I. PURPOSE OF THE COMMITTEE

The purposes of the Governance Committee (the "Committee") of the Board of Directors (the "Board") of Health Net, Inc. (the "Company") shall be to: identify and screen those individuals qualified to serve as directors of the Company, consistent with criteria established by the Board, and to select individuals so qualified as director nominees at each annual meeting of Company stockholders; to nominate individuals to fill vacancies on the Board which occur between annual meetings of Company stockholders; to recommend individual Board members for designation as members of committees of the Board; to advise the Board with respect to the Board's composition, procedures and committees; to review and recommend to the Board the annual compensation paid to Board members for their service on the Board; to develop and recommend to the Board a set of corporate governance guidelines and director independence standards applicable to the Company and advise the Board with respect to the corporate governance guidelines applicable to the Company; to oversee the evaluation of the Board and the Company's management; to review and oversee the policies and processes for people development, including succession planning for the Company's Chairman of the Board, Chief Executive Officer and certain senior officers of the Company as presented by management from time to time ("Senior Officers"); and to review and oversee any other matters delegated to the Committee by the Board from time to time.

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II. COMPOSITION, MEETINGS AND PROCEDURES OF THE COMMITTEE

The Committee shall be composed of three or more directors, all of whom shall be appointed by the Board after the Board's review of the Committee's recommendations with respect thereto. Each member of the Committee shall be qualified to serve on the Committee pursuant to the requirements of the New York Stock Exchange (the "NYSE"), the Company's bylaws and any additional requirements that the Board deems appropriate.

The members of the Committee shall be elected annually to one-year terms by majority vote of the Board, after the Board's review of the recommendations of the Committee with respect thereto, at the first meeting of the Board following the annual meeting of stockholders. Vacancies on the Committee shall be filled by majority vote of the Board at the next meeting of the Board following the occurrence of the vacancy. No member of the Committee shall be removed except by majority vote of the directors then in office that are independent directors, as determined by the Board in accordance with the listing standards of the NYSE and the director independence standards adopted by the Board. On an annual basis, one member of the Committee shall be designated as Chairman of the Committee by the Board after the Board's review of the recommendations of the Committee with respect thereto. Any other applicable provisions relating to the term of members of a committee of the Board under the Company's bylaws shall also govern the Committee.

The Committee shall meet as often as it deems necessary or desirable, but not less frequently than four times annually, either in person or telephonically, and at such times and places as the Committee shall determine. Any member of the Committee may also call a special meeting of the Committee. A majority of the members of the Committee shall constitute a quorum for the transaction of business at any meeting of the Committee, and the vote of a majority of the members thereof present at a meeting at which a quorum is present shall be the act of the Committee. Any other applicable provisions relating to meetings and procedures for committees of the Board under the Company's bylaws shall also govern the Committee.

The Committee may request that any directors, officers or employees of the Company, or other persons whose advice and counsel are sought by the Committee, attend any meeting of the Committee to provide such pertinent information as the Committee requests.

Following each of its meetings, the Committee shall deliver a report on the meeting to the Board, including a description of all actions taken by the Committee at the meeting. The Committee shall keep written minutes of its meetings, which minutes shall be maintained with the books and records of the Company. When appropriate, action may be taken by written consent in lieu of a meeting of the Committee.

The Committee may form subcommittees for any purpose that the Committee deems appropriate and may delegate to such subcommittees such power and authority as the Committee deems appropriate; provided, however, that no subcommittee shall consist of fewer than two members; and provided further, that the Committee shall not delegate to a subcommittee any power or authority required by any law, regulation, listing standard of the NYSE or Company bylaw or policy to be exercised by the Committee as a whole.

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III. RESPONSIBILITIES OF THE COMMITTEE

A. Board Candidates and Nominees

The Committee shall have the following goals and responsibilities with respect to Board candidates and nominees:

1. To establish procedures for evaluating the credentials and suitability of potential director nominees proposed by management or the Company's stockholders.
2. To review qualifications of candidates for Board membership from whatever source received and identify individuals qualified to become Board members, consistent with criteria established by the Board from time to time.
3. To select the director nominees for election by the stockholders or appointment by the Board, as the case may be, and to select individuals to fill vacancies on the Board which occur between annual meetings of stockholders of the Company, in each case pursuant to the bylaws of the Company, which selections shall be consistent with the Board's criteria for selecting new directors. The criteria weighed in this selection of director nominees include: a candidate's possession of such knowledge, experience, skills, expertise and diversity so as to enhance the Board's ability to manage and direct the affairs and business of the Company, including, when applicable, to enhance the ability of committees of the Board to fulfill their duties and/or to satisfy any independence requirements imposed by law, regulation, NYSE listing standards or the Company's bylaws; the relevance of the candidate's experience to the business of the Company or management of large public companies; the candidate's independence from conflict or direct economic relationship with the Company; and the ability of the candidate to attend Board meetings regularly and devote an appropriate amount of effort in preparation for those meetings.
4. To recommend to the Board criteria relating to tenure as a director, such as retirement age, limitations on the number of times a director may stand for reelection, restrictions on the number of other public company directorships upon which a director may sit, and the continuation of directors in an honorary or similar capacity and the definition of independence as it relates to the directors in light of the listing standards of the NYSE and the director independence standards adopted by the Board.
5. To review from time to time and recommend to the Board the annual compensation payable to Board members for their service on the Board, including any equity-based compensation and/or other perquisites payable to the Board.
6. To review the suitability for continued service as a director of each Board member when his or her term expires and when he or she has a significant change in status, including but not limited to an employment change, and to determine whether or not the director should be re-nominated.
7. To deliberate and take such actions with respect to incumbent directors who fail to receive the required vote for re-election, including accepting or not accepting any previously tendered resignation on behalf of the Company or requesting that any such director submit his or her resignation to the Company, and taking such other actions as are contemplated by the Company’s Policy Statement on Majority Voting, unless the Board has established that an alternative committee take the foregoing actions.

