California
State Teachers’
Retirement
System
Investments
7667
Folsom Blvd., Ste. 250
Sacramento,
CA 95826
(916)
229-3723 Fax (916) 229-0502
cailman@calstrs.com
May
9,
2007
Dear
Fellow Shareholder of UnitedHealth:
I
am
writing to you on behalf of the California State Teachers Retirement System
(CalSTRS). CalSTRS is the second-largest public pension system in the U.S.,
with
approximately $168 billion in assets. We manage retirement benefits for over
775,000 public school teachers in the California public school system, serving
both kindergarten through high school-age children and the community college
adult students as well.
CalSTRS
maintains a substantial investment in UnitedHealth; indeed, it is a core holding
in the portfolio, as nearly four million of our 5.7 million shares are held
in
our passively managed accounts. The UnitedHealth holding amounted to over $300
million at the end of the last quarter on March 31, 2007. CalSTRS believes
that
there are certain core issues, just as there are core holdings that, should
be
established and enhanced, simply because these issues bring clarity and fairness
to the investor governance process. In our view, Proxy Access is a core issue
for investors and this issue should be pursued by companies and shareholders
alike. UnitedHealth is having its annual meeting on May 29, 2007; we are writing
to alert you to a shareholder proposal that the largest public pension fund
in
the country, the California Public Employees Retirement System (CalPERS), has
placed on the Company’s ballot, regarding Proxy Access. The ballot issue is
identified as Proposal 11 on the proxy card. This shareholder governance
campaign is fully supported by CalSTRS and we urge you to vote in favor of
the
proposal. The CalPERS proposal request the UnitedHealth Group’s Board to amend
UnitedHealth’s bylaws to provide shareholder access to the Company’s proxy
materials under certain and clearly defined conditions. The proposal sets
ownership criteria and length of ownership conditions before the Company would
have to grant proxy access. It also sets a certain number of names that could
be
added to the Company’s proxy materials.
As
long-term core owners of UnitedHealth, CalSTRS and CalPERS have no interest
in
the valuable management and Board time being ill-used. It is our belief that
implementing this proposal will be a valuable factor to UnitedHealth’s
shareholders and enhance the Company’s reputation as a transparent and fair
governance model.
This
proposal, if enacted by the Company provides a low-cost and less distracting
process for investors to have a meaningful say in the governance of the Board
and by extension, its oversight of the corporation, and accountability to
shareholders. We urge you to vote for shareholder Proposal number 4, identified
as Proposal 11 on the proxy ballot card.
Fellow
Shareholder of UnitedHealth
May
9,
2007
Page
2
VOTE
FOR SHAREHOLDER PROPOSAL NO. 4
(Proposal
11 on the proxy card)
| · |
Shareholder
Proposal No. 4 (Proposal 11 on the proxy ballot card) allows for
meaningful yet responsible shareowner access to the director nomination
process to promote board accountability and a culture focused on
creating
long-term shareholder
value.
|
Remember,
this proposal:
| · |
Provides
that only shareholders that have beneficially owned 3% or more
of
UnitedHealth’s outstanding common stock for at least two years will be
eligible to nominate up to two candidates for election to the Board.
(See
attached for full text of the proposal).
|
SHAREHOLDER
PROPOSAL NO. 4 - A NON-BINDING SOLUTION
FOR
ENSURING ACCOUNTABILITY
Remember,
this proposal is:
| · |
Non-binding
and requests the board to amend UnitedHealth’s bylaws to establish
procedures for including shareholder nominated director candidates
in the
Company’s proxy statement.
|
And,
| · |
If
adopted, Shareholder Proposal No. 4 (Proposal 11 on proxy ballot
card)
will allow shareholder nominees to be included for shareholder
consideration along with management nominees in board
elections.
|
CalSTRS
believes that this provision will work to ensure a culture highlighted by
accountable, competent, focused directors, whose interests are clearly aligned
with the interests of long-term shareholders. CalSTRS believes that the
implementation of this proposal will signal good news for long-term shareholders
and that what is good news for them is also good news for the management and
Board of the Company. Please vote with us on May 29, 2007.
Fellow
Shareholder of UnitedHealth
May
9,
2007
Page
3
Please
refer to the proxy statement for more information or call The Altman Group,
Inc., who is assisting us with this effort toll-free at (800) 314-9816 or at
(201) 460-1200 if you have any questions or need assistance in voting your
shares.
Sincerely,
Christopher
J. Ailman
Chief
Investment Officer
PLEASE
NOTE:
The cost
of this solicitation is being borne entirely by CalSTRS and is being done
through the use of one or more of the following forms of communication: mail,
e-mail, and/or telephone communication. CalSTRS is not asking for your proxy
card. Please
do not send us your proxy card but return it to the proxy voting agent in the
envelope that was provided to you.
ATTACHMENT
SHAREHOLDER
PROPOSAL
RESOLVED,
the shareholders of UnitedHealth Group, Inc. (the “Company”), request that the
Board amend the Company’s bylaws to add the following to Section
3.03:
Notwithstanding
the above, the corporation shall include in its proxy materials for a meeting
of
shareholders at which directors are to be elected the name, together with the
Disclosure and Statement (both as defined in this section 3.17), of any person
nominated for election to the Board of Directors by a shareholder or group
thereof that satisfies the requirements of this section 3.17 (the “Nominator”),
and allow shareholders to vote with respect to such nominee on the corporation’s
proxy card. Each Nominator may nominate up to two candidates for election at
a
meeting.
A
Nominator must:
(a)
have
beneficially owned 3% or more of the corporation’s outstanding common stock
(“Required Shares”) continuously for at least two years;
(b)
provide written notice received by the Secretary within the time period
specified in the first paragraph of this section containing (i) with respect
to
the nominee, (A) the information required by such section and (B) such nominee’s
consent to being named in the proxy statement and to serving as a director
if
elected; and (ii) with respect to the Nominator, proof of ownership of the
Required Shares; and
(c)
execute an undertaking that it agrees to (i) assume all liability stemming
from
any legal or regulatory violation arising out of the Nominator’s communications
with the corporation’s shareholders, including, without limitation, the
Disclosure and Statement; (ii) to the extent it uses soliciting material other
than the corporation’s proxy materials, comply with all applicable laws and
regulations, including, without limitation, the SEC’s Rule 14a-12.
The
Nominator may furnish a statement, not to exceed 500 words, in support of the
nominee’s candidacy (the “Statement”) at the time the Disclosure is submitted.
The Board of Directors shall adopt a procedure for timely resolving disputes
over whether notice of a nomination was timely given and whether the Disclosure
and Statement comply with this section 3.17 and any applicable SEC
rules.
SUPPORTING
STATEMENT
As
an
indication of the extent of the compensation problems at many public
corporations, President George W. Bush recently said he was “floored” when he
sees “guys making a billion dollars as a CEO of a company.” President Bush also
stated that he hopes that “shareholders should take a good hard look at some of
these companies.”
The
“Wilmer Cutler Report” exposed many compensation-related problems at the Company
including inadequate internal controls, a lack of disclosure regarding financial
relationships between the former CEO and the Chairman of the Compensation
Committee, the improper “repricing” of options and the improper “backdating” of
options. For these reasons, CalPERS is sponsoring this proposal to advise the
Board that shareowners should have a meaningful voice in the election of the
Board of Directors.
Access
to
the proxy for purposes of electing a director nominated by large shareowners
is
the most effective mechanism for ensuring accountability.
Please
vote FOR this proposal.