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Eddy Elfenbein submits: The Wall Street Journal reported that the Attorney General of Minnesota is turning up the heat on UnitedHealth (NYSE:UNH). The stock has been under attack ever since the news of CEO William McGuire’s $1.6 billion in options became know. Plus, it appears that many of these options were “back-priced” to be more favorable for UNH execs.

Here’s what the WSJ reported (sub.req.):

Minnesota Attorney General Mike Hatch, stepping up his campaign against UnitedHealth Group Inc., urged around 135 public and private pension funds to withhold votes for four directors seeking re-election to the health insurer's board next month.

In a letter sent yesterday to the big investors, Mr. Hatch accused the board of failing to provide proper oversight in the awarding of stock options "in the billions to top executives" while having "awarded themselves millions of dollars in stock option opportunities." Mr. Hatch, who is running for governor, acknowledges his letter-writing campaign is primarily "symbolic."

The letter was sent to a group that includes the American Federation of Teachers retirement plan and the California Public Employees' Retirement System, or Calpers.

Mr. Hatch's letter comes amid scrutiny of the circumstances under which UnitedHealth Chief Executive William McGuire obtained some of the $1.6 billion in unrealized gains he holds in UnitedHealth stock options. He, and in some years at least 10 other top executives, frequently received options just before big run-ups in the company's share price, which had the effect of making the options more profitable than they otherwise would have been.

Last week, Mr. Hatch intervened in a federal civil suit that names as defendants Dr. McGuire, Chief Operating Officer Stephen J. Hemsley and several board members and alleges that shareholders were harmed by backdated option grants. UnitedHealth's board also has launched a probe of its past option-granting practices, and the company has said it received a call from the Securities and Exchange Commission.

The stock has slid from over $64 in December to $50.16 for yesterday’s close.

Source: UnitedHealth Under Fire (UNH)