Apr 19, 2007 2:23 pm US/Central
UNH Gave Fmr. Executive A Raise Before Scandal
Minneapolis (AP) ―
Two months before a stock options scandal enveloped then-Chairman and Chief Executive William McGuire, UnitedHealth Group gave him a $100,000 raise to $2.3 million, according to a filing the company made on Thursday.
The board approved the raise in January 2006, the company disclosed in its proxy statement.
UnitedHealth said its board's compensation committee gave McGuire the raise "in light of strong overall 2005 company performance from a financial and operational perspective."
McGuire, who stepped down late in 2006, was paid $8.7 million that year, according to an Associated Press calculation of the figures disclosed on Thursday. His total paycheck also included $6.1 million worth of new stock options, also granted in January before the scandal began.
McGuire didn't get a bonus or long-term incentive for 2006. In January 2006 the board targeted his bonus at $3.45 million and capped it at $6.9 million. The board set a long-term cash incentive for McGuire targeted at $1.15 million with a maximum of $2.3 million.
The options, to buy 400,000 shares, were granted in January 2006, which was disclosed at the time. Those options had a strike price of $59.42, so with the company's shares hovering in the low $50s the options aren't worth anything yet. They expire in January 2016. The options were a reward for the acquisition of PacifiCare, the launch of UnitedHealth's Medicare prescription drug program, and other factors, the company said.
The calculations of total pay include salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
The company said it covered $138,218 for McGuire's use of the company jet for personal travel. It said it has eliminated perks such as private jet service, security, financial planning, and company cars and drivers for its executive officers, and it listed no such expenses for current CEO Stephen Hemsley.
"As a result of these changes, we have essentially eliminated most of the traditional corporate perquisites that are common in the market for senior executives at large public companies," the company said.
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