United Healthcare 2006 Annual Report Download - page 77

As to certain other Section 16 Grants, Compensation Committee approval occurred at a meeting or there was
general Compensation Committee approval of the Section 16 Grant together with a delegation to the
Chairman of the Compensation Committee to determine the final amount of stock options, grant date and
exercise price for each Section 16 officer receiving options. The Company has determined, based on all
available evidence, that the appropriate measurement date for these Section 16 Grants is the earlier of (a) the
date on which a Form 4 (or other statement of changes in beneficial ownership) was filed with the SEC with
respect to a particular officer’s grant or (b) the date on which a resolution with respect to that grant was
adopted at a meeting of the Compensation Committee or a decision was made by the Chairman of the
Compensation Committee, if so delegated.
For option grants with stated grant dates in October 1999 that were made in connection with the entry of
employment agreements for our former chief executive officer and our current chief executive officer (both
of whom had been employed by the Company prior to that date), the Company has determined that the
appropriate measurement date is the date on which the employment agreements were executed on behalf of
the Company. With respect to stock option grants with a stated grant date in October 1999 that represented
the number of additional stock options necessary to equal the minimum annual stock option grant provided
for pursuant to each such employment agreement, the Company has determined that the appropriate
measurement date is the last day of 1999, the calendar year in which the Company was contractually
obligated to make the grants.
•Broad-Based Grants — Between 1,500 and 4,000 middle and senior management employees periodically and
customarily received options. As described in the WilmerHale Report, our former chief executive officer,
acting pursuant to authority delegated to him by the Compensation Committee, chose the grant dates and
overall amounts for Broad-Based Grants and ultimately reflected the Broad-Based Grants in CEO
Certificates.
The Company followed separate allocation processes to determine the particular recipients and individual
option amounts of grants to middle management employees and senior management employees. In the
majority of Broad-Based Grants, the process of allocating stock option grants among individual employees in
both middle management and senior management continued beyond the stated grant date. After the date on
which substantially all granting activities were completed, there were an insignificant number of changes to
option awards attributable to circumstances such as the effective cancellation of a grant because of an
employee’s termination, administrative error corrections, promotion or individual performance reassessment.
Based on all available evidence, the Company has determined that the appropriate measurement date for
Broad-Based Grants was the later of the following two dates: (a) the date on which the evidence identified by
the Company indicated that a communication to or from our former chief executive officer refers to a
particular grant, or the grant was presented to the Compensation Committee or (b) the date on which the
allocation of the options to individual employees and grant process associated with the Broad-Based Grant
was substantially complete. Where information is not available to evidence either (a) or (b) above, the
Company has determined the appropriate measurement date to be the date on which the Company
determined, based upon all available evidence that the CEO Certificate for such grant was likely executed.
Where option award amounts changed subsequent to the date the allocation process was substantially
complete, the Company has determined that each award that was changed is a separate grant with its own
measurement date and should not be considered indicative that the granting process was not complete.
•New Hire and Promotion Grants — During the Independent Review Period, the Company granted stock
options to approximately 2,500 employees in connection with their hire or promotion (“New Hire and
Promotion Grants”).
For New Hire and Promotion Grants made prior to 2002, the Company typically chose grant dates by
determining the lowest closing price of the Company’s common stock between the date of an event in the
recruitment of the newly hired employee (e.g., date of first contact, date of an offer letter) or promotion of the
employee and the end of the quarter in which the employee started work or was promoted. As a result of this
practice, some employees received stock options with grant dates that were earlier than that employee’s start
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