Borrowed from GOOG, is this the mean and lean private US health care system you were talking about? Not like our "bloated, bureaucratic government", eh?
McGuire was paid $8 million last year and did not exercise any stock options. But he exercised $114.5 million in options in 2004, and held more than $1.6 billion in unexercised options at the end of 2005, according to regulatory filings.
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UnitedHealth CEO: Stop Exec Stock Options By JOSHUA FREED, AP Business Writer
Tue Apr 18, 12:09 PM ET
UnitedHealth Group Inc. chairman and CEO William McGuire, under fire for a compensation package that has made him one of the nation's most richly paid corporate chiefs, said Tuesday he has recommended that his company stop awarding new stock options to senior executives.
The move, which UnitedHealth's board would have to approve, comes after news reports showed McGuire and other UnitedHealth executives were awarded stock options dated at low points in the company's share price — thus maximizing their later profit when the options were exercised.
The comments came on the same day that the nation's second biggest health insurer reported its first-quarter profit climbed 21 percent as revenue jumped almost 58 percent, propelled by its acquisition of PacifiCare.
McGuire said in a conference call that he was recommending that the board "forego for the foreseeable future further equity-based grants or awards for our most-senior and longest-tenured executives, for whom equity positions are well-established from prior years of service." McGuire has led the company since 1989.
He said the company's board would consider the idea at its next meeting in early May.
He also said he was recommending that the board cap some executive retirement plans and get rid of noncash perks. McGuire benefits from personal use of the company's aircraft, The Wall Street Journal reported on Tuesday.
Earlier this month UnitedHealth disclosed that a committee of its independent directors was looking into its "current and historic stock option grant practices" in the midst of an inquiry from the Securities and Exchange Commission.
The Journal has reported that the options in were established before 2002. After that, the newspaper said new rules curtailed backdating of options.
"I can say that, to my knowledge, every member of management in this company believes that at the time we collectively followed appropriate practices for those option grants which affected all of our employees," McGuire said.
He didn't directly answer an analyst's question about whether he backdated stock options, which would not necessarily be illegal.
"We sleep with good conscience," he said.
McGuire was paid $8 million last year and did not exercise any stock options. But he exercised $114.5 million in options in 2004, and held more than $1.6 billion in unexercised options at the end of 2005, according to regulatory filings.
In its earnings report, UnitedHealth said its profit rose to $899 million, or 63 cents per share, for the January-March period from $743 million, or 55 cents per share, during the same period last year. The results include the impact of new accounting rules requiring companies to record costs for stock-based compensation, which UnitedHealth adopted on Jan. 1.
Analysts surveyed by Thomson Financial expected earnings of 64 cents a share, including 4 cents per share in stock option expenses.
Quarterly revenue rose to $17.59 billion from $11.16 billion last year, the company said. UnitedHealth is the No. 2 health insurer behind WellPoint Inc.
The Medicare drug benefit that took effect Jan. 1 added $1.2 billion in revenue, but UnitedHealth said it lost $106 million on it because the program's costs occur disproportionately in the first half of the year.
The company raised its full-year profit guidance to a range of $2.88 to $2.92 per share. That's up from guidance of $2.85 to $2.90 per share given in January.
UnitedHealth acquired West-coast insurer PacifiCare on Dec. 20, and that added $3.9 billion in revenue and $185 million in earnings from operations.
About 4.5 million seniors had signed up for UnitedHealth's Medicare Part D prescription drug program as of March 31.
It said it expects the prescription drug program to have a 3 percent profit margin once expenses are spread over the full year, despite a negative 7 percent margin during the first quarter.
UnitedHealth shares dropped $1.67, or 3.2 percent, to $50 in midday trading on the New York Stock Exchange, down from a high of $64.61 in December.
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On the Net: unitedhealthgroup.com |
