
|
24,514,186
|
|
|
23,469,874
|
|
22,069,874
|
|
|
3,000,000
|
|
|
21,596,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payments
|
|
|
6,612,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive
(1)
|
|
|
|
|
|
4,400,000
|
|
4,400,000
|
|
|
4,400,000
|
|
|
|
|
Insurance Benefits
|
|
|
|
|
|
2,000,000
|
|
660,000
|
|
|
|
|
|
|
|
Acceleration of Equity
(2)
|
|
|
9,591,432
|
|
|
14,108,092
|
|
14,108,092
|
|
|
|
|
|
16,961,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(3)
|
|
|
16,203,432
|
|
|
20,508,092
|
|
19,168,092
|
|
|
4,400,000
|
|
|
16,961,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Payments
|
|
|
5,712,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive
(1)
|
|
|
|
|
|
4,000,000
|
|
4,000,000
|
|
|
4,000,000
|
|
|
|
|
Insurance Benefits
|
|
|
|
|
|
2,000,000
|
|
600,000
|
|
|
|
|
|
|
|
Acceleration of Equity
(2)
|
|
|
18,886,001
|
|
|
15,325,080
|
|
15,325,080
|
|
|
18,886,001
|
|
|
18,886,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
(3)
|
|
|
24,598,001
|
|
|
21,325,080
|
|
19,925,080
|
|
|
22,886,001
|
|
|
18,886,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Represents
the maximum amount the Compensation Committee may in its discretion determine, but is not required, to pay the executive officer (or the executive
officer's estate, if applicable) based upon a prorated portion of the award that the executive officer would have received but for his death, disability or retirement, calculated at the achievement of
the maximum performance target, as more fully described in footnote 2 to the 2018 Grants of Plan-Based Awards table. For the purposes of this table, the potential amounts have not been prorated
because the table assumes a death, disability or retirement as of December 31, 2018.
65
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
-
(2)
-
Represents
the (i) unvested RSUs multiplied by the closing stock price on December 31, 2018 ($249.12), (ii) intrinsic value of the unvested
stock options, which is calculated based on the difference between the closing price of our stock on December 31, 2018 ($249.12) and the exercise or grant price of the unvested stock options as
of that date, and (iii) the number of performance shares earned if target performance is achieved multiplied by the closing stock price on December 31, 2018 ($249.12). If maximum
performance is achieved for the performance shares, the amounts for Acceleration of Equity would be (a) for "For Good Reason or Not for Cause," $56,455,981 for Mr. Hemsley; $52,704,470
for Mr. Wichmann; $25,735,255 for Mr. Rex; $13,872,061 for Mr. Witty; and $25,859,368 for Mr. Nelson; (b) for "Death" and "Disability," $44,111,089 for
Mr. Hemsley; $39,165,296 for Mr. Wichmann; $21,975,989 for Mr. Rex; $15,535,051 for Mr. Witty; and $18,737,525 for Mr. Nelson; (c) for "Retirement,"
$56,455,981 for Mr. Hemsley; $52,704,470 for Mr. Wichmann; and $25,859,368 for Mr. Nelson; and (d) for "Change in Control," $56,455,981 for Mr. Hemsley; $52,704,470
for Mr. Wichmann; $28,229,897 for Mr. Rex; $21,242,391 for Mr. Witty; and $25,859,368 for Mr. Nelson.
For
"For Good Reason or Not for Cause," the amount includes the value of unvested equity awards held by the named executive officer that will not immediately vest upon termination but will continue to
vest through any applicable severance. For "Retirement," the amount includes the value of certain unvested equity awards granted in 2015, 2016, 2017 and 2018 that will continue to vest and be
exercisable for a period of five years (but not after the award's expiration date). The value of the awards that will not immediately vest is based on their intrinsic values on December 31,
2018. However, because these awards would continue to vest after termination of employment or retirement, the actual value the named executive officer would receive is not determinable. At
December 31, 2018, Messrs. Hemsley, Wichmann, and Nelson had met the retirement eligibility provisions.
-
(3)
-
Does
not include value of benefits, plans or arrangements that would be paid or available following termination of employment that do not discriminate in scope,
terms or operation in favor of our executive officers and that are generally available to all salaried employees or accrued balances under any non-qualified deferred compensation plan that is
described above.
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following
information about the relationship between the annual total compensation of our median employee and the annual total compensation of our CEO.
For
purposes of reporting annual total compensation and the ratio of annual total compensation of our CEO to our median employee, both the CEO and median employee's annual total compensation were
calculated consistent with the Summary Compensation Table executive compensation disclosure requirements, plus the value of employer-paid health insurance contributions. Our median employee
compensation was $57,412 and our Chief Executive Officer's compensation was $18,124,873. Accordingly, our CEO to median employee pay ratio is 316:1.
Our
enterprise-wide Company compensation philosophy is designed to attract and retain high-quality talent and provide market-competitive total compensation opportunities that support our
pay-for-performance culture. Actual pay practices vary for employees by level and geographic location based on competitive market factors. The most significant difference in the pay practices for our
CEO versus our median employee is the use of variable/at-risk compensation.
66
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
We consistently applied total direct compensation as the measure to determine the median employee in our global employee population as of October 1, 2018. That workforce
population consisted of 272,625 global full-time, part-time, temporary and seasonal employees employed on that date. 85,332 of those employees were located outside the United States and we then
applied the de minimis exemption to exclude 11,530 employees in the Philippines (4.2% of our global employee population).
We
have a broad and diverse workforce with approximately 60% of the people represented in three key talent pillars (85,000 clinicians, 45,000 customer-facing employees and 30,000 information and
computer technologists). Our median employee (one of our customer-facing employees) is a non-exempt, full-time employee who works within our operations function as a senior claims representative in
the United States.
A
summary of our workforce population is provided in the charts below:
67
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Proposal 2 Advisory Approval of the Company's Executive Compensation
|
The
Board of Directors recognizes the significant interest of shareholders in executive compensation matters. As required by Section 14A of the Exchange Act, we are seeking
shareholders' views on our executive compensation philosophy and practices through an advisory vote on the following resolution at the Annual Meeting:
"Resolved,
that the shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of
the SEC, including the Compensation Discussion and Analysis, the compensation tables and the related narrative disclosures."
The
Compensation Discussion and Analysis, compensation tables and related narrative disclosures appear on pages 28-67 of this proxy statement.
As
discussed in the Compensation Discussion and Analysis, the Board of Directors believes that our executive compensation program attracts and retains highly qualified executives while linking
executive compensation directly to Company-wide performance and long-term shareholder interests. In deciding how to vote on this proposal, the Board of Directors asks you to consider the key points
with regard to our executive compensation program included
in the Compensation Discussion and Analysis and in the "Executive Summary" section on pages 28-29 of this proxy statement.
This
advisory proposal, commonly referred to as a "Say-on-Pay" proposal, is not binding on the Board of Directors. Although the voting results are not binding, the Board and the Compensation Committee
will review and consider them when evaluating our executive compensation program. More than 95% of the votes cast were in favor of our executive compensation program at each of our annual meetings
since our inaugural vote in 2011.
In
addition to our annual advisory vote to approve the Company's executive compensation, we are committed to ongoing engagement with our shareholders on executive compensation and corporate governance
issues. These engagement efforts take place throughout the year where appropriate through meetings, telephone calls and correspondence involving our senior management, directors and representatives of
our shareholders.
For these reasons, the Board of Directors recommends you vote FOR approval of the compensation of the named executive officers, as disclosed in this proxy
statement. Executed proxies will be voted FOR approval of the compensation of the named executive officers unless you specify otherwise.
