UnitedHealth Panel May Face Scrutiny
By Joshua Freed | SFGate.com
Originally published April 23, 2006
The huge paydays for UnitedHealth Group Inc. Chairman and CEO William McGuire grabbed attention last week – but that could soon be turning to the people who signed off on his pay package.
Most companies, including UnitedHealth, have compensation committees made up of a few directors who set pay for executives. McGuire’s $1.6 billion in unexercised stock options have some people wondering whether UnitedHealth’s three-member compensation committee was doing its job.
The Wall Street Journal first reported that the timing of McGuire’s stock options, when UnitedHealth stock was at its lowest so he would benefit as much as possible, raised the possibility that they had been backdated.
Compensation consultant Paul R. Dorf, managing director of Compensation Resources Inc., called backdating options “highly unethical, if not illegal.”
“The over-$1 billion that Dr. McGuire currently holds in paper gains shows that the committee has not applied the “holy cow” test, as fiduciary duty requires,” ISS (Institutional Shareholder Services Inc.) wrote.
Comment:
By Don McCanne, M.D.
Holy cow!
UnitedHealth Group’s medical loss ratio for 2005 was 78.6%. That means that UnitedHealth retained for its own intrinsic uses, including profits, 21.4% of premiums paid. Profit for 2005 was $3.3 billion. For that performance, CEO McGuire receives $1.6 billion in unexercised stock options.
Holy cow!!
And we continue with public policies that keep this industry in charge?
Holy cow!!!