United Healthcare 2015 Annual Report Download - page 70

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Redeemable Noncontrolling Interests
Redeemable noncontrolling interests in the Company’s subsidiaries whose redemption is outside the control of
the Company are classified as temporary equity. The following table provides details of the Company’s
redeemable noncontrolling interests activity for the years ended December 31, 2015 and 2014:
(in millions) 2015 2014
Redeemable noncontrolling interests, beginning of period .............................. $1,388 $1,175
Net earnings .................................................................. 29 —
Acquisitions .................................................................. 196 203
Redemptions ................................................................. (116) —
Distributions ................................................................. (19) (40)
Fair value and other adjustments .................................................. 258 50
Redeemable noncontrolling interests, end of period ................................... $1,736 $1,388
Share-Based Compensation
The Company recognizes compensation expense for share-based awards, including stock options, stock-settled
stock appreciation rights (SARs) and restricted stock and restricted stock units (collectively, restricted shares), on
a straight-line basis over the related service period (generally the vesting period) of the award, or to an
employee’s eligible retirement date under the award agreement, if earlier. Restricted shares vest ratably;
primarily over two to five years and compensation expense related to restricted shares is based on the share price
on date of grant. Stock options and SARs vest ratably primarily over four to six years and may be exercised up to
10 years from the date of grant. Compensation expense related to stock options and SARs is based on the fair
value at date of grant, which is estimated on the date of grant using a binomial option-pricing model. Under the
Company’s Employee Stock Purchase Plan (ESPP) eligible employees are allowed to purchase the Company’s
stock at a discounted price, which is 85% of the lower market price of the Company’s common stock at the
beginning or at the end of the six-month purchase period. Share-based compensation expense for all programs is
recognized in operating costs in the Company’s Consolidated Statements of Operations.
Net Earnings Per Common Share
The Company computes basic earnings per common share attributable to UnitedHealth Group common
stockholders by dividing net earnings attributable to UnitedHealth Group common stockholders by the weighted-
average number of common shares outstanding during the period. The Company determines diluted net earnings
per common share attributable to UnitedHealth Group common stockholders using the weighted-average number
of common shares outstanding during the period, adjusted for potentially dilutive shares associated with stock
options, SARs, restricted shares and the ESPP, (collectively, common stock equivalents) using the treasury stock
method. The treasury stock method assumes a hypothetical issuance of shares to settle the share-based awards,
with the assumed proceeds used to purchase common stock at the average market price for the period. Assumed
proceeds include the amount the employee must pay upon exercise, any unrecognized compensation cost and any
related excess tax benefit. The difference between the number of shares assumed issued and number of shares
assumed purchased represents the dilutive shares.
Health Insurance Industry Tax
Health Reform Legislation includes an annual, nondeductible insurance industry tax (Health Insurance Industry
Tax) to be levied proportionally across the insurance industry for risk-based health insurance products.
The Company estimates its liability for the Health Insurance Industry Tax based on a ratio of the Company’s
applicable net premiums written compared to the U.S. health insurance industry total applicable net premiums,
both for the previous calendar year. The Company records in full the estimated liability for the Health Insurance
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