68
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Audit Committee Report
The Audit Committee of our Board of Directors is comprised of three non-employee directors, all of whom are audit committee financial experts,
as defined by the SEC. The Board of Directors has determined all of the members of the Audit Committee are independent within the meaning of the listing standards of the NYSE, the rules of the SEC and
the Company's Standards for Director Independence. The Audit Committee operates under a written charter adopted by the Board of Directors accessible in the corporate governance section of our website
at
www.unitedhealthgroup.com/about/corporate-governance
.
The
Audit Committee has responsibility for selecting and evaluating the independent registered public accounting firm, which reports directly to the Audit Committee, overseeing the performance of the
Company's internal audit function, and assisting the Board of Directors in its oversight of enterprise risk management including privacy and data security. Management has primary responsibility for
the Company's consolidated financial statements and the overall reporting process, for maintaining adequate internal control over financial reporting and, with the assistance of the Company's internal
auditors, for assessing the effectiveness of the Company's internal control over financial reporting. Deloitte & Touche LLP ("Deloitte") has served as the Company's independent
registered public accounting firm since 2002.
While
it is not the duty of the Audit Committee to plan or conduct audits, the Audit Committee engages with the Company's independent registered public accounting firm and the internal auditors
regarding the overall scope and plans for their respective audits. The Company's independent registered public accounting firm is responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), expressing an opinion as to the conformity of the consolidated
financial statements with generally accepted accounting principles in the United States of America, and auditing management's assessment of the effectiveness of internal control over financial
reporting. The Audit Committee's responsibility is to monitor and oversee these processes. The Audit Committee also oversees management's processes to identify and quantify material risks facing the
Company, including risks disclosed in the Company's Annual Report on Form 10-K. The Audit Committee meets regularly with the internal auditors and independent registered public accounting firm,
with and without management present, to discuss the results of their examinations, the evaluation of the Company's internal control over financial reporting and the overall quality of the Company's
accounting and reporting.
The
Audit Committee has adopted a Policy for Approval of Independent Auditor Services (the "Policy") outlining the scope of services the independent registered public accounting firm may provide to
the Company. The Policy sets forth guidelines and procedures the Company must follow when retaining the independent registered public accounting firm to perform audit, audit-related, tax and other
services. The Policy also specifies certain non-audit services that may not be performed by the independent registered public accounting firm under any circumstances. Pursuant to these guidelines, the
Audit Committee approves fee thresholds annually for each of these categories, and services within these thresholds are deemed pre-approved.
69
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Management
represented to the Audit Committee that the Company's consolidated financial statements were prepared in accordance with generally accepted accounting principles. The Audit Committee has
reviewed and discussed with management and Deloitte in separate sessions the Company's consolidated financial statements for the years ended December 31, 2018, December 31, 2017, and
December 31, 2016, management's annual report on the Company's internal control over financial reporting and Deloitte's attestation. The Audit Committee discussed with management and Deloitte
the process used to support certifications by the Company's CEO and CFO as required by the SEC and the Sarbanes-Oxley Act of 2002 to accompany the Company's periodic filings with the SEC and the
process used to support management's annual report on the Company's internal controls over financial reporting.
The
Audit Committee discussed with Deloitte matters required to be discussed by Auditing Standard No. 1301, "Communications with Audit Committees" issued by the Public Company Accounting
Oversight Board and Rule 2-07 of Regulation S-X. Deloitte provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the Public Company
Accounting Oversight Board regarding Deloitte's communications with the Audit Committee concerning independence, and the Audit Committee discussed with Deloitte the accounting firm's independence. In
considering the independence of Deloitte, the Audit Committee took into consideration whether the provision of non-audit services is compatible with maintaining the independence of Deloitte. In
connection with its selection of Deloitte as the Company's independent registered public accounting firm for the year ending December 31, 2019, the Audit Committee conducted a performance
evaluation of Deloitte's services.
Based
upon the Audit Committee's review of the financial statements, independent discussions with management and Deloitte, and the Audit Committee's review of the representation of management and the
report of the independent registered public accounting firm to the Audit Committee, and subject to the limitations of the Audit Committee's role, the Audit Committee recommended to the Board of
Directors that the audited consolidated financial statements for the years ended December 31, 2018, December 31, 2017, and December 31, 2016, be included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC.
Members of the Audit Committee
Glenn M. Renwick, Chair
Michele J. Hooper
F. William McNabb III
70
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Disclosure of Fees Paid to Independent Registered Public Accounting Firm
Aggregate fees billed to the Company for the fiscal years ended December 31, 2018 and 2017, represent fees billed by the Company's
principal independent registered public accounting firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates, which includes Deloitte
Consulting (collectively, "Deloitte & Touche"). The Audit Committee pre-approved the audit and non-audit services provided in the years ended December 31, 2018 and 2017, by
Deloitte & Touche, as reflected in the table below.
|
|
|
|
|
|
|
|
|
|
Year
|
|
|
|
|
|
|
|
Fee Category
|
|
2018
|
|
2017
|
|
Audit Fees
|
|
$
|
19,465,000
|
|
$
|
21,077,000
|
|
Audit-Related Fees
(1)
|
|
3,154,000
|
|
3,723,000
|
|
|
|
|
|
|
|
Total Audit and Audit-Related Fees
|
|
$
|
22,619,000
|
|
$
|
24,800,000
|
|
Tax Fees
(2)
|
|
1,550,000
|
|
2,266,000
|
|
All Other Fees
(3)
|
|
90,000
|
|
102,000
|
|
|
|
|
|
|
|
Total
|
|
$
|
24,259,000
|
|
$
|
27,168,000
|
|
|
|
|
|
|
|
-
(1)
-
Audit-Related
Fees for 2018 and 2017 include benefit plan and other required audits, an audit of one of our subsidiaries, certain AICPA agreed-upon procedures and
due diligence services.
-
(2)
-
Tax
Fees include tax compliance, planning and support services. In 2018 and 2017 approximately $499,000 and $285,000, respectively, of Tax Fees were related to
international tax services, approximately $771,000 and $1,787,000, respectively, of Tax Fees were for business model operating design services and audit support and approximately $280,000 and
$194,000, respectively, of Tax Fees were related to tax compliance (review and preparation of corporate and expatriate tax returns, review of the tax treatment for certain expenses and claims for
refunds).
-
(3)
-
All
Other Fees include consulting fees and fees relating to communications training for international employees.
Audit Committee's Consideration of Independence of Independent Registered Public Accounting Firm
The Audit Committee has reviewed the nature of non-audit services provided by Deloitte & Touche and has concluded these services are
compatible with maintaining the firm's ability to serve as our independent registered public accounting firm.
Audit and Non-Audit Services Approval Policy
The Audit Committee has adopted a Policy for Approval of Independent Auditor Services (the "Policy") outlining the scope of services
Deloitte & Touche may provide to the Company. The Policy sets forth guidelines and procedures the Company must follow when retaining Deloitte & Touche to perform audit, audit-related,
tax and other services. The Policy also specifies certain non-audit services that may not be performed by Deloitte & Touche under any circumstances. Pursuant to these guidelines, the Audit
Committee approves fee thresholds annually for each of these categories, and services within these thresholds are deemed pre-approved. The Audit Committee has delegated authority to the Chair of the
Audit Committee to pre-approve permitted audit and non-audit services between regularly scheduled quarterly Audit Committee meetings, provided that such pre-approvals are presented to the Audit
Committee at its next scheduled meeting. All fees reported above were approved pursuant to the Policy. The services provided by our independent registered public accounting firm and related fees are
discussed with the Audit Committee, and the Policy is evaluated and updated periodically by the Audit Committee.
