California Treasurer Phil Angelides criticized UnitedHealth Group's proposed acquisition of PacifiCare Health Systems, Cypress, Calif., calling $314 million earmarked for payouts to top executives excessive. Angelides, who plans to run for governor next year, urged Gov. Arnold Schwarzenegger and two of the state's largest public pension funds to use their investment clout to oppose the $8.1 billion deal if the payments are not rescinded. Angelides has no regulatory authority over the planned merger, announced in July, but he is a trustee of the California Public Employees' Retirement System and the California State Teachers' Retirement System, which own a combined $480 million in PacifiCare and UnitedHealth stock. The California Medical Association and the Foundation for Taxpayer and Consumer Rights, a Santa Monica, Calif.-based consumer advocacy group, also have called for a careful examination of the proposed payouts.
According to filings with California regulators, PacifiCare's 39 top executives would receive a total of $229.5 million if the merger closes by Feb. 1, 2006, with most of the money representing accelerated vesting of stock options. An additional $84.5 million in stock and signing bonuses would be paid to executives who remain with the combined company. PacifiCare officials contend the compensation is both well deserved and within industry standards. -- by Laura B. Benko