Former UnitedHealth Group Chair and CEO William McGuire, MD, agreed to forfeit another portion of the fortune he amassed during the 17 years he led the company, settling with investors in a lawsuit over alleged stock-option backdating, according to MedNews.
Under the agreement, Dr. McGuire will pay $30 million to United investors in a class-action lawsuit led by a California pension fund and will surrender options to purchase 3.65 million shares of stock granted between 2003 and 2005. At mid-September’s stock prices, those shares would be worth about $100 million. The case had been set for trial in September.
UnitedHealth Group is the parent company of payer United Healthcare (UHC) and information company Ingenix.
“In effect, this was an example of runaway executive compensation,” said Peter Mixon, general counsel for the California Public Employees’ Retirement System (CalPERS).
The CalPERS agreement is the third settlement involving the former CEO regarding alleged improper stock option backdating.
United already had agreed to pay $895 million to the same plaintiffs and is awaiting final approval of that deal by a federal judge. Former United General Counsel David Lubben also settled, paying $500,000 to plaintiffs.
Dr. McGuire did not admit wrongdoing; nor has he done so in any previous settlement. In a December 2007 settlement with the Securities and Exchange Commission, Dr. McGuire agreed to pay the SEC a $7 million fine, return $11 million in what the SEC called “ill-gotten gains,” plus $1.7 million in interest, while also returning stock options and cash to United.