Former UnitedHealth CEO Agrees To Settle CalPERS Lawsuit
On Wednesday, former UnitedHealth Group CEO William McGuire agreed to pay $30 million to settle a class-action lawsuit led by CalPERS, the Sacramento Bee reports.
In the suit, CalPERS alleges that McGuire backdated UnitedHealth stock options to an earlier date when the share price was lower (Ortiz, Sacramento Bee, 9/11). Backdating stock options makes it possible for executives to boost their compensation (Fuhrmans, Wall Street Journal, 9/11).
CalPERS maintains that the backdating cost the fund about $22 million from its investment of $322 million in UnitedHealth.
McGuire denies the allegations (Sacramento Bee, 9/11).
McGuire also agreed to forgo options to purchase 3.675 million shares under the proposed settlement, which is subject to approval by U.S. District Court in Minnesota (Anderson, Sacramento Business Journal, 9/10). The shares are estimated to have a value of about $107 million (Sacramento Bee, 9/11).
In addition, former UnitedHealth General Counsel David Lubben agreed to pay $500,000 to settle the case led by CalPERS (Wall Street Journal, 9/11).
CalPERS holds 4.7 million shares of UnitedHealth valued at about $140 million. UnitedHealth is the parent company of Cypress-based HMO PacifiCare.
In July, UnitedHealth agreed to pay $895 million to settle the class-action suit (Lifsher, Los Angeles Times, 9/11).
Previously, McGuire had agreed to forgo options for about 9.2 million shares and about $100 million in retirement pay. He also has paid a $7 million penalty to the Securities and Exchange Commission.
McGuire still faces a criminal inquiry by the U.S. attorney for the southern district of New York (Wall Street Journal, 9/11).