Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Summary: UnitedHealthcare's outgoing CEO William W. McGuire and his successor, Stephen J. Hemsley, have agreed to return about $390 million in stock-option compensation as a result of an investigation into options backdating -- the biggest voluntary options forfeiture in history. At the same time, the company has announced that it will restate its earnings results dating back to 1994. The SEC is investigating more than 130 companies for options backdating, and UnitedHealthcare is one of the largest. In 1997, 1999 and 2000, Dr. McGuire received option grants on the day of the shares' lowest price of the year -- a lucky pattern with odds of 200 million to one. In addition to returning unexercised backdated options, McGuire has also agreed to forgo any benefit from such options that he has already exercised -- though it remains unclear how that forfeiture will be accomplished. At the end of 2005, McGuire held $1.78 billion worth of unexercised options. The company's shares dropped $1.57, or 3.2%, to close at $48.
Related links: The original WSJ story that broke the options scandal • Additional coverage: Newsday , Business Week • Commentary: UnitedHealth CEO Departure: Pain or Relief For Investors? • Updated WSJ Options Scandal Scorecard
Potentially impacted stocks and ETFs: UnitedHealth Group, Inc. (NYSE:UNH) • Competitors: Wellpoint Inc. (WLP), CIGNA Corp. (NYSE:CI), Aetna, Inc. (NYSE:AET), Humana Inc. (NYSE:HUM) • ETFs: iShares Dow Jones US Healthcare Provider (NYSEARCA:IHF), Vanguard Health Care ETF (NYSEARCA:VHT), and PowerShares Dynamic Large Cap Growth (NYSEARCA:PWB) have UNH as a top-ten holding
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