Legal News

UnitedHealth Settles ?Historical Stock Options Practices? Case for $895 Mil

By Dan Slater

We say “backdating,” you say “historical stock options practices.” Let’s call the whole thing off.

UnitedHealth Group, one of the largest companies to be ensnared in the backdating scandal, announced a settlement today with California Public Employees’ Retirement System (or CalPERS, for all of you well-versed in public-pension lingo) and plaintiff class rep Alaska Plumbing and Pipefitting Industry Pension Trust. According to the press release, UnitedHealth, based in Minnetonka, Minn., will pay a whopping $895 million to settle the federal securities class action — filed in 2006 — “relating to its historical stock options practices.” Here’s the early WSJ report.

That’s the largest backdating shareholder class-action settlement to date, and dwarfs the next-largest, Brocade, last month at $160 million. (See prior LB coverage here.) Plaintiffs lawyers: Coughlin Stoia.

“The settlement provides UnitedHealth Group with certainty and closure on this lawsuit, avoids potentially costly and protracted litigation and allows us to continue to focus on providing Americans with high-quality, affordable health care solutions,” said Thomas L. Strickland, UnitedHealth’s top legal beagle.

Last December, former UnitedHealth CEO, Dr. William McGuire, agreed to forfeit about $420 million in stock-option gains and retirement pay to settle shareholder and federal government claims related to stock-option backdating, though the give-back was unrelated to the shareholder suit. In addition to the $530 million McGuire made in compensation while running UnitedHealth, he was allowed to keep stock options valued at more than $800 million.

Full post as published by Law Blog - WSJ.com on July 02, 2008 (boomark / email).