UnitedHealth gave McGuire $100,000 raise

UnitedHealth gave McGuire $100,000 raise

	Published : Thu, 19 Apr 2007 20:19 By : Agencies Print this Story

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 as CEO in November 2006, was paid $8.7 million that year, according to an Associated Press calculation of the figures disclosed on Thursday. He actually collected $2.1 million in base salary because he didn't finish the year. His total paycheck also included $6.1 million worth of new stock options, also granted in January before the scandal began.

UnitedHealth has admitted that stock options given to many of its workers weren't dated correctly, which had the effect of inflating the gain for many of them. The issue forced McGuire out, and he was replaced as CEO by Hemsley, who had been president and chief operating officer. Hemsley was paid almost $7.1 million during 2006, according to AP's calculation, including a January stock option grant valued at $3.1 million.

McGuire didn't get a bonus or long-term incentive for 2006. But 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.

It's not clear how much of his stock options McGuire will be able to cash in. A company appointed committee is looking into how his departure should be handled and whether it should try to get any of the compensation back.

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.