United Healthcare 2012 Annual Report Download - page 101

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Share-Based Compensation Recognition and Estimates
The principal assumptions the Company used in calculating grant-date fair value for stock options and SARs
were as follows:
2012 2011 2010
Risk free interest rate ............................... 0.7% - 0.9% 0.9% - 2.3% 1.0% - 2.1%
Expected volatility ................................. 43.2% - 44.0% 44.3% - 45.1% 45.4% - 46.2%
Expected dividend yield ............................. 1.2% - 1.7% 1.0% -1.4% 0.1% -1.7%
Forfeiture rate ..................................... 5.0% 5.0% 5.0%
Expected life in years ............................... 5.3-5.6 4.9-5.0 4.6 -5.1
Risk-free interest rates are based on U.S. Treasury yields in effect at the time of grant. Expected volatilities are
based on the historical volatility of the Company’s common stock and the implied volatility from exchange-
traded options on the Company’s common stock. Expected dividend yields are based on the per share cash
dividend paid by the Company’s Board of Directors. The Company uses historical data to estimate option and
SAR exercises and forfeitures within the valuation model. The expected lives of options and SARs granted
represents the period of time that the awards granted are expected to be outstanding based on historical exercise
patterns.
Other Employee Benefit Plans
The Company also offers a 401(k) plan for all employees. Compensation expense related to this plan was not
material for the years 2012, 2011 and 2010.
In addition, the Company maintains non-qualified, unfunded deferred compensation plans, which allow certain
members of senior management and executives to defer portions of their salary or bonus and receive certain
Company contributions on such deferrals, subject to plan limitations. The deferrals are recorded within Long-
Term Investments with an approximately equal amount in Other Liabilities in the Consolidated Balance Sheets.
The total deferrals are distributable based upon termination of employment or other periods, as elected under
each plan and were $348 million and $281 million as of December 31, 2012 and 2011, respectively.
12. Commitments and Contingencies
The Company leases facilities and equipment under long-term operating leases that are non-cancelable and
expire on various dates through 2028. Rent expense under all operating leases for 2012, 2011 and 2010 was $334
million, $295 million and $297 million, respectively.
As of December 31, 2012, future minimum annual lease payments, net of sublease income, under all non-
cancelable operating leases were as follows:
(in millions)
Future Minimum
Lease Payments
2013 ...................................................................... $380
2014 ...................................................................... 357
2015 ...................................................................... 319
2016 ...................................................................... 277
2017 ...................................................................... 233
Thereafter ................................................................. 556
The Company provides guarantees related to its service level under certain contracts. If minimum standards are
not met, the Company may be financially at risk up to a stated percentage of the contracted fee or a stated dollar
99