Minnetonka-based UnitedHealth Group has agreed to pay $895 million to settle a lawsuit alleging the health insurance company gave executives backdated stocks, a compensation scheme that lined the execs’ pockets but caused losses for investors.
Former CEO William McGuire agreed to personally pay $30 million under the settlement, including a $7 million penalty, the largest penalty levied against an individual in a stock-backdating case.
All together, the settlement is believed to be the largest backdating options recovery ever to result from a class-action lawsuit. The California Public Employees’ Retirement System (CalPERS) and other institutional shareholders filed the suit.
The Securities and Exchange Commission alleged that UnitedHealth concealed $1 billion in executive compensation through the stock-backdating scheme between 1994 and 2005.
U.S. District Judge James Rosenbaum granted preliminary approval of the settlement Dec. 22, with a final approval hearing set for March 16.