By BLOOMBERG NEWS
Published: December 20, 2006
The UnitedHealth Group widened its estimate of earnings restatements for the backdating of stock options yesterday and projected higher 2007 profit on gains in market share.Income for 1994 through 2005 may be reduced by as much as $1.5 billion to $1.7 billion to correct improper accounting for options awarded to executives and employees, the company, based in Minnetonka, Minn., told analysts. Net income next year will rise more than 13 percent, to $4.7 billion to $4.75 billion, UnitedHealth said.UnitedHealth’s former chief executive, William W. McGuire, was removed last month, to be succeeded by Stephen J.Hemsley, after an independent review found that Mr.McGuire might have manipulated the dating of options worth hundreds of millions of dollars. how much is enough?
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With McGuire gone, UnitedHealth regroups by Martin
Moylan, Minnesota Public Radio
December 8, 2006
Amid investigations by federal prosecutors and securities regulators, William McGuire officially stepped down last week as UnitedHealth Group's CEO. His departure is part of a
company effort to address a scandal involving hundreds of millions of dollars in stock options granted to McGuire and other executives.
.........Earlier this year, UnitedHealth said it would cost about $286 million to correct its accounting for back-dated options. Now, the company says the cost will be significantly higher. How high, it's not saying yet. Whatever the eventual cost, analysts expect UnitedHealth could likely absorb it without too much trouble. The company is one of the largest, strongest and
most profitable health insurers in the nation. Through the first nine months of this year, UnitedHealth had about $54 billion in revenue. And it posted a profit of $3 billion.
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Estimated Annual Retirement Benefit: $5,092,000*
*Calculated by The Corporate Library for the AFL-CIO Executive PayWatch
UnitedHealth Group CEO William W. McGuire will receive an annual supplemental retirement benefit for his lifetime. If he retires at age 65, his pension benefit will equal 65 percent of his average cash compensation over his past 36 months of employment. This special pension benefit is part of McGuire’s employment agreement.[1]
Ironically, this special pension guarantee probably will not be necessary for McGuire to have a secure retirement. On paper, McGuire is a stock option billionaire with $1,776,547,635 in unexercised stock options as of Dec. 31, 2005.[2] how many people could have healthcare if not for this obscene compensation?
Until 2005, UnitedHealth Group permitted McGuire to choose the day of his own option grants by giving “oral notification.” In 1997, 1999 and 2000 he received stock option grants on the day of the single lowest closing price of each year, and a grant in 2001 that came near the bottom of a sharp stock dip. According to The Wall Street Journal, “the odds of such a favorable pattern occurring by chance would be one in 200 million or greater.”[3] sweet!
On McGuire’s retirement, all his stock options will immediately vest. His employment agreement also provides for additional retirement perks. For the first 36 months of McGuire’s retirement, UnitedHealth Group will continue to pay his insurance premiums, provide him an office and a secretary and allow him personal use of the company jets.[4]
Should UnitedHealth Group need McGuire’s services after he retires, his employment contract provides for a consulting agreement for up to 36 months. During this period, he will be paid his full cash compensation that he earned as UnitedHealth Group’s CEO.[5] However, the provisions of his consulting agreement will ensure this consulting work does not impose on McGuire’s retirement.
Under McGuire’s contract, the UnitedHealth Group’s
requests for consulting services “shall not unreasonably interfere with the personal, charitable or other business activities” of McGuire or interfere with him “pursuing other full time employment.” Moreover, UnitedHealth Group will continue to pay for McGuire’s consulting services to his beneficiaries in the event of his death during the consulting period.[6]
Lastly, McGuire’s contract requires that UnitedHealth Group provide him and his spouse with health care for the remainder
of their lives at no cost to McGuire. Should UnitedHealth Group terminate its retiree health care plan, the company must reimburse McGuire for the full cost of alternative insurance coverage.[7] Unlike McGuire's coverage, the retiree health care of UnitedHealth Group’s 55,000 employees is not protected by
law.
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Category: Healthcare Hospitals
Executive/Company
Total Compensation
Alan B. MillerUniversal Health Services, Inc.
$11,292,613.00
Jack O. BovenderHCA Inc.
$10,957,085.00
Kenneth C. DonaheyLifePoint Hospitals, Inc.
$8,343,007.00
James D. SheltonTriad Hospitals, Inc.
$7,982,467.00
Wayne T. SmithCommunity Health Systems, Inc.
$7,393,620.00
Trevor FetterTenet Healthcare Corporation
$6,740,746.00
Joseph V. VumbaccoHealth Management Associates, Inc.
$1,822,776.00
Ken P. McDonaldAmSurg Corp.
$1,495,128.00
John H. ShortRehabCare Group, Inc.
$669,113.00
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