A Medical Device Daily
UnitedHealth Group (Minneapolis), a provider of business and healthcare services, reported that a special litigation committee (SLC), comprised of two former Minnesota Supreme Court Justices, has concluded its review of claims relating to UnitedHealth’s stock option practices brought against company officers and directors in federal and state derivative lawsuits.
Based on its 15-month review, the SLC reached settlement agreements on behalf of the company with UnitedHealth Group’s former CEO William McGuire, MD; former general counsel David Lubben; and former director William Spears. The agreements call for them to surrender stock options and other benefits that amount to $900 million.
The SLC concluded that all claims against the defendants in the derivative suits, including current and former UnitedHealth Group officers and directors should be dismissed. The SLC’s conclusions are reflected in a final report delivered to the U.S District Court for the District of Minnesota and the Hennepin County District Court, State of Minnesota.
Under the settlement agreement, McGuire will:
• surrender to UnitedHealth certain stock options to acquire 9,223,360 shares of company stock, which the SLC has valued at about $320 million;
• surrender his interest in the company’s executive retirement plan, valued at about $91 million;
• surrender to the company about $8 million in his executive savings plan account; and
• relinquish claims to other post-employment benefits under his employment agreement.
These amounts, combined with a previous repricing of all stock options awarded to McGuire from 1994 to 2002, result in a total value to be relinquished by McGuire of more than $600 million.
Under the Lubben settlement, Lubben will:
• surrender to UnitedHealth his stock options to acquire 273,000 shares of company stock, which the SLC has valued of more than $3 million; and
• repay to the company $20.55 million of the compensation realized by him as a result of his March 2007 exercise of stock options.
These amounts, combined with a previous repricing of stock options awarded to Lubben, result in a total value relinquished by Lubben of about $30 million.
The fair settlement value of the company’s claims against Spears will be determined by binding arbitration.
In a related action, McGuire reached a settlement with the Securities and Exchange Commission, which charged him with violating SEC rules and aiding and abetting violations by UnitedHealth.