UNITEDHEALTH GROUP INC

11. Share-Based Compensation

The Company’s outstanding share-based awards consist mainly of non-qualified stock options and restricted shares. As of December 31, 2025, the Company had 39 million shares available for future grants of share-based awards under the 2020 Stock Incentive Plan. As of December 31, 2025, there were 15 million shares of common stock available for issuance under the ESPP.

Stock Options

Stock option activity for the year ended December 31, 2025 is summarized in the table below:

Restricted Shares

Restricted share activity for the year ended December 31, 2025 is summarized in the table below:

Other Share-Based Compensation Data

Share-Based Compensation Recognition and Estimates

The principal assumptions the Company used in calculating grant-date fair value for stock options were as follows:

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. The Company uses historical data to estimate option exercises and forfeitures within the valuation model. The expected lives of options granted represent the periods of time the awards granted are expected to be outstanding based on historical exercise patterns.

Other Employee Benefit Plans

The Company offers various defined contribution retirement savings plans for its domestic employees. Compensation expense related to these plans was $850 million, $853 million and $804 million for the years ended December 31, 2025, 2024 and 2023, respectively.

In addition, the Company maintains non-qualified, deferred compensation plans, which allow certain members of senior management and executives to defer portions of their salary or bonus. 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 $2.2 billion and $2.1 billion as of December 31, 2025 and 2024, respectively.

12. Commitments and Contingencies

Leases

Operating lease costs, including immaterial variable and short-term lease costs, were $1.6 billion, $1.4 billion and $1.4 billion for the years ended December 31, 2025, 2024 and 2023, respectively. Cash payments made on the Company’s operating lease liabilities were $1.1 billion for the years ended December 31, 2025, 2024 and 2023, respectively, which were classified within operating activities in the Consolidated Statements of Cash Flows. As of December 31, 2025, the Company’s weighted-average remaining lease term and weighted-average discount rate for its operating leases were 9.2 years and 5.0%, respectively.

As of December 31, 2025, future minimum annual lease payments under all non-cancelable operating leases were as follows:

Other Commitments

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 amount. None of the amounts accrued, paid or charged to income for service level guarantees were material as of December 31, 2025, 2024 or 2023.

The Company has entered into certain transactions that include various put and call options on unconsolidated businesses. As of December 31, 2025 the estimated obligation under these arrangements if they were currently redeemable was $4.8 billion. The Company does not have any material potential required repurchases in the next twelve months.

Legal Matters

The Company is frequently made party to a variety of legal actions and regulatory inquiries, including class actions and suits brought by members, care providers, consumer advocacy organizations, customers, shareholders and regulators, relating to the Company’s businesses, including management and administration of health benefit plans and other services. These matters include medical malpractice, employment, intellectual property, antitrust, privacy and contract claims and claims related to health care benefits coverage and other business practices.

The Company records liabilities for its estimates of probable costs resulting from these matters where appropriate. Estimates of costs resulting from legal and regulatory matters involving the Company are inherently difficult to predict, particularly where the matters: involve indeterminate claims for monetary damages or may involve fines, penalties or punitive damages; present novel legal theories or represent a shift in regulatory policy; involve a large number of claimants or regulatory bodies; are in the early stages of the proceedings; or could result in a change in business practices. Accordingly, the Company is often unable to estimate the losses or ranges of losses for those matters where there is a reasonable possibility or it is probable a loss may be incurred.

Government Investigations, Audits and Reviews

The Company has been involved or is currently involved in various governmental investigations, audits and reviews. These include routine, regular and special investigations, audits and reviews by the Centers for Medicare and Medicaid Services (CMS), state insurance and health and welfare departments, state attorneys general, the Office of the Inspector General (OIG), the Office of Personnel Management, the Office for Civil Rights, the Government Accountability Office, the Federal Trade Commission, U.S. Congressional committees, the U.S. Department of Justice (DOJ), the SEC, the Internal Revenue Service, the U.S. Drug Enforcement Administration, the U.S. Department of Labor, the Federal Deposit Insurance Corporation, the Consumer Financial Protection Bureau, the Defense Contract Audit Agency, the Food and Drug Administration and other governmental authorities. Similarly, the Company’s international businesses are also subject to investigations, audits and reviews by applicable foreign governments. The Company responds on a regular basis to subpoenas, information requests, inquiries, investigations and other processes from governmental entities. The Company can provide no assurance as to the scope and outcome of these matters and no assurance as to whether its business, financial condition or results of operations will be materially adversely affected. Certain of the Company’s businesses have been reviewed or are currently under review, including for, among other matters, compliance with coding and other requirements under the Medicare risk-adjustment model. CMS and OIG have selected certain of the Company’s local plans for risk adjustment data validation (RADV) audits to validate the coding practices of and supporting documentation maintained by health care providers and such audits may result in retrospective adjustments to payments made to the Company’s health plans.

On February 14, 2017, the DOJ announced its decision to pursue certain claims within a lawsuit initially asserted against the Company and filed under seal by a whistleblower in 2011. The whistleblower’s complaint, which was unsealed on February 15, 2017, alleges the Company made improper risk adjustment submissions and violated the False Claims Act. In March 2025, a Special Master appointed by the court issued a report recommending that the court enter summary judgment in the Company’s favor on all remaining claims. In April 2025, the DOJ filed a motion asking the court to reject the Special Master’s report. The Company cannot reasonably estimate the outcome which may result from this matter given its procedural status.