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Sat, Dec 08, 2007 - Page 10 News List

UnitedHealth's ex-CEO to pay back US$418 million

NY TIMES NEWS SERVICE , NEW YORK

In one of the largest corporate pay give-backs ever, William McGuire, the former chief executive of UnitedHealth Group, has agreed to forfeit at least US$418 million to settle claims related to back-dated stock options.

The pay back is on top of roughly US$198 million that McGuire, an entrepreneur who built UnitedHealth, had alreadly agreed to return to his former employer.

The total -- US$618 million -- includes money that McGuire will return as part of separate settlements reached on Thursday with the Securities and Exchange Commission (SEC) and UnitedHealth shareholders.

The forfeitures are the first time regulators have successfully employed corporate governance rules put in place after the collapse of Enron that force executives to disgorge ill-gotten gains.

As part of the settlement with the SEC, McGuire will pay a US$7 million fine and will be barred from serving as a director of a public company for 10 years. He will, however, be allowed to keep stock options valued at more than US$800 million, including many that have been sharply criticized.

The developments are the most significant to date since US federal regulators started looking into the backdating of stock options. More than 120 companies have come under scrutiny for granting options to executives on dates when the company's share price was low, a tactic that guaranteed the maximum profit when the options were exercised.

The settlement comes a year after the furor over compensation forced McGuire's resignation from UnitedHealth, the nation's largest health insurer.

In a statement on Thursday, McGuire said that he was pleased to put the controversy behind him: "The last 18 months have been an extraordinarily challenging period for my family, and I am pleased to have reached a resolution."

UnitedHealth is still embroiled in the scandal over improperly granted options. The SEC said its UnitedHealth inquiry is continuing. So far, the firm has restated its earnings by US$1.5 billion and announced a US$55 million deal with the Internal Revenue Service.

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