Former CEO Agrees to Forego $420 Million in Compensation and Benefits
MINNEAPOLIS, Dec. 6 /PRNewswire-USNewswire/ -- Former CEO and Chairman of UnitedHealth Group Corporation, Dr. William McGuire, today agreed to terms with the UnitedHealth Special Litigation Committee (SLC) that call for McGuire to return more than $420 million in stock options and other compensation to settle issues related to the dating of stock options during his tenure as CEO of the company, in addition to the $198 million he has previously repaid by repricing options. The SLC has agreed to seek to have all derivative claims against Dr. McGuire dismissed with prejudice. The SLC made no findings of wrongdoing by Dr. McGuire.
In a related action, Dr. McGuire also reached a settlement with the Securities and Exchange Commission (SEC) which charged him with violating provisions of the Securities Exchange Act of 1934 and the Securities Act of 1933 and aiding and abetting violations by UnitedHealth Group; Dr. McGuire neither admitted nor denied the allegations and agreed to return to the Company approximately $460 million in options and other compensation benefits, which will satisfied by the SLC settlement, and to pay a civil penalty of $7 million, to be barred from serving as an officer or director of a public company for ten years, and to be enjoined from violating the securities laws in the future.
Together, the settlements resolve major legal actions involving Dr. McGuire, and help move him along the path of putting the options dating matters behind him.
"The last 18 months have been an extraordinarily challenging period for my family and me. I am very pleased to have reached a resolution that puts these matters to rest," Dr. McGuire said. "I am extremely proud of all that our team accomplished at UnitedHealth Group to improve health care and build a highly successful and innovative company, and I wish the Company well in fulfilling its mission."
In his settlement with the SLC, McGuire agreed to return over $320 million in options. He also volunteered to forego the full value of his fully-vested Supplemental Executive Retirement Plan (SERP) worth nearly $92 million and approximately $8.1 million of incentive compensation benefits in a deferred compensation plan. Along with the $198 million of repriced vested and unvested options last November, Dr. McGuire's actions remove any possible benefit he may have received as a result of the issues arising from the options program of the Company.
"Dr. McGuire deserves great credit for taking full responsibility to resolve the options dating issues at UnitedHealth Group," said David M. Brodsky, Dr. McGuire's attorney. "He called for the company investigation that helped identify the problems, proposed remedial actions to the Board to address them, resigned from the company to enable it to move forward, and more than paid back every penny at issue."
During his 17 year tenure, McGuire oversaw the transformation of UnitedHealth Group from a $600 million regional insurance company to a $70 billion global health services company. When McGuire took the helm in 1991, UnitedHealth Group served just over 1 million people. By 2006, that number had reached 50 million. UnitedHealth Group's performance during his tenure was spectacular, growing at a cumulative rate 30 times greater than the S&P average. Shareholders of UnitedHealth Group saw an 8,453 percent return on their investment under McGuire's leadership.
While CEO of the Company, UnitedHealth Group was recognized for its continuing innovation in the delivery of health care. These included expanded uses of data in decision-making, technology applications to improve efficiency and advance quality, the elimination of "gatekeeper" systems in favor of open access to doctors and nurses and new approaches to meeting the unique health care needs of older people and disadvantaged populations. Dr. McGuire resigned from the company on November 30, 2006.
In recent months Dr. McGuire has continued his work in the health care sector, focusing on how to expand access and improve both the efficiency and quality of our current healthcare system. He intends to increase and expand these efforts in the months ahead. He has also begun working on issues surrounding educating socioeconomically disadvantaged people, and has been engaged in a variety of charitable endeavors.
|SOURCE Latham and Watkins, LLP|
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