Friday, December 01, 2006

UnitedHealth Shareholders Granted a Reprieve

From the Wall Street Journal this AM:
In an unusual move, a federal judge has temporarily barred ousted UnitedHealth Group Inc. Chief Executive William McGuire from exercising stock options or receiving any retirement pay or other exit benefits while an external, board-appointed committee establishes whether the health insurer has claims against him.

The order, which backs a joint motion by attorneys for several shareholder lawsuits and Dr. McGuire himself, puts on hold any agreement between UnitedHealth and its longtime chief executive over the terms of his departure until those legal questions have been answered. Dr. McGuire agreed to resign in October after an internal report concluded millions of stock options were likely backdated on his watch. He left the company yesterday with negotiations over his retirement package still unresolved.

The injunction is unusual in the annals of executive pay. U.S. District Judge James Rosenbaum of Minnesota handed it down late Wednesday partly at the request of attorneys representing a group of shareholder plaintiffs who have filed lawsuits against UnitedHealth. The complaints argue that the option backdating lined the pockets of Dr. McGuire and other top executives at the expense of the company. "If he were able to reap what we see as ill-begotten gains, we'd be asserting a claim without a remedy," said Karl Cambronne, lead attorney for the group.
No so fast, Dr. McGuire. Let's see what the external committee decides. It is also interesting to note:
Dr. McGuire also supported the plaintiffs' push for an injunction, and his attorneys even drafted the proposed court order, according to one person familiar with the situation said. The departing CEO believes the special litigation committee will vindicate him once "all the evidence is in," this individual said.
Let's see, according to one set of outside reviewers, some would put the odds of Dr. McGuire having timed all those option dates just right was about 200 million to 1? And we're not even talking about those other set of double-issued options, are we?

Good luck, Dr. McGuire.

You're gonna need it.


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