71
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Proposal 3 Ratification of Independent Registered Public Accounting Firm
|
The
Audit Committee is directly responsible for the appointment, evaluation, compensation, retention and oversight of the independent registered public accounting firm retained to
audit the Company's financial statements. The Audit Committee has appointed Deloitte & Touche LLP ("Deloitte") as our independent registered public accounting firm for the year ending
December 31, 2019. Deloitte has been retained as our independent registered public accounting firm since 2002. The Audit Committee is responsible for approving audit fees associated with the
retention of Deloitte. In order to assure continuing auditor independence, the Audit Committee periodically considers whether there should be a rotation of our independent registered public accounting
firm. Further, as part of the Audit Committee's assessment of Deloitte and in conjunction with the mandated rotation of the audit firm's lead engagement partner, in November 2015, the Audit Committee
interviewed candidates to become Deloitte's new lead engagement partner and following those interviews, selected the individual who became the new lead engagement partner in 2017.
Based
on its most recent evaluation of Deloitte, the members of the Audit Committee believe the continued retention of Deloitte as the Company's independent registered public accounting firm is in the
best interest of the Company and its shareholders. Among the factors considered by the Committee in reaching this recommendation were the following: the quality and efficiency of Deloitte's historical
and recent audit plans and performance; Deloitte's capabilities and expertise in handling the breadth and complexity of the Company's U.S. and global operations; external data on audit quality and
performance, including recent Public Company Accounting Oversight Board (PCAOB) reports on Deloitte; the appropriateness of Deloitte's fees for audit and non-audit services; Deloitte's independence
and objectivity; and the quality and candor of Deloitte's communications with management and the Audit Committee.
The
Board of Directors has proposed that shareholders ratify the appointment of Deloitte at the Annual Meeting. If shareholders do not ratify the appointment of Deloitte, the Audit Committee will
reconsider the appointment but is not obligated to appoint another independent registered public accounting firm. The Audit Committee evaluates, at least every three years, whether to rotate our
independent registered public accounting firm.
Representatives
of Deloitte are expected to be present at the meeting, will have an opportunity to make a statement and will be available to respond to questions from shareholders.
The Board of Directors recommends you vote FOR ratification of the appointment of Deloitte as our independent registered public accounting firm for the year
ending December 31, 2019. Executed proxies will be voted FOR ratification of this appointment unless you specify otherwise.
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Proposal 4 Shareholder Proposal Regarding Amendment to Proxy Access Bylaw
|
We
have been informed that John Chevedden intends to introduce the proposal set forth below at the Annual Meeting. In accordance with SEC rules, the text of the proposal is printed verbatim from the
submission. The Company will provide to shareholders the address and reported holdings of the Company's common stock for the proposal sponsor promptly upon receiving an oral or written request. The
Board of Directors has recommended a vote against this proposal for the reasons set forth following the proposal.
Shareholder Proposal Amendment to Proxy Access Bylaw
RESOLVED:
Stockholders ask the board of directors to amend its proxy access bylaw provisions and any associated documents, to include the following change:
No
limitation shall be placed on the number of stockholders that can aggregate their shares to achieve the 3% of common stock required to nominate directors under our Company's proxy access
provisions.
Under
current provisions, even if the 20 largest public pension funds were able to aggregate their shares, they would not meet the 3% criteria for a continuous 3-years at most companies examined by
the Council of Institutional Investors. Additionally many of the largest investors of major companies are routinely passive investors who would be unlikely to be part of the proxy access shareholder
aggregation process. Our company has a strict 20 participant limit for shareholder proxy access.
Under
this proposal it is likely that the number of shareholders who participate in the aggregation process would still be a modest number due to the rigorous rules our company adopted for a
shareholder to make an application
to qualify as one of the aggregation participants. Plus it is easy for our management to reject potential aggregating shareholders because management simply needs to find one item lacking from a list
of requirements.
Supporting Statement
Now is a good time to adopt this proposal given these critical issues that deserve strict oversight and the avoidance of reoccurrences:
New
York Attorney General request for information on policies of pharmacy benefit managers and insurers related to prescribing opioid medications.
November
2018
DOJ
joined whistleblower lawsuits over alleged overcharging of Medicare Advantage Program.
August
2018
73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Class Action of alleged overcharged co-payment amounts of prescription drugs. May 2018 Insulin: Proposed Class Action suit filed by patients over high prices.
March
2018
EpiPen:
Purported Class Action over inflated EpiPen prices.
January
2018
This
proposal would put shareholders in a better position to ask for Board refreshment. For instance the following directors had excessively long-tenure which was made worse by elevating these
directors to very important roles. Long tenure can seriously erode director independence at shareholder expense.
|
|
|
|
|
|
|
Richard Burke
|
|
41-years
|
|
Lead Director
|
|
|
Gail Wilensky
|
|
25-years
|
|
|
|
|
William Ballard
|
|
25-years
|
|
|
|
|
Stephen Hemsley
|
|
18-years
|
|
Insider Chairman
|
|
|
Two
members of the executive pay committee each had 25-years tenure.
The
majority of the nomination committee had an average tenure of 33-years.
Board of Directors' Recommendation
The Board of Directors unanimously recommends a vote AGAINST the foregoing proposal for the following reasons:
We
have carefully considered this proposal and have concluded that it is not necessary or in the best interests of the Company or its shareholders.
Background
In February 2016, the Board of Directors adopted a proxy access bylaw which provides the Company's shareholders a useful and balanced proxy
access process while safeguarding the interests of all of our shareholders.
The
Company's proxy access bylaw permits a shareholder, or group of up to 20 shareholders, owning at least 3% of the Company's outstanding shares of common stock continuously for at least three years,
to nominate and include in the Company's annual meeting proxy materials director nominees constituting up to 20% of the Board, subject to requirements specified in the Company's bylaws.
Our
decision to adopt proxy access was informed by discussions with our shareholders and other corporate governance experts. After carefully considering the range of viewpoints and market practices,
we adopted an appropriate, balanced and effective proxy access framework that provides meaningful proxy access rights to shareholders, while mitigating the possibility for misuse. The 20 shareholder
aggregation limit we adopted has been adopted by almost all U.S. listed companies implementing proxy access (approximately 93% as of December 31, 2018), and has been recognized by the
Council of Institutional Investors as a market standard.
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
The proponent's requested change to the Company's proxy access bylaw would place no limit on the number of shareholders who may aggregate their holdings to reach the required
3% ownership threshold. An aggregation limit of 20 provides abundant opportunities for the Company's shareholders to combine with other shareholders to satisfy the ownership requirement. The Company's
proxy access policies are further strengthened in the context of leading corporate governance measures supporting the accountability of the Board to our shareholders,
including:
-
-
Board members are elected annually by a majority vote of our shareholders.
-
-
The Board has a strong Lead Independent Director with robust responsibilities.
-
-
The Board is highly independent and benefits from an ongoing commitment to refreshment. Since January 2017, we have appointed five new
directors to the Board who are standing for election this year.
-
-
The Company's Nominating Advisory Committee, comprised of long-term shareholders of the Company and a member of the medical community, provides
our Nominating and Corporate Governance Committee with additional input regarding desirable characteristics of director candidates and the composition of our Board.
-
-
Shareholders have the right to call a special meeting.
-
-
Shareholders have the right to act by written consent.
-
-
The Company has a robust, ongoing shareholder engagement program.
