CEO leaves UnitedHealth after stock backdating report release

STAFF & WIRE REPORTS-UnitedHealth Group's Chair and CEO William W. McGuire, MD, has stepped down as chairman of the board and will resign as CEO on Dec. 1, following the release of a report that found that Dr. McGuire likely received backdated stock options.

According to an Oct. 15 UnitedHealth Group company statement outlining a series of actions, the UnitedHealth Group Board elected Stephen J. Hemsley to succeed Dr. McGuire as CEO upon his departure from the company. Hemsley joined the company in 1997 and has been president and COO since 1999.

According to Clive Riddle, president and founder of MCOL, a provider of business-to-business health management and managed care resources, during Dr. McGuire's time at UnitedHealth, the company's stock increased a multiple of 56 times.

In February, a United press release announced Dr. McGuire's exercise of 2.3 million shares of stock to support philanthropic commitments and for financial diversification purposes, according to Riddle. "Never in a million years do I think Dr. McGuire or United imagined at that time, that they did anything wrong or that the transaction would help trigger the firestorm that it did," he says.

BIG FISH

"United got caught in the backdating scandal because they are a big and very visible fish," Riddle continues. "But there will be other large healthcare companies ultimately caught in this net as well. More importantly, most of the companies caught in this scandal have nothing to do with healthcare. You just have to be a public company, be fairly visible, have stock options and participated in a practice that has indeed been widespread to now operate under a cloud."

UnitedHealth Group could not be reached for comment.