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UnitedHealth Group Inc. CEO Dr. William McGuire has accumulated stock options worth an estimated $1.6 billion. On Tuesday, he acknowledged that might be enough.

Under fire for compensation practices that have made him one of the wealthiest executives in the country, McGuire said he will recommend that he and about a dozen other top United executives forgo new stock awards "for the foreseeable future."

McGuire long has been a lightning rod in the debate over executive compensation, particularly with health care costs rising so rapidly and the ranks of the uninsured growing.

"It's a shocking wealth transfer," said Nell Minow, editor of the Corporate Library, an organization in Portland, Maine, that analyzes corporate compensation and governance issues.

Earlier this year, McGuire cashed out options worth $124 million, and in 2004 he was the highest-paid executive in Minnesota, with total compensation of almost $125 million.

Company officials have defended those paydays by pointing to McGuire's success in transforming United from a financially ailing insurer into the second-largest in the country. The company also is a Wall Street darling; its stock price has climbed more than 200 percent in the past five years.

McGuire emphasized Tuesday that in his opinion, stock options were appropriately awarded to him and other executives according to company policy, which until last year allowed the option price to be established in periods when the company's stock was in a dip or before a sharp run-up.

"To my knowledge, every member of management is believed to have followed appropriate practices and were within [company] guidelines," McGuire told analysts. "We sleep with good conscience."

McGuire also has become a major financial giver in the Twin Cities and elsewhere. His family foundation dispensed almost $5 million in 2004 and recently pledged $5 million for a new riverfront park in downtown Minneapolis and $10 million to help pay for the college education of low-income public school students in Minnesota.

Timing of options questioned

Stock options are designed to reward executives for good performance as reflected in a company's stock value. Presumably, the better a company performs, the higher its stock shares will go and executives will benefit when they sell the lower-priced options for the higher market price.

The Securities and Exchange Commission (SEC) reportedly is looking into whether United and other companies allowed executives to backdate their stock options, thus ensuring a bigger profit when those options were sold. The question of the timing in McGuire's case was first raised in a Wall Street Journal story in March.

United has confirmed that until 2005, McGuire was allowed to select the date for his options. The company recently informed regulators that it also is conducting an internal review -- done by an independent committee consisting of nonemployee board members and outside legal counsel -- of some of its compensation practices.

Minow said the board most likely would be liable if anything inappropriate turns up. "In this case, if you believe there was a mistake, the clear thing to do is act very quickly and stop it and start over as you cooperate with the feds," she said.

The 2.3 million shares McGuire sold in February at $59 a share were optioned to him at $5 a share. The SEC filing reflecting the sale did not say when the option was set.

UnitedHealth's board is expected to consider the freeze on future option awards at its next meeting in May.

McGuire's comments Tuesday were his first public remarks about the options issue. He told analysts: "It's been very difficult to respond to reports that impugn motive. As soon as we were aware of a concern, we commenced a thorough review of our practices. We take these concerns seriously."

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