Despite a settlement in the UnitedHealth Group Inc. stock-option case this month, a federal judge in Minneapolis ruled Wednesday that about $800 million worth of former CEO William McGuire's options will remain frozen for now.
McGuire and the plaintiffs in the shareholder cases settled Dec. 6 had asked U.S. District Judge James Rosenbaum to lift his injunction. But the California Public Employees' Retirement System (CalPERS), the plaintiff in a separate lawsuit against McGuire, said the lifting of the injunction could jeopardize its ability to collect a judgment.
The options have been frozen since November 2006, when they were worth more than $1 billion. They have since been repriced.
McGuire argued that UnitedHealth has the resources to pay any claims against him. But in his ruling Wednesday, Rosenbaum said that McGuire's confidence that the company would pay a judgment against him "may be open to question."
Rosenbaum said he also considered the amount of money coming to McGuire. "Words such as 'huge,' 'fantastic,' 'astounding,' 'staggering,' or 'astronomical' do not describe $1 billion," he wrote. "Such a sum can only be thought of as 'transcendent,' or in terms of the gross national product of smaller members of the United Nations."
In the end, Rosenbaum said, the need to protect a possible judgment in CalPERS' favor outweighed McGuire's "wish for funds with which to engage in charitable activities and to pursue business interests."
The options will remain frozen pending a review by the Minnesota Supreme Court of the state's "business judgment rule" as it applies to the settlement, Rosenbaum said.
McGuire stepped down as UnitedHealth's chief executive Dec. 1, 2006. In this month's settlement, he agreed to surrender $420 million in options and other benefits.
Casey Common • 612-673-7096
