UnitedHealth gets initial OK to settle options suit for $895M

Anne Zieger — Fri, 19 Dec 2008 09:50:47 -0500

A federal judge has given preliminary approval to a deal that would allow UnitedHealth Group to pay $895 million to settle a class-action lawsuit over backdated stock options. The deal would not only require nearly a billion dollars in reparations from UnitedHealth, it would also require former CEO Bill McGuire to pay $30 million, and former general counsel David Lubben to pay $500,000.

The class action, which was led by the California Public Employees' Retirement System, has pushed UnitedHealth to make changes to its corporate governance policies, according to a recent filing with the SEC. The SEC papers don't specify what the changes are, but doubtless, closer scrutiny of stock-option issuance must be among them.

In preparation for the settlement, the health plan had already paid $895 million into a fund for CalPERS and the other plaintiffs, so this shouldn't be an additional financial drain.

To learn more about the case:
- read this Minneapolis Star-Tribune piece

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$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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Stock Options

UnitedHealth gets initial OK to settle options suit for $895M

$420M settlement for UnitedHealth's McGuire moves ahead