The
Company's proxy access bylaw is consistent with market practice and strikes the appropriate balance between providing meaningful proxy access and safeguarding shareholders by mitigating misuse,
while limiting administrative burden and expense. Our corporate governance practices assure strong Board accountability and provide shareholders with appropriate access to the Board. We do not believe
it is necessary or in the best interests of the Company or its shareholders to change the Company's proxy access bylaw as outlined in the proposal.
For these reasons, the Board of Directors recommends that shareholders vote AGAINST the proposal. Executed proxies will be voted AGAINST this proposal unless
you specify otherwise.
75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Questions and Answers About the Annual Meeting and Voting
1. What is the purpose of the Annual Meeting?
At the Annual Meeting, shareholders will act upon the matters outlined in the Notice of Annual Meeting of Shareholders. These
include:
-
-
election of directors;
-
-
an advisory vote to approve our executive compensation (a "Say-on-Pay" vote);
-
-
ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm; and
-
-
if properly presented, one shareholder proposal.
Also,
once the business of the Annual Meeting is concluded, management of the Company will give a business update. Management, Chairs of each standing Board committee and representatives of
Deloitte & Touche LLP will be available to respond to questions from shareholders.
2. What is a proxy?
It is your legal designation of another person to vote the stock you own in the manner you direct. That other person is called a proxy. If you designate someone
as your proxy in a written document, that document also is called a proxy or a proxy card. We have designated Dannette L. Smith and Faraz A. Choudhry to serve as proxies for the Annual Meeting. The
Board of Directors will use the proxies at the 2019 Annual Meeting of Shareholders. The proxies also may be voted at any adjournments or postponements of the meeting.
3. What is a proxy statement?
The Company's Board of Directors is soliciting proxies for use at the 2019 Annual Meeting of Shareholders. A proxy statement is a document we give you when we
are soliciting your vote pursuant to SEC regulations.
4. What is the difference between a shareholder of record and a shareholder who holds stock in street name?
Shareholders of Record.
If your shares are registered in your name with our transfer agent, EQ Shareowner Services, you are a shareholder of record with respect to
those shares and the Notice of Internet Availability of Proxy Materials ("Notice") or the proxy materials were sent directly to you by Broadridge Financial Solutions.
Street Name Holders.
If you hold your shares in an account at a bank or broker, then you are the beneficial owner of shares held in "street name." The Notice or
proxy materials were forwarded to you by your bank or broker, who is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to
direct your bank or broker on how to vote the shares held in your account.
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
5. How many shares must be present to hold the Annual Meeting?
In order to conduct the Annual Meeting, holders of a majority of the shares entitled to vote as of the close of business on the record date must be present in
person or by proxy. This constitutes a quorum. Your shares are counted as present if you attend the Annual Meeting and vote in person, if you vote your proxy over the Internet or by telephone or by
mail. Abstentions and broker non-votes will be counted as present for purposes of establishing a quorum. If a quorum is not present, we will adjourn the Annual Meeting until a quorum is obtained.
6. How can I access the proxy materials for the Annual Meeting?
Shareholders may access the proxy materials, which include the Notice of Annual Meeting of Shareholders, Proxy Statement (including a form of proxy card) and
Annual Report for the year ended December 31, 2018 on the Internet at
www.unitedhealthgroup.com/investors/annual-reports.html
. We will also provide a hard copy of any of these documents free
of
charge upon request to: UnitedHealth Group Incorporated, 9900 Bren Road East, Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors.
Instead
of receiving future copies of our proxy materials by mail, you can elect to receive an e-mail that will provide electronic links to these documents. Opting to receive your proxy materials
online will save the cost of producing
and mailing documents to your home or business, will give you an electronic link to the proxy voting site and will also help preserve environmental resources.
Shareholders of Record.
If you vote on the Internet at
www.proxyvote.com
, simply
follow the prompts for enrolling in the electronic proxy delivery service. You also may enroll in the electronic proxy delivery service at any time by going directly to
www.unitedhealthgroup.com
and following the enrollment instructions.
Street Name Holders.
If you hold your shares in a bank or brokerage account, you also may have the opportunity to receive the proxy materials electronically.
Please check the information provided in the proxy materials you receive from your bank or broker regarding the availability of this service.
7. How do I attend the Annual Meeting? What do I need to bring?
To attend the Annual Meeting, you will need to bring an admission ticket and valid photo identification.
Only
our shareholders are entitled to attend the meeting. The procedure you must follow in order to attend the meeting depends on whether you are a shareholder of record or a street name holder of our
common stock.
Shareholders of Record.
If you are a shareholder of record and received a Notice, the Notice is your admission ticket. If you are a shareholder of record and
received proxy materials by mail, your admission ticket is attached to your proxy card. You will need to bring the Notice or the admission ticket and valid photo identification with you to the Annual
Meeting in order to be admitted to the meeting.
Street Name Holders.
If you hold your shares in street name, bring with you to the Annual Meeting valid photo identification and your most recent brokerage
statement or a letter from your broker or other nominee indicating that you hold our shares. We will use that statement or letter to verify your ownership of common stock and admit you to the Annual
Meeting;
however, you will not be able to vote your shares at the Annual Meeting without a legal proxy, as described in Question 8.
77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Please note that use of cameras, phones or other similar electronic devices and the bringing of large bags, packages or sound or video recording equipment will not be permitted
in the meeting room. Attendees will also be required to comply with meeting guidelines and procedures that will be available at the meeting. A copy of the meeting guidelines and procedures is also
available on our website at
www.unitedhealthgroup.com/investors/annual-meeting.html
.
8. How can I vote at the Annual Meeting if I own shares in street name?
If you are a street name holder, you may not vote your shares at the Annual Meeting unless you obtain a legal proxy from your bank or broker. A legal proxy is a
bank's or broker's authorization for you to vote the shares it holds in its name on your behalf. To obtain a legal proxy, please contact your bank or broker for further information.
9. What shares are included on the Notice, proxy card or voting instruction form?
If you are a shareholder of record, you will receive only one Notice or proxy card for all the shares of common stock you
hold:
-
-
in certificate form;
-
-
in book-entry form; and
-
-
in any Company benefit plan.
If
you hold your shares in street name, you will receive one Notice or voting instruction form for each account you have with a bank or broker. If you hold shares in multiple accounts, you may need to
provide voting instructions for each account.
If
you hold shares in our 401(k) savings plan and do not vote your shares or specify your voting instructions on your proxy card, the administrators of the 401(k) savings plan will vote your 401(k)
plan shares in the same proportion as the shares for which they have received voting instructions.
To allow sufficient time for voting by the 401(k)
administrators, your voting instructions must be received by 11:59 p.m. Eastern Time on May 29, 2019.
10. How can I listen to the live webcast of the Annual Meeting?
You can listen to the live webcast of the Annual Meeting by visiting
www.unitedhealthgroup.com
and clicking on "Investors" and then on the link to the webcast. An archived copy of
the webcast
will also be available on our website for 14 days following the Annual Meeting.
11. What different methods can I use to vote?
By Written Proxy.
All shareholders of record who received proxy materials by mail can vote by written proxy card. If you received a Notice or the proxy materials
electronically, you may request a proxy card at any time by following the instructions on the Notice or on the voting website. If you are a street name holder, you will receive instructions on how you
may vote from your bank or broker, unless you previously enrolled in electronic delivery.
78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
By Telephone or Internet.
All shareholders of record can vote by telephone from the United States and Canada, using the toll-free telephone
number on the proxy
card, or through the Internet using the procedures and instructions described on the Notice or proxy card. Street name holders may vote by Internet or telephone if their bank or broker makes those
methods available, in which case the bank or broker will enclose the instructions with the proxy materials. The Internet and telephone voting procedures are designed to authenticate shareholders'
identities, allow shareholders to vote their shares and to confirm their instructions have been properly recorded.
