US: UnitedHealth Ex-CEO Settles Pay Case

Former UnitedHealth Group
Inc. Chief Executive William McGuire agreed to pay $30 million and
forfeit 3.7 million stock options to settle shareholder claims related
to options backdating, adding to what was already one of the largest
executive-pay givebacks in history.

The agreement is Dr. McGuire's third major settlement
of an options-backdating claim since revelations of the practice led to
his ouster nearly two years ago. Dr. McGuire denied the allegations in
the class-action lawsuit. UnitedHealth resolved the same case
separately in July, agreeing to pay more than $895 million in the
largest settlement of a backdating case to date.

The Minnetonka, Minn., health-insurance titan has been
one of the largest corporations ensnared in the backdating scandal, in
which dozens of companies were found to have manipulated the dates that
options were awarded in order to give executives a chance to reap more
compensation. Dr. McGuire was among the most successful and
highest-paid executives in the U.S. before the scandal erupted, and he
held options valued at about $1.78 billion.

That wealth has shrunk to nearly one-sixth of that
amount in the wake of Dr. McGuire's givebacks and the company's
declining share price. Dr. McGuire, who reaped about $530 million in
pay and options gains while running UnitedHealth from 1991-2006, still
retains 20 million stock options that could be exercised for a gain of
$307 million at the current share price.

UnitedHealth shares have fallen 50% since the start of
the year. They rose 83 cents, or 2.9%, to $29.31, in 4 p.m. New York
Stock Exchange composite trading Wednesday.

To resolve other civil and government claims, Dr.
McGuire already had agreed to forfeit 9.2 million stock options and
nearly $100 million in retirement pay, in addition to a $7 million
penalty to the Securities and Exchange Commission. That comes on top of
unrealized gains he surrendered at the time of his ouster -- estimated
then at $200 million -- by agreeing to reprice previously granted
options.

He still faces a criminal inquiry into UnitedHealth's
options scandal by the U.S. attorney for the Southern District of New
York. That office wouldn't comment on or confirm the status of the
probe.

"I am pleased to be able to help bring the
stock-option dating issues closer to complete resolution," Dr. McGuire
said. "As CEO, I consistently took responsibility to help address
important issues facing UnitedHealth Group, and I have continued to do
my part to resolve stock option dating issues since leaving the
company."

The current settlement resolves a class action led by
the California Public Employees' Retirement System. As part of the
deal, Dr. McGuire will pay the $30 million into a fund for shareholder
plaintiffs, adding to the $895 million UnitedHealth agreed to pay.

David Lubben, UnitedHealth's former general counsel
who was also ousted after a board-commissioned probe, also settled the
Calpers-led suit yesterday, for $500,000.

Write to Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com

• 201 Executive Compensation