Unitedhealth group stock option backdating
The roots of the scandal date back to 1972, when an accounting rule was put in place permitting companies to avoid recording executive compensation as an expense on their income statements so long as the income was in the form of stock options that were granted at a rate equal to the market price on the day of the grant, often referred to as an at-the-money grant.This enabled companies to issue enormous compensation packages to senior executives without notifying shareholders.
The company denies the assertions, noting that Hemsley was cleared from involvement by independent organizations paid for by the United Health board to examine the practice of awarding options at a hand-picked low price to maximize value as United Health's stock rose.
You could view the conciliatory gesture last week by United Health Group CEO Bill Mc Guire to voluntarily forgo any more millions in option grants as a first try at a low-cost settlement with the Securities and Exchange Commission (SEC). The government's top securities regulator is investigating the extent to which Mc Guire, one of America's best-paid bosses, was able to pick the dates of some of his option grants to coincide with low-water prices for UNH's shares.
The company told the Star Tribune this week that the board of directors had to approve the selected dates and that the practice was halted in 2005.
In so holding, the Court "easily accepted" the parties' assertion that the proposed settlement is the largest in the history of shareholder derivative litigation.
In the Order granting final approval, the Court found that the case was "zealously contested," yet the parties "managed the case efficiently, particularly in light of its novelty and complexity." December 19, 2008 - Court Grants Preliminary Approval of Settlement in United Health On December 19, 2008, the Court granted preliminary approval of the settlement.Still, some securities lawyers say, such practices may violate securities laws, because they allow insiders to benefit from knowledge not available to other shareholders.