You could view the conciliatory gesture last week by UnitedHealth Group CEO Bill McGuire to voluntarily forgo any more millions in option grants as a first try at a low-cost settlement with the Securities and Exchange Commission (SEC).

It may take a lot more than that.

The government's top securities regulator is investigating the extent to which McGuire, one of America's best-paid bosses, was able to pick the dates of some of his option grants to coincide with low-water prices for UNH's shares.

The company told the Star Tribune this week that the board of directors had to approve the selected dates and that the practice was halted in 2005.

Still, some securities lawyers say, such practices may violate securities laws, because they allow insiders to benefit from knowledge not available to other shareholders.

"Dollar Bill" has made lots of news with cash-and-stock paydays that have topped $100 million in recent years -- and he's still sitting atop stock options valued at $1.6 billion. McGuire's admiring outside board members -- 10 of whom have become millionaires through the sale of their own appreciated stock in recent years -- have defended his league-leading compensation on grounds that the giant health insurer's stock price has been a superb performer.

However, the national scrutiny this week came amid news that the SEC is investigating whether McGuire and the board broke any laws. The Minnesota attorney general also has jumped into a shareholder suit seeking to get to the bottom of the matter.

Others are less concerned with option-dating and more concerned with the cumulative effects that big paydays for executives at UnitedHealth are having on the health care industry.

"My thoughts relate more to UnitedHealth Group's pay in general, rather than on the backdating issues, which are hard to parse due to ambiguous legal standards," said Broc Romanek, a former SEC lawyer, corporate counsel and the editor of and

"UnitedHealth Group's CEO serves as a good example of excessive CEO pay being the fault of an aggressive CEO and a compliant board, which impacted the pay structure of an entire industry," Romenek said.

In the managed-care sector, Romanek said, CEOs at Cigna HealthCare, Aetna and WellPoint "have been historically overpaid because they used McGuire as their peer group for benchmarking purposes. Clearly, UnitedHealth is another one of those poster children for bad corporate governance, even without the backdating scandal. All of these serve as a reminder as to how much the CEO pay-setting process is broken."

McGuire, a physician, has led once-reeling United through 15 years of unprecedented growth and profits, particularly over the past eight years. UNH grew through consolidation of national competitors and as a seller of innovative programs and back-office processing to other health insurers trying to contain costs.

Now one of America's best-known billionaires, thanks to appearances this week on national TV and in the Wall Street Journal, McGuire said he believed that everything he and several other top executives and board members did was acceptable and within United's corporate rules.

Several board members publicly praised McGuire's leadership and vision and said he was more than entitled to a piece of the additional tens of billions of market value added under his tenure.

Still, investors appear concerned. Despite posting more record quarterly results this week, UNH shares are down so far in 2006, and off more than 20 percent from their high of 2005.

Institutional Shareholder Services, the influential shareholder advisory group, said in a prepared statement Thursday that there "is not sufficient evidence to prove backdating of options by the company."

Still, ISS said, it's concerned that the board's compensation committee has failed in its duty to "provide oversight to the executive pay practices and administered a flawed employment contract. The over $1 billion that Dr. McGuire currently holds in paper gains shows that the committee has not applied the 'holy cow' test, as fiduciary duty requires."

In other words, this may be legal, but "holy cow."

McGuire and his executive crew have set new standards for wealth that have drawn envy as well as ire from country clubs and executive suites nationally. Then there is the wrath of those who see such largesse as simply too much -- particularly from a health care outfit, because there are so many millions of Americans who lack basic health insurance.

"Even if there's nothing illegal at United, this is the extreme of obscenity in corporate governance," said Brother Louis DeThomasis, the chancellor of St. Mary's University, a onetime successful entrepreneur and a veteran board member who writes and lectures about business ethics. "We must reward excellence in performance. But handing people eternal paradise ... $1.6 billion worth of options is a bit much."

Neal St. Anthony • 612-673-7144 •