In Person.
All shareholders of record may vote in person at the Annual Meeting. Street name holders may vote in person at the Annual Meeting if they have a legal
proxy, as described in Question 8.
The Notice is not a proxy card and cannot be used to vote your shares.
12. What is the record date and what does it mean?
The record date for the Annual Meeting is April 9, 2019. Only owners of record of shares of common stock of the Company at the close of business on the
record date are entitled to notice of and to vote at the Annual Meeting, or at any adjournments or postponements of the Annual Meeting. On April 9, 2019, there were 952,244,528 shares of common
stock issued, outstanding and entitled to vote. Each owner of record on the record date is entitled to one vote for each share of common stock held.
The
record date was established by our Board of Directors as required by the Delaware General Corporation Law. Owners of record of common stock at the close of business on the record date are entitled
to:
-
-
receive notice of the Annual Meeting; and
-
-
vote at the Annual Meeting and any adjournments or postponements of the Annual Meeting.
13. If I submit a proxy, may I later revoke it and/or change my vote?
Shareholders of record may revoke a proxy and/or change their vote prior to the completion of voting at the Annual Meeting
by:
-
-
signing another proxy card with a later date and delivering it to an officer of the Company before the Annual Meeting;
-
-
voting again over the Internet or by telephone prior to 11:59 p.m., Eastern Time, on June 2, 2019;
-
-
voting at the Annual Meeting; or
-
-
notifying the Secretary to the Board of Directors in writing before the Annual Meeting.
Street
name holders may revoke a proxy and/or change their vote prior to the completion of voting at the Annual Meeting by:
-
-
submitting new voting instructions in the manner provided by your bank or broker; or
-
-
contacting your bank or broker to request a legal proxy in order to vote your shares in person at the Annual Meeting.
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
14. Are votes confidential? Who counts the votes?
We hold the votes of all shareholders in confidence from directors, officers and employees except:
-
-
as necessary to meet applicable legal requirements and to assert or defend claims for or against the Company;
-
-
in the case of a contested proxy solicitation;
-
-
if a shareholder makes a written comment on the proxy card or otherwise communicates his or her vote to management; or
-
-
to allow the independent inspectors of the election to certify the results of the vote.
We
have retained Broadridge Financial Solutions to tabulate the votes. We have retained CT Hagberg LLC to act as independent inspector of the election.
15. How may I confirm my vote was counted?
We are offering our shareholders the opportunity to confirm their votes were cast in accordance with their instructions. Vote confirmation is consistent with
our commitment to sound corporate governance standards and an important means to increase transparency. Beginning May 20, 2019 and for up to two months after the Annual Meeting, you may confirm
your vote beginning 24 hours after your vote is received, whether it was cast by proxy card, electronically or telephonically. To obtain vote confirmation, log onto
www.proxyvote.com
using
your control number (located on your Notice or proxy card) and receive confirmation on how your
vote was cast. If you hold your shares through a bank or brokerage account, the ability to confirm your vote may be affected by the rules of your bank or broker and the confirmation will not confirm
whether your bank or broker allocated the correct number of shares to you.
16. What are my choices when voting for director nominees and what vote is needed to elect directors?
In the vote on the election of director nominees, shareholders may:
-
-
vote in favor of a nominee;
-
-
vote against a nominee; or
-
-
abstain from voting with respect to a nominee.
A
director nominee will be elected if the number of votes cast "for" the nominee exceeds the number of votes cast "against" the nominee. To address a provision in Delaware law that allows a director
who has not been re-elected to remain in office until a successor is elected and qualified, we have a policy requiring any director who does not receive a greater number of votes "for" than "against"
his or her election in an uncontested election to tender his or her resignation from the Board of Directors following certification of the shareholder vote. Under this policy, the Board of Directors
will determine whether to accept or reject the offer to resign within 90 days of certification of the shareholder vote. The text of this policy appears in our Principles of Governance, which is
available on our website at
www.unitedhealthgroup.com/about/corporate-governance
.
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
17. What are my choices when voting on each of the other proposals considered at the Annual Meeting?
For each of the other proposals, shareholders may:
-
-
vote for the proposal;
-
-
vote against the proposal; or
-
-
abstain from voting on the proposal.
18. What vote is needed to approve each of the other proposals?
The proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm and the shareholder proposal
must be approved by the holders of a majority of the shares of common stock present and entitled to vote in person or by proxy at the Annual Meeting in order to pass. For the advisory vote to approve
our executive compensation, there is no minimum approval necessary since it is an advisory vote; however, the Board of Directors will consider the results of the advisory vote when considering future
decisions related to such proposal.
19. What is the Board's recommendation with regard to each proposal?
The Board of Directors makes the following recommendation with regard to each proposal:
-
-
The Board of Directors recommends a vote FOR each of the director nominees.
-
-
The Board of Directors recommends a vote FOR advisory approval of the Company's executive compensation.
-
-
The Board of Directors recommends a vote FOR ratification of the appointment of Deloitte & Touche LLP as our independent
registered public accounting firm.
-
-
The Board of Directors recommends a vote AGAINST the shareholder proposal regarding amending the proxy access bylaw.
20. What if I do not specify a choice for a matter when returning a proxy?
Shareholders should specify their choice for each matter in the manner described in the Notice or on their proxy card. If no specific instructions are given,
proxies that are signed and returned will be voted:
-
-
FOR the election of all director nominees;
-
-
FOR the advisory approval of our executive compensation;
-
-
FOR the ratification of the appointment of Deloitte & Touche LLP as the Company's independent registered public accounting firm;
and
-
-
AGAINST the shareholder proposal regarding the amendment to the proxy access bylaw.
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
21. Are my shares voted if I do not provide a proxy?
If you are a shareholder of record and do not provide a proxy, you must attend the Annual Meeting in order to vote. If you hold shares through an account with a
bank or broker, your shares may be voted by the bank or broker on some matters if you do not provide voting instructions. Banks and brokers have the authority under NYSE rules to vote shares for which
their customers do not provide voting instructions on routine matters. The ratification of Deloitte & Touche LLP as our independent registered public accounting firm is considered a
routine matter. The other matters being voted on at the Annual Meeting are not considered routine and banks and brokers cannot vote shares without instruction on those matters. Shares that banks and
brokers are not authorized to vote are counted as "broker non-votes."
22. How are abstentions and broker non-votes counted?
Abstentions have no effect on the election of directors. Abstentions have the effect of an "AGAINST" vote on the advisory vote to approve our executive
compensation, the ratification of the appointment of the Company's independent registered public accounting firm and the shareholder proposal. Broker non-votes have no effect on the vote for any
matter at the meeting.
23. Does the Company have a policy about directors' attendance at the Annual Meeting of Shareholders?
The Company expects directors to attend the Annual Meeting, absent a compelling reason.
24. What are the deadlines for submitting director nominees and other shareholder proposals for the 2020 Annual
Meeting?
Shareholder Director Nominations for Inclusion in the Company's Proxy Materials (Proxy Access).
To be considered for inclusion in our proxy statement for our 2020
Annual Meeting, director nominations submitted pursuant to Section 3.04 of our Bylaws must be received at our principal executive offices at UnitedHealth Group Center, 9900 Bren Road
East, Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors, no earlier than November 21, 2019 and no later than December 21, 2019, and must be submitted in
accordance with Section 3.04 of our Bylaws. If we do not receive the information required by our Bylaws by the deadline described above, the director nominee will be excluded from our proxy
statement for our 2020 Annual Meeting.
