In one of the largest executive-pay givebacks in history, former UnitedHealth Group Inc. Chief Executive William McGuire has agreed to forfeit about $620 million in stock-option gains and retirement pay to settle civil and federal-government claims related to stock-option backdating. Stock-option backdating refers to the illegal practice of "backdating" stock option agreements so that options are priced at a historical low price rather than the current price, generating higher profits for the option holder.
Under the agreement, other key executives agreed to return ill gotten stock option gains as well bringing the total value of the settlement to almost $890 million. McGuire's payment dwarfs the $500 million junk bond king Michael Milken returned in the 1980's. McGuire still faces criminal charges.
So, why is he smiling? He still retains about 24 million stock options that currently could be cashed in for a gain of roughly $800 million, on top of about $530 million in pay he pocketed while running UnitedHealth from 1991 to 2006 -- obviously, the public defender will not be called upon to handle his criminal case.
Why would McGuire cheat the system to make $600 million, when he already was making more than a billion dollars?
This level of greed is in a whole different league than the six-figure executive who cheats on his expenses by taking his wife out to dinner and pretending she is a client. Or, the $50,000 bookkeeper who embezzles a $1,000 a month to cover her mortgage expense. I find McGuire's case disturbing. A billion dollars should be enough to keep anyone on the right side of the law. Obviously not.
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