UnitedHealth Groups former chairman and chief executive officer, William McGuire, M.D., will forfeit more than $400 million under agreements reached with the company and the Securities and Exchange Commission over an options backdating scandal, on top of $200 million he has already relinquished.
The settlements come more than a year after the scandal came to light, and McGuire, formerly one of the highest paid executives in healthcare, resigned.
An independent committee made up of two former Minnesota Supreme Court justices agreed McGuire will give back 9.2 million company shares worth about $320 million, retirement income valued at $91 million and $8 million in a savings account, plus other benefits, combined with prior stock options awards repriced from 1994 to 2002, for a total of about $600 million, according to a statement released by UnitedHealth. The company is seeking to dismiss all related lawsuits on the matter and also reached repayment agreements with other former executives involved in the scandal.
The payments will also settle matters with the SEC. The settlement is the first involving an individual under the Sarbanes-Oxley Act, which prevents corporate executives from profiting from stock sales earned while their companies were misleading investors.
Linda Chatman Thomsen, director of the SECs Enforcement Division, said the size of the settlement reflects the magnitude and scope of Dr. McGuires misconduct.
McGuire, pulmonologist, resigned effective December 2006 after an internal investigation from an outside firm revealed that he had likely backdated his and other executives options, picking the most profitable dates retroactively to price them. At the time, his options were worth about $1.7 billion. -- by Rebecca Vesely