Other Shareholder Proposals to Be Considered for Inclusion in the Company's Proxy Materials (SEC Rule 14a-8).
To be considered for inclusion in our proxy
statement for our 2020 Annual Meeting, shareholder proposals submitted pursuant to SEC Rule 14a-8 must be received no later than December 21, 2019 and be submitted in accordance with
Rule 14a-8. These shareholder proposals must be in writing and received by the deadline described above at our principal executive offices at UnitedHealth Group Center, 9900 Bren Road East,
Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors. If we do not receive a shareholder proposal by the deadline described above, the proposal may be excluded from our proxy
statement for our 2020 Annual Meeting.
82
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Other Shareholder Proposals for Presentation at the 2020 Annual Meeting (Advance Notice Provision).
A shareholder proposal that is not submitted for inclusion in
our proxy statement for our 2020 Annual Meeting pursuant to Section 3.04 of our Bylaws or SEC Rule 14a-8 and is sought to be presented at the 2020 Annual Meeting must comply with the
"advance notice" deadlines in our Bylaws. As such, these shareholder proposals must be received no earlier than February 4, 2020, and no later than the close of business on March 5,
2020. These shareholder proposals must be in writing and received within the "advance notice" deadlines described above at our principal executive offices at UnitedHealth Group Center, 9900 Bren Road
East, Minnetonka, Minnesota 55343, Attention: Secretary to the Board of Directors. These shareholder proposals must be in the form provided in our Bylaws and must include the information set forth in
the Bylaws. If we do not receive a shareholder proposal and the required information by the "advance notice" deadlines described above, the proposal may be excluded from consideration at the 2020
Annual Meeting. The "advance notice" requirement described above supersedes the notice period in SEC Rule 14a-4(c)(1) of the federal proxy rules regarding the discretionary proxy voting
authority with respect to such shareholder business.
25. How are proxies solicited and what is the cost?
We bear all expenses incurred in connection with the solicitation of proxies. We have engaged Morrow Sodali LLC to assist with the solicitation of
proxies for a base fee of $20,000 plus expenses. We will reimburse brokers, fiduciaries and custodians for their costs in forwarding proxy materials to beneficial owners of common stock.
Our
directors, officers and employees may also solicit proxies by mail, telephone and personal contact. They will not receive any additional compensation for these activities.
26. Where can I find more information about my voting rights as a shareholder?
The SEC has an informational website that provides shareholders with general information about how to cast their vote and why voting should be an important
consideration for shareholders. You may access that information at
https://www.investor.gov/research-before-you-invest/research/shareholder-voting
or at
www.investor.gov
.
83
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Security Ownership of Certain Beneficial Owners and Management
The following table provides information about shareholders known to us to beneficially own more than 5% of the outstanding shares of our
common stock, based solely on the information filed by such shareholders in 2019 for the year ended December 31, 2018 on Schedule 13G under the Exchange Act.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent of
Class
|
|
|
|
|
|
|
|
The Vanguard Group, Inc.
(1)
|
|
|
71,461,036
|
|
|
|
7.42
|
%
|
|
100 Vanguard Boulevard
|
|
|
|
|
|
|
|
|
|
Malvern, Pennsylvania 19355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock, Inc.
(2)
|
|
|
69,831,381
|
|
|
|
7.30
|
%
|
|
55 East 52
nd
Street
|
|
|
|
|
|
|
|
|
|
New York, New York 10055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FMR LLC
(3)
|
|
|
65,200,422
|
|
|
|
6.78
|
%
|
|
245 Summer Street
|
|
|
|
|
|
|
|
|
|
Boston, Massachusetts 02210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
This
information, including percent of class, is based on the Schedule 13G/A filed with the SEC by The Vanguard Group. Inc. on February 11,
2019. The Vanguard Group, Inc. reported having sole voting power over 1,186,163 shares, shared voting power over 225,198 shares, sole dispositive power over 70,075,335 shares and shared
dispositive power over 1,385,701 shares.
-
(2)
-
This
information, including percent of class, is based on the Schedule 13G/A filed with the SEC by BlackRock, Inc. on February 7, 2019.
BlackRock, Inc. reported having sole voting power over 60,772,629 shares and sole dispositive power over 69,831,381 shares.
-
(3)
-
This
information, including percent of class, is based on the Schedule 13G/A filed with the SEC by FMR LLC on February 13, 2019. FMR LLC
reported having sole voting power over 9,280,832 shares and sole dispositive power over 65,200,422 shares.
84
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
The following table provides information about the beneficial ownership of our common stock as of April 9, 2019, by each director and nominee for director, each named
executive officer, and by all of our current directors, executive officers and director nominees as a group. As of April 9, 2019, there were 952,244,528 shares of our common stock issued,
outstanding and entitled to vote.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner or
Identity of Group
|
|
Ownership of
Common Stock
|
|
Number of Shares
Deemed Beneficially
Owned as a Result
of Equity Awards
Exercisable or Vesting
Within 60 Days of
April 9, 2019
|
|
Total
(1)
|
|
Percent of
Common
Stock
Outstanding
|
|
|
|
|
|
|
|
|
|
William C. Ballard, Jr.
|
|
|
72,933
|
(2)
|
|
|
5,000
|
|
|
77,993
|
|
*
|
|
|
|
|
|
|
|
|
|
Richard T. Burke
|
|
|
1,762,163
|
(2)(3)
|
|
|
5,000
|
|
|
1,767,163
|
|
*
|
|
|
|
|
|
|
|
|
|
Timothy P. Flynn
|
|
|
3,169
|
|
|
|
|
|
|
3,169
|
|
*
|
|
|
|
|
|
|
|
|
|
Michele J. Hooper
|
|
|
33,754
|
(2)
|
|
|
|
|
|
33,754
|
|
*
|
|
|
|
|
|
|
|
|
|
F. William McNabb III
|
|
|
1,449
|
(2)
|
|
|
|
|
|
1,449
|
|
*
|
|
|
|
|
|
|
|
|
|
Valerie C. Montgomery Rice, M.D.
|
|
|
1,315
|
|
|
|
|
|
|
1,315
|
|
*
|
|
|
|
|
|
|
|
|
|
John H. Noseworthy, M.D.
|
|
|
180
|
(2)
|
|
|
|
|
|
180
|
|
*
|
|
|
|
|
|
|
|
|
|
Glenn M. Renwick
|
|
|
81,031
|
(2)
|
|
|
|
|
|
81,031
|
|
*
|
|
|
|
|
|
|
|
|
|
Gail R. Wilensky, Ph.D.
|
|
|
62,941
|
(2)
|
|
|
5,000
|
|
|
67,941
|
|
*
|
|
|
|
|
|
|
|
|
|
Stephen J. Hemsley
|
|
|
3,083,204
|
(4)(5)
|
|
|
551,259
|
|
|
3,634,463
|
|
*
|
|
|
|
|
|
|
|
|
|
David S. Wichmann
|
|
|
849,523
|
(4)(5)
|
|
|
377,486
|
|
|
1,227,009
|
|
*
|
|
|
|
|
|
|
|
|
|
John F. Rex
|
|
|
60,936
|
|
|
|
284,305
|
|
|
345,241
|
|
*
|
|
|
|
|
|
|
|
|
|
Andrew P. Witty
|
|
|
451
|
|
|
|
|
|
|
451
|
|
*
|
|
|
|
|
|
|
|
|
|
Steven H. Nelson
|
|
|
20,884
|
|
|
|
38,123
|
|
|
59,007
|
|
*
|
|
|
|
|
|
|
|
|
|
All current directors, executive officers and director nominees as a group (17 individuals)
|
|
|
6,179,850
|
(6)
|
|
|
1,613,872
|
|
|
7,793,722
|
|
0.82%
|
|
|
|
|
|
|
|
|
|
-
*
-
Less
than 1%.
