UnitedHealth To Consider New Corporate Governance Policies
The UnitedHealth Group board on Wednesday announced plans to meet on May 1 to consider revisions to corporate governance policies in response to concerns about millions of dollars in stock options issued to company CEO William McGuire and other top executives, the Wall Street Journal reports (Fuhrmans, Wall Street Journal, 4/27).
A federal civil lawsuit filed last week alleges that McGuire, UnitedHealth Chief Operating Officer Stephen Hemsley and several company board members harmed shareholders through the issue of backdated stock options. The board has launched an investigation into the issue, and UnitedHealth has received a related telephone call from the Securities and Exchange Commission.
In response, Minnesota Attorney General Mike Hatch (D) on Monday asked public and private pension funds to withhold votes for the four board members -- McGuire, James Johnson, Douglas Leatherdale and Mary Mundinger -- who will seek re-election at an annual shareholder meeting on May 2. The CalPERS on Tuesday also raised concerns about the issue and threatened to withhold votes for McGuire, Johnson and Mundinger (California Healthline, 4/26).
At the meeting on May 1, the board plans to consider proposals to:
- End the issue of stock options to top executives who hold a certain number of shares (Bloomberg/Los Angeles Times, 4/27);
- Eliminate noncash forms of compensation for top executives;
- Recommend to shareholders that "the board be declassified, meaning all directors would stand for annual election," rather than "serve three-year staggered terms," according to the Journal;
- Allow a simple majority of shareholder votes for approval of some company decision, rather than a supermajority of votes;
- Limit the number of boards on which members can serve to six;
- Require members to attend director-education seminars;
- Mandate that members of the audit committee are financial experts (Wall Street Journal, 4/27);
- Eliminate increased severance payments in the event that the company is sold; and
- Freeze benefits under supplemental retirement plans (Freed, AP/Minneapolis Star Tribune, 4/27).
In related news, McGuire on Wednesday defended "two embattled members" of the UnitedHealth board who will seek re-election at the shareholder meeting, the AP/Star Tribune reports. In a letter sent to large shareholders, McGuire called board members James Johnson and Mary Mundinger "invaluable."
He wrote, "They have intimate knowledge regarding our company's areas of focus, are experienced in public company matters, and embody the highest standards of integrity" (AP/Minneapolis Star Tribune, 4/27).