Shareholders of UnitedHealth Group, Minneapolis, re-elected four board members, including Chairman and Chief Executive Officer William McGuire, at the insurer's annual meeting despite opposition from at least two large institutional investors. The vote came amid mounting scrutiny of UnitedHealth's stock-option granting practices, which have allowed McGuire and other executives and directors to amass billions of dollars in unrealized gains. Both the Securities and Exchange Commission and a special committee of independent UnitedHealth directors are examining whether the insurer backdated option grants to low points in the company's stock price so as to maximize their value when exercised later. On Monday, UnitedHealth's board voted to reduce compensation levels and discontinue equity-based awards for McGuire, President and Chief Operating Officer Stephen Hemsley and some other senior executives with the longest tenures. The directors also cut their own compensation 40%, on top of a 20% cut last year.
The re-elected board members include McGuire, Douglas Leatherdale, James Johnson and Mary Mundinger, the latter two of whom sit on UnitedHealth's compensation committee. The California Public Employees Retirement System and the Minnesota State Board of Investment withheld their votes for all four directors in a protest over pay practices. -- by Laura B. Benko