-
(1)
-
Unless
otherwise noted, each person and group identified possesses sole voting and dispositive power with respect to the shares shown opposite such person's or
group's name. Shares not outstanding but deemed beneficially owned by virtue of the right of an individual to acquire them within 60 days of April 9, 2019, are treated as outstanding
only when determining the amount and percent owned by such individual or group.
-
(2)
-
Includes
the following number of vested DSUs which are considered owned under the Company's stock ownership guidelines for directors:
Mr. Ballard 23,693; Mr. Burke 23,693; Mr. Flynn 3,169; Ms. Hooper 30,384;
Mr. McNabb 1,449; Dr. Montgomery Rice 1,315; Dr. Noseworthy 180; Mr. Renwick 45,062; and
Dr. Wilensky 21,706.
-
(3)
-
Includes
86,000 shares held in trust for the benefit of Mr. Burke's children. Mr. Burke does not have voting or dispositive power over these shares and
disclaims beneficial ownership of these shares. Also includes 1,488,500 shares held indirectly in a limited liability partnership.
85
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
-
(4)
-
Includes
the following number of shares held in trust for the individuals pursuant to our 401(k) plan: Mr. Hemsley 316.3605; and
Mr. Wichmann 237.0823. Pursuant to the terms of the 401(k) plan, a participant has sole voting power over his or her shares; however, the plan trustee votes all unvoted
shares in the same proportions as the actual proxy votes submitted by plan participants.
-
(5)
-
Includes
82,416.272 DSUs, 125,560 shares held in charitable foundations and 902,493 shares held in grantor retained annuity trusts, all of which are beneficially
owned by Mr. Hemsley.
-
(6)
-
Includes
the indirect holdings included in footnotes 3, 4 and 5.
Householding Notice
We have adopted "householding" procedures allowing us to deliver one Notice or single copies of proxy statements and annual reports to any
household at which two or more shareholders reside who share the same last name or whom we believe to be members of the same family. Each registered shareholder living in that household will receive a
separate proxy card if the householded proxy materials are received by mail.
If
you participate in householding but wish to receive a separate copy of the Notice, this proxy statement or our 2018 Annual Report for the year ended December 31, 2018, please notify us at:
UnitedHealth Group Center, 9900 Bren Road East, Minnetonka, Minnesota 55343, Attn: Secretary to the Board of Directors, telephone
(877) 536-3550. You may opt-in or opt-out of householding at any time by contacting our transfer agent, EQ Shareowner Services, at P.O. Box 64854, St. Paul, Minnesota
55164-0854, telephone (800) 468-9716. Your householding election will apply to all materials mailed more than 30 days after your request is received.
Your
participation in the householding program is encouraged. As an alternative to householding, you may choose to receive documents electronically. Instructions for electing electronic delivery are
described in Question 6 of the "Questions and Answers About the Annual Meeting and Voting" section of this proxy statement.
We
have been notified that some banks and brokers will household proxy materials. If your shares are held in "street name" by a bank or broker, you may request information about householding from your
bank or broker.
Other Matters at Meeting
In accordance with the requirements of advance notice described in our Bylaws, no shareholder nominations or shareholder proposals other than
those included in this proxy statement will be presented at the 2019 Annual Meeting. We know of no other matters that may come before the Annual Meeting. However, if any matters calling for a vote of
the shareholders, other than those referred to in this proxy statement, should properly come before the meeting, the persons named as proxies will vote on such matters according to their individual
judgment.
86
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
Certain Relationships and Transactions
Approval or Ratification of Related-Person Transactions
The Board of Directors has adopted a written Related-Person Transactions Approval Policy, which is administered by the Nominating Committee. A
copy of the policy is available on our website at
www.unitedhealthgroup.com
. Under the policy, "related-person"
transactions are prohibited unless approved or ratified by the Nominating Committee. In general, a related-person transaction is any transaction or series of transactions (or amendments thereto)
directly or indirectly involving:
-
-
A director or an immediate family member of a director in which an executive officer of the Company is directly or indirectly a participant and
the amount involved exceeds $1.00; or
-
-
A director, executive officer or shareholder beneficially owning more than 5% of our common stock, or any of their respective immediate family
members, in which the Company or its subsidiaries is directly or indirectly a participant and the amount involved exceeds $120,000; provided that if a director is an executive officer of an entity
that is a party to a transaction with the Company or its subsidiaries, and the director was actively involved in the transaction, then the amount shall be $1.00.
Related-person
transactions under the policy do not include:
-
-
Indemnification and advancement of expenses made pursuant to the Company's Certificate of Incorporation or Bylaws or pursuant to any agreement
or instrument.
-
-
Interests arising solely from the ownership of a class of the Company's equity securities, if all holders of that class of equity securities
receive the same benefit on a pro rata basis.
-
-
Any transaction that involves the providing of compensation to a director or executive officer in connection with his or her duties to the
Company or any of its subsidiaries, including the reimbursement of business expenses incurred in the ordinary course.
Under
the policy, the Company determines whether a transaction falls under the definition of a related-person transaction requiring review by the Nominating Committee. In determining whether to
approve or ratify a related-person transaction, the Nominating Committee will consider, among other things, whether the terms of the related-person transaction are fair to the Company and on terms at
least as favorable as would apply if the other party was not an affiliate; the business reasons for the transaction; whether the transaction could impair the independence of a director under the
Company's Standards for Director Independence; and whether the transaction would present an improper conflict of interest for any director or executive officer of the Company.
Any
member of the Nominating Committee who has an interest in the transaction under discussion will abstain from voting on the approval of the related-person transaction, but may, if so requested by
the Chair of the Nominating Committee, participate in some or all of the Nominating Committee's discussions of the related-person transaction. Any related-person transaction that is not approved or
ratified, as the case may be, will be voided, terminated or amended, or other actions will be taken in each case as determined by the Nominating Committee so as to avoid or otherwise address any
resulting conflict of interest.
87
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Board of
Directors
|
|
|
|
2
|
|
Corporate
Governance
|
|
|
|
3
|
|
Executive
Compensation
|
|
|
|
4
|
|
Audit
|
|
|
|
5
|
|
Annual
Meeting
|
|
|
|
6
|
|
Other
Information
|
As required under SEC rules, transactions in which the Company was or is to be a participant and the amount involved exceeds $120,000, and in which any related person had or
will have a direct or indirect material interest, are disclosed below.
Related-Person Transactions
Fees Paid to Family Member of Executive Officer
Brent Asplund, Mr. Hemsley's son-in-law, is a contractor providing technology services to Optum. The compensation paid to
Mr. Asplund is consistent with the Company's overall compensation principles based on the contractor's years of experience, performance and comparable positions within the Company.
Transactions with 5% Shareholders
BlackRock, Inc. beneficially owned approximately 7.30% of our common stock as of December 31, 2018. The Company paid BlackRock
$5.4 million for investment management fees in 2018. BlackRock maintains a self-funded health insurance plan through the Company and paid the Company $2.4 million for administrative
services, $1.1 million for biometric screenings and lab tests and $467,800 for an employee assistance program in 2018.
