UnitedHealth ex-CEO will pay $466M to settle options case

In the federal government's largest stock-option-backdating case, the Securities and Exchange Commission and UnitedHealth Group unh announced Thursday a record $468 million settlement against former company CEO William McGuire.

In its civil complaint, the SEC charged that McGuire signed backdated documents that repeatedly led UnitedHealth to grant in-the-money stock options to himself and other company executives and employees without disclosing the expenses, as required by accounting rules.

McGuire approved documents that falsely showed the stock options had been granted on earlier dates, when UnitedHealth's share price was at low points — thus increasing the value of the options.

McGuire, without admitting or denying the charges, will disgorge gains of $11 million, pay a $7 million civil penalty and reimburse UnitedHealth about $448 million of all equity-based pay and cash bonuses he received from 2003 through 2006. McGuire also is barred from serving as an officer or director of a publicly traded firm for 10 years.

UnitedHealth said that former general counsel David Lubben will repay the company $21 million in exercised stock options from March, plus return unexercised stock options valued at $3 million.

An arbitrator will determine a settlement amount for former director William Spears, who resigned last year after an investigation by private attorneys hired by UnitedHealth found that he had worked as an investment manager for McGuire and his family.

The settlement comes as a special committee of former Minnesota Supreme Court justices concluded its investigation into the backdating scandal and released an 80-page report and settlement.

The special committee, UnitedHealth and shareholders' attorneys also announced a $300 million settlement to end a civil lawsuit against the company's executives and officers by pension funds in Ohio and elsewhere.

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