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Former UnitedHealth CEO McGuire To Give Back More Than $600 Million
By Vanessa Fuhrmans and James Bandler
The Wall Street Journal
Thursday, December 6, 2007

In one of the largest executive pay givebacks ever, former UnitedHealth Group Inc. chief executive William McGuire has agreed to repay more than $400 million to settle civil and federal government claims related to stock option backdating, on top of $200 million he had previously surrendered to his former employer.

The massive settlement comes a year after the options-backdating scandal led to Dr. McGuire's ouster from the company, a leading health insurer based in Minnetonka, Minn.  Dr. McGuire previously had been one of the most successful and highest-paid executives in the U.S.

The forfeiture is part of an agreement with a UnitedHealth board committee, in which the company will seek to dismiss a shareholder lawsuit stemming from the imbroglio.  Last year, an internal probe concluded that millions of stock options were likely backdated on Dr. McGuire's watch.  Also today, the Securities and Exchange Commission filed civil charges against Dr. McGuire, which he settled without admitting or denying wrongdoing, according to a person familiar with the matter.

The forfeiture marks a key milestone in UnitedHealth's efforts to resolve the scandal that claimed its longtime chief executive and forced it to restate $1.13 billion in previous earnings over a 12-year period.

David Lubben, UnitedHealth's former general counsel, also has agreed to repay $20.6 million in prior stock options gains, and surrender unexercised options valued by UnitedHealth at more than $3 million.  In total, the company says, Mr. Lubben will have repaid more than $30 million.

The health insurance giant has been one of the largest companies to become ensnared in the options backdating scandal, in which companies manipulated the dates that options were awarded to provide additional compensation to executives.  More than 140 companies have been under investigation by the Securities and Exchange Commission, and executives at a number of those, including UnitedHealth, are still being probed by the Justice Department.

On Wednesday, a jury convicted Stephanie Jensen, a former human resources chief of Brocade Communications Systems, on charges of conspiracy and falsifying records for her role in a backdating scheme at that company.  She was the second former Brocade executive to be found guilty in a case stemming from options-backdating investigations.  More than 80 corporate officials have lost their jobs in fallout from the scandal.

Write to Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com and James Bandler at james.bandler@wsj.com