FMR LLC
beneficially owned approximately 6.78% of our common stock as of December 31, 2018. The Company and its employees paid Fidelity Management & Research Company ("Fidelity"),
a wholly owned subsidiary of FMR LLC, $43.1 million in benefits management fees in 2018. Fidelity maintains a self-funded health insurance plan through the Company and paid the Company
$22.6 million for administrative services, $73.1 million for premium payments on behalf of affiliated entities, $6.5 million for prescription drug payments and $1.2 million
for an employee assistance program and wellness services in 2018.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than 10% of our
common stock, to file initial reports of ownership and reports of changes in ownership with the SEC and the NYSE. Executive officers, directors and greater-than-10% beneficial owners are required by
SEC rules to furnish us with copies of all Section 16(a) reports they file. Due to a clerical error, one Form 4 was filed one day late on behalf of the Company's Chief Accounting Officer
in 2018. Except for the foregoing, based solely on our review of these reports and written representations from our executive officers
and directors, we believe that all of our executive officers and directors complied with all Section 16(a) filing requirements during 2018.
88
Table of Contents
Appendix A Reconciliation of Non-GAAP Financial Measures
|
Use of Non-GAAP Financial Measures
Adjusted net earnings per share is a non-GAAP financial measure. Non-GAAP financial measures should be considered in addition to, but not as a
substitute for, or superior to, financial measures prepared in accordance with GAAP.
Adjusted
net earnings per share excludes from GAAP net earnings per share, intangible amortization and other items, if any, that do not reflect the Company's underlying business performance.
Management believes the use of adjusted net earnings per share provides investors and management useful information about the earnings impact of acquisition-related intangible asset amortization. In
addition, adjusted net earnings per share excludes the earnings impact of the deferred tax revaluation recognized after The Tax Cuts and Jobs Act of 2017 was enacted in December 2017. Management
believes the exclusion of these items provides a more useful comparison of the Company's underlying business performance from period to period.
UNITEDHEALTH GROUP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
ADJUSTED NET EARNINGS AND EARNINGS PER SHARE
(in millions, except per share data)
(unaudited)
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2018
|
|
Year Ended December 31, 2017
|
|
GAAP net earnings attributable to UnitedHealth Group common shareholders
|
|
$
|
11,986
|
|
$
|
10,558
|
|
Revaluation of U.S. net deferred tax liabilities due to tax reform
|
|
|
|
(1,197
|
)
|
Intangible amortization
|
|
899
|
|
896
|
|
Tax effect of intangible amortization
|
|
(225
|
)
|
(334
|
)
|
|
|
|
|
|
|
Adjusted net earnings attributable to UnitedHealth Group common shareholders
|
|
$
|
12,660
|
|
$
|
9,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted earnings per share
|
|
$
|
12.19
|
|
$
|
10.72
|
|
Revaluation of U.S. net deferred tax liabilities due to tax reform per share
|
|
|
|
(1.22
|
)
|
Intangible amortization per share
|
|
0.91
|
|
0.91
|
|
Tax effect per share of intangible amortization
|
|
(0.22
|
)
|
(0.34
|
)
|
|
|
|
|
|
|
Adjusted diluted earnings per share
|
|
$
|
12.88
|
|
$
|
10.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89
VIEW MATERIALS & VOTE SCAN TO UNITEDHEALTH GROUP INCORPORATED 9900 BREN ROAD EAST MINNETONKA, MN 55343 VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern time on June 2, 2019, or May 29, 2019 for shares held in the UnitedHealth Group 401(k) Savings Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern time on June 2, 2019, or May 29, 2019 for shares held in the UnitedHealth Group 401(k) Savings Plan. Have your proxy card in hand when you call and follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided, or send it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717, so that it is received by June 2, 2019. VOTE CONFIRMATION You may confirm that your instructions were received and included in the final tabulation to be issued at the Annual Meeting on June 3, 2019 via the ProxyVote Confirmation link at www.proxyvote.com by using the information printed in the box marked by the arrow Vote Confirmation is available 24 hours after your vote is received beginning May 20, 2019, with the final vote tabulation remaining available through August 2, 2019. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by UnitedHealth Group in mailing proxy materials, you can consent to receive all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E61293-P19286 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. UNITEDHEALTH GROUP INCORPORATED The Board of Directors recommends you vote FOR each of the nominees for director in Proposal 1, FOR Proposal 2 and FOR Proposal 3, and AGAINST Proposal 4. 1. Election of Directors For Against Abstain For Against Abstain Nominees: ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 2. Advisory approval of the Companys executive compensation. Ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm for the Company for the year ending December 31, 2019. ! ! ! ! ! ! 1a. William C. Ballard, Jr. 3. 1b. Richard T. Burke 1c. Timothy P. Flynn The Board of Directors recommends you vote AGAINST Proposal 4. 1d. Stephen J. Hemsley 4. The shareholder proposal set forth in the proxy statement requesting an amendment to the proxy access bylaw, if properly presented at the 2019 Annual Meeting of Shareholders. ! ! ! 1e. Michele J. Hooper 1f. F. William McNabb III 1g. Valerie C. Montgomery Rice, M.D. 1h. John H. Noseworthy, M.D. 1i. Glenn M. Renwick 1j. David S. Wichmann ! 1k. Gail R. Wilensky, Ph.D. For address changes and/or comments, please check this box and write them on the back where indicated. Please indicate if you plan to attend this meeting. ! Yes ! No Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date XXXX XXXX XXXX XXXX
ADMISSION CARD 2019 Annual Meeting of Shareholders Monday, June 3, 2019 10:00 a.m. Central Time Lower Level Conference Center 300 North LaSalle Chicago, IL 60654 PLEASE ADMIT NON-TRANSFERABLE If you plan to attend the 2019 Annual Meeting of Shareholders, please write your name and address in the space provided below and present this admission card and photo identification at the registration desk. Name: Address: ____ You may vote your proxy at any time over the Internet at www.proxyvote.com or by telephone at 1-800-690-6903. Please see the reverse side of this proxy card for complete instructions on how to vote your proxy. Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.unitedhealthgroup.com/proxymaterials. For directions to the 2019 Annual Meeting, please see the information posted at www.unitedhealthgroup.com/annualmeeting. E61294-P19286 UNITEDHEALTH GROUP INCORPORATED Annual Meeting of Shareholders June 3, 2019 10:00 a.m. Central Time This proxy is solicited by the Board of Directors By signing the proxy, you revoke all prior proxies and appoint each of Dannette L. Smith and Faraz A. Choudhry each individually, and with full power of substitution, to vote all shares you are entitled to vote on the matters shown on the reverse side and any other matters which may properly come before the 2019 Annual Meeting of Shareholders and all adjournments or postponements thereof. These shares of stock will be voted as you specify on the reverse side. If no choice is specified, this proxy will be voted FOR all of the nominees for director in Proposal 1, FOR Proposal 2, FOR Proposal 3 and AGAINST Proposal 4, and in the discretion of the named proxies on all other matters that may properly come before the meeting. If you are a current or former employee of UnitedHealth Group and own shares of common stock through the UnitedHealth Group 401(k) Savings Plan, your completion and execution of this proxy card or your submission of an Internet or telephone vote will provide voting instructions to the trustee of the plan. If no direction is made, if your proxy card is not signed, or if your vote by proxy card, Internet or telephone is not received by 11:59 p.m. Eastern Time on May 29, 2019, the plan shares credited to this 401(k) account will be voted by the plan trustee in the same proportions as the proxy votes which were timely and properly submitted by other plan participants. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side Address Changes/Comments:
UnitedHealth (NYSE:UNH)
Historical Stock Chart
From Mar 2024 to Apr 2024
UnitedHealth (NYSE:UNH)
Historical Stock Chart
From Apr 2023 to Apr 2024