MINNEAPOLIS – After a 15-month review of past stock-option practices, UnitedHealth Group (NYSE:UNH) has reached a settlement agreement with three former executives that calls on them to relinquish more than $630 million in assets.
The probe was conducted by a Special Litigation Committee – composed of two former Minn. Supreme Court justices: former Chief Justice Kathleen Blatz and former Justice Edward Stringer – that also negotiated the settlement on UnitedHealth’s behalf, the company said in a statement last night.
In its recommendations to the courts, the SLC said that all claims against the insurer’s former CEO Dr. William W. McGuire, former director William G. Spears and former general counsel David J. Lubben should be dismissed.
McGuire, Spears and Lubben had resigned last year after a separate internal probe – by a committee of UnitedHealth directors and representatives from the company’s independent counsel, Wilmer Cutler Pickering Hale and Dorr – found problems that included poor record-keeping, backdating of stock options and “disclosures with respect to stock options and related accounting [that] were not accurate in certain respects.” (READ MORE)
Under the settlement announced today, McGuire will surrender to the insurer his options to acquire 9.22 million shares of UnitedHealth stock, valued at $320 million; his interest in the company’s executive retirement plan, valued at $91 million; and his executive savings plan account, valued at $8 million; his other post-employment benefits. Those amounts, together with the earlier repricing of all stock options awarded to him between 1994 to 2002, will bring the total value relinquished by McGuire to more than $600 million, UnitedHealth said.
Lubben has agreed to surrender to UnitedHealth his options to acquire 273,000 shares of company stock, valued at more than $3 million, and repay the company $20.55 million of the compensation realized a result of his March 2007 exercise of stock options. Those returns, together with the earlier repricing of stock options, will bring the total value relinquished by Lubben to about $30 million, the company said.
The value of the claims against Spears are to be determined by binding arbitration, UnitedHealth said.
Together with the assets previously relinquished voluntarily by the trio through the surrender or repricing of stock options, that will bring the executives’ total restitution to about $900 million, UnitedHealth said.
The SLC’s findings are reflected in a final report filed yesterday with both the U.S. District Court for the District of Minnesota and the state’s Hennepin County District Court. Copies of the panel’s report and the settlement agreements with McGuire and Lubben are available for viewing in UnitedHealth’s online newsroom.
UnitedHealth Group (NYSE:UNH) is a diversified health and well-being company based in Minneapolis, Minn. It offers a broad spectrum of products and services through six operating businesses – UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized Care Services and Ingenix – serving about 70 million individuals nationwide. Additional information is available at www.unitedhealthgroup.com.
The level of greed and willingness to commit fraud to engorge themselves with un-earned millions is breathtaking and an indictment of the for profit medical insurance industry