A federal judge in Minneapolis gave preliminary approval Thursday for UnitedHealth Group Inc. to pay $895 million to settle a class-action lawsuit concerning backdated stock options, one of two large shareholder suits over the issue.
The settlement also has the company's former chief executive, William McGuire, paying $30 million and another former executive, general counsel David Lubben, paying $500,000.
The money will go into a settlement fund for class members in a securities fraud lawsuit led by the California Public Employees' Retirement System (CalPERS) and the Alaska Plumbing and Pipefitting Industry Pension Trust.
A notice to shareholders eligible for payouts will be mailed Dec. 29 and published the next week. The deadline for objections is Feb. 17, and there is a March 16 hearing for final approval. There also will be a website for shareholders to file claims online.
The case has dragged on for two years with twists and turns and an unusual level of complexity. It is joined at the hip with another class-action settlement reached a year ago, which called for McGuire to pay $420 million to UnitedHealth, though that amount has shrunk to about $168 million because of the tanking stock market. That settlement has yet to be approved by the judge in the case.
McGuire stepped down in 2006 as chief of the company he built into the country's biggest health insurer after an internal investigation found that executives' options to purchase shares had been backdated, maximizing profit for those who got them.
The hearing Thursday was brief, with U.S. District Judge James Rosenbaum doing most of the talking as he praised the "extraordinarily talented attorneys" in the courtroom and reflected on the case.
"Twenty-seven million pages of documents. Nearly 70 witness depositions, including not less than 10 expert witnesses. ... This case has been as thoroughly litigated as any," Rosenbaum said, adding that it was "as much work and probably more as I have ever expended on a single matter."
Now, he added, "We'll put this matter before the public and see what their thoughts are."
Chen May Yee • 612-673-7434