Advertisement
  1. Archive

Judge freezes exec's benefits

A federal judge on Thursday froze millions of dollars in unexercised stock options and retirement benefits of outgoing UnitedHealth chief William McGuire until 30 days after a company review of shareholder lawsuits is completed.

McGuire stepped down as chief executive on Thursday and previously resigned as chairman of the nation's second-largest health insurer.

In October, a company-sponsored investigation concluded that stock options awarded to McGuire and others were probably backdated, which means they weren't really issued when the company originally said they were. Backdating options can give recipients a larger profit than they otherwise may have gotten.

Judge James Rosenbaum said there was no opposition to the freeze from any of the parties in the case. "There has been a showing that all parties to these matters will benefit from the requested relief," he wrote.

The company has said it will have to restate its earnings back to 1994.

California's public employee pension fund has sued over the company's handling of stock options. An attorney for the fund has argued that federal authorities could seize the money if a criminal case is ever filed.

Neither McGuire nor the company have been charged criminally, but UnitedHealth has acknowledged receiving a subpoena from the U.S. Attorney's Office in New York.

McGuire attorney Steve Gaskins said earlier this week that UnitedHealth's stock options plan is frozen while the company finishes investigating the matter.

McGuire had $1.78-billion in unexercised stock options at the end of 2005. But the company's share price has dropped 25 percent since then, and repricing from the backdating controversy sliced off another $200-million.

McGuire's employment contract calls for a retirement benefit calculated by outside groups at $5.1-million a year, along with other perks.

YOU MIGHT ALSO LIKE

Advertisement
Advertisement