B. Board Composition and Procedures

The Committee shall have the following goals and responsibilities with respect to the composition and procedures of the Board as a whole:

1. To review annually with the Board the composition of the Board as a whole and to recommend, if necessary, measures to be taken so that the Board reflects the appropriate balance of knowledge, experience, skills, expertise and diversity required for the Board as a whole and contains at least the minimum number of independent directors required by the NYSE.
2. To review periodically the size of the Board and to recommend to the Board any appropriate changes.
3. To make recommendations on the frequency and structure of Board meetings.
4. To annually review the relationships that each director has with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company) and the categorical director independence standards adopted by the Board.
5. To make recommendations concerning any other aspect of the procedures of the Board that the Committee considers warranted, including but not limited to procedures with respect to the waiver by the Board of any Company rule, guideline, procedure or corporate governance principle.

C. Board Committees

The following shall be the goals and responsibilities of the Committee with respect to the committee structure of the Board:

1. To annually review, in consultation with the Board, the size and composition of each standing committee of the Board, including the identification of individuals qualified to serve as members of a committee, including the Committee, and to recommend individual directors to fill any vacancy that might occur on a committee, including the Committee.
2. To monitor committee structure and operations (including authority to delegate to subcommittees) and to make recommendations for any changes, including the creation and elimination of committees.
3. To review annually committee assignments and the policy with respect to the rotation of committee memberships and/or chairpersonships with a view toward balancing the benefits derived from continuity against benefits derived from diversity of experience and viewpoints of the various directors, and to report any recommendations to the Board.
4. To recommend that the Board establish such special committees as may be desirable or necessary from time to time in order to address ethical, legal or other matters that may arise. The Committee's power to make such a recommendation under this charter shall not be exclusive and shall be without prejudice to the right of any other committee of the Board, or any individual director, to make such a recommendation at any time.

D. Corporate Governance

The following shall be the goals and responsibilities of the Committee with respect to corporate governance:

1. To develop and review periodically, and at least annually, the corporate governance guidelines adopted by the Board to assure that they are appropriate for the Company and comply with the requirements of the NYSE, and to recommend any desirable changes to the Board.
2. To consider any other corporate governance issues that arise from time to time, and to develop appropriate recommendations for the Board.

E. Evaluation of the Board and Management

The Committee shall be responsible for overseeing the evaluation of the Board as a whole and the management of the Company, including the Chief Executive Officer of the Company. Such responsibility shall include responsibility for implementing and overseeing a process for the Board to perform a self-evaluation of its performance on at least an annual basis. This assessment should include a review of any areas in which the Board or management can make a better contribution to the Company. The Committee shall establish procedures to allow it to exercise these oversight functions.

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F. Succession Planning

The Committee shall periodically, but at least annually, evaluate the Company's succession plans for the Chairman of the Board, Chief Executive Officer and Senior Officers. To assist the Committee, the Chairman of the Board and the Chief Executive Officer shall prepare and distribute to the Committee an annual report on succession planning for the Senior Officers of the Company with an assessment of such officers and their potential to succeed him or her and other senior management positions.

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IV. EVALUATION OF THE COMMITTEE

The Committee shall, on an annual basis, evaluate its performance under the requirements of this charter. The performance evaluation shall be conducted in such a manner as the Committee deems appropriate. In conducting this review, the Committee shall evaluate whether this charter appropriately addresses the matters that are or should be within its scope and shall recommend such changes as it deems necessary or desirable to the Board. The Committee shall address all matters that the Committee considers relevant to its performance, including at least the following: the adequacy, appropriateness and quality of the information and recommendations presented by the Committee to the Board and the nominations and appointments to the Board made by the Committee, the manner in which they were discussed or debated, and whether the number and length of meetings of the Committee were adequate for the Committee to complete its work in a thorough and thoughtful manner.

The Committee shall deliver to the Board a report, which may be oral, setting forth the results of its evaluation, including any recommended amendments to this charter and any recommended changes to the Company's or the Board's policies or procedures.

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V. INVESTIGATIONS AND STUDIES; OUTSIDE ADVISERS

The Committee may conduct or authorize investigations into or studies of matters within the Committee's scope of responsibilities, and may retain, at the Company's expense, such independent counsel or other consultants or advisors as it deems necessary. The Committee shall have the sole authority to retain or terminate any search firm to be used to identify director candidates, including sole authority to approve the search firm's fees and other retention terms, such fees to be borne by the Company.

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