$420M settlement for UnitedHealth's McGuire moves ahead

Anne Zieger — Fri, 15 Aug 2008 13:52:35 -0400

As just about everyone knows by this point, the courts decided last year that former UnitedHealth CEO Bill McGuire had been a bad boy when it came to stock options. McGuire was asked to give up $420 million in dicey stock-option gains and retirement pay to settle shareholder and SEC complaints over how the stock options were awarded. (We're talking a slight case of backdating for profit here.)

Despite this decision, which was arrived at by a special litigation committee, things reached a stalling point after that, notes the Wall Street Journal. A judge overseeing the case decided not to finalize the agreement, as he wanted to know whether he had to follow the word of the litigation committee. Delay, delay and more delay.

Well, now, it seems that the Minnesota Supreme Court is ready to move things along. Yesterday, the court concluded that the judge has to defer to the litigation committee, as long as it was operating in good faith and decided things independently. So, maybe now Dr. McGuire will end up paying out his backdating gains.

To learn more about the decision:
- read this Wall Street Journal blog item

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UnitedHealth settles securities suit for $895M

Anne Zieger — Thu, 03 Jul 2008 11:34:07 -0400

UnitedHealth Group has agreed to settle a federal securities class-action lawsuit brought by a group of major shareholders for $895 million. The move, coming at a time of financial challenges for the health plan industry as a whole, should have a big impact on UnitedHealth's operations. The company will cut 4,000 jobs and is warning of weaker profits, already challenged by the slow U.S. economy and higher Medicare costs.

The lawsuit was brought by the California Public Employees Retirement System (CalPERS) over the health plan's stock-option grant practices. Such practices had helped lead to the departure of previous CEO William McGuire, who resigned in December 2006 over the scandal that arose when the company's practice of backdating options to favorable dates was discovered. The proposed settlement will impose new protections against such skullduggery, including a mandated holding period for options granted to execs and shareholder approval of any stock option re-pricing.

To learn more about the proposed settlement:
- read this Modern Healthcare article (reg. req.)

Related Articles:
UnitedHealth's CEO ousted over questionable stock options
UnitedHealth's McGuire gives up $400M in assets
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stock option backdating

$420M settlement for UnitedHealth's McGuire moves ahead

UnitedHealth settles securities suit for $895M