UnitedHealth Group Special Litigation Committee Reaches Settlement Agreements with Former CEO Dr. William W. McGuire, Former General Counsel David Lubben, and Former Director William G. Spears
SLC Recommends Dismissal of All Derivative Claims against All
Named Defendants
MINNEAPOLIS--(Business Wire)--UnitedHealth Group (NYSE:UNH) today announced that the Special
Litigation Committee (SLC), an independent committee comprised of two
former Minnesota Supreme Court Justices, has concluded its review of
claims relating to the Company's historical stock option practices
brought against certain of the Company's current and former officers
and directors in federal and state derivative lawsuits. Based on its
exhaustive, 15 month review, the SLC reached settlement agreements on
behalf of the Company with UnitedHealth Group's former Chairman and
CEO William W. McGuire, M.D., former General Counsel David J. Lubben,
and former Director William G. Spears.
In addition, the SLC concluded that all claims against all named
defendants in the derivative suits, including current and former
UnitedHealth Group officers and directors should be dismissed. The
SLC's conclusions are reflected in a final report delivered today to
the United States District Court for the District of Minnesota and the
Hennepin County District Court, State of Minnesota.
Under the McGuire settlement agreement, Dr. McGuire will:
-- Surrender to UnitedHealth Group certain stock options to
acquire 9,223,360 shares of Company stock, which the SLC has
valued at approximately $320 million;
-- Surrender his interest in the Company's Supplemental Executive
Retirement Plan, valued at approximately $91 million;
-- Surrender to the Company approximately $8 million in his
Executive Savings Plan Account; and
-- Relinquish claims to other post-employment benefits under his
Employment Agreement.
These amounts, combined with a previous repricing of all stock
options awarded to Dr. McGuire from 1994 to 2002, result in a total
value to be relinquished by Dr. McGuire in excess of $600 million.
Under the Lubben settlement agreement, Mr. Lubben will:
-- Surrender to UnitedHealth Group his stock options to acquire
273,000 shares of Company stock, which the SLC has valued in
excess of $3 million; and
-- Repay to the Company $20.55 million of the compensation
realized by him as a result of his March 2007 exercise of
stock options.
These amounts, combined with a previous repricing of stock options
awarded to Mr. Lubben, result in a total value relinquished by Mr.
Lubben of approximately $30 million.
Under the Spears settlement agreement, the fair settlement value
of the Company's claims against him will be determined by binding
arbitration.
The SLC has valued the total amounts to be relinquished pursuant
to these settlement agreements, together with the value previously and
voluntarily relinquished by current and former executives through the
surrender and repricing of options, to be approximately $900 million.
The settlement agreements and the dismissal of the derivative
actions are subject to notice to the Company's shareholders and Court
approval.
Richard Burke, Chairman of the Board of Directors, said, "The
Board of Directors, on behalf of the Company and its shareholders,
would like to express its deep appreciation for the extraordinary work
of Justices Blatz and Stringer, the members of the independent,
special committee created by the Board, throughout this lengthy and
thorough process."
The SLC is comprised of two retired Minnesota State Supreme Court
justices, former Chief Justice Kathleen Blatz and former Justice
Edward Stringer. Pursuant to Minnesota law, the Board of Directors
created the independent SLC and delegated to it complete authority to
review the claims in the derivative litigation and determine whether
those claims should be pursued on behalf of the Company.
Copies of the SLC's report and the McGuire and Lubben settlement
agreements are available on the "Newsroom" section of the Company's
website at www.unitedhealthgroup.com.
About UnitedHealth Group
UnitedHealth Group is a diversified health and well-being company
dedicated to making health care work better. Through its family of
businesses, UnitedHealth Group serves more than 70 million individuals
nationwide. Visit www.unitedhealthgroup.com for more information.
Forward-Looking Statements
This press release may contain statements, estimates, projections,
guidance or outlook that constitute "forward-looking" statements as
defined under U.S. federal securities laws. Generally the words
"believe," "expect," "intend," "estimate," "anticipate," "plan,"
"project," "will" and similar expressions, identify forward-looking
statements, which generally are not historical in nature. These
statements may contain information about financial prospects, economic
conditions, trends and uncertainties. We caution that actual results
could differ materially from those that management expects, depending
on the outcome of certain factors. These forward-looking statements
involve risks and uncertainties that may cause UnitedHealth Group's
actual results to differ materially from the results discussed in the
forward-looking statements. Some factors that could cause results to
differ materially from the forward-looking statements include: the
potential consequences of the findings announced on October 15, 2006
of the investigation by an Independent Committee of directors of our
historic stock option practices; the consequences of the restatement
of our previous financial statements, related governmental reviews,
including a formal investigation by the Securities and Exchange
Commission, and review by the Internal Revenue Service, U.S.
Congressional committees, U.S. Attorney for the Southern District of
New York and Minnesota Attorney General, a related review by the
Special Litigation Committee of the Company, and related shareholder
derivative actions, including whether court approval of the settlement
agreements between the Company and certain named defendants and the
dismissal of the derivative claims against all named defendants is
obtained, shareholder demands and purported securities and Employee
Retirement Income Security Act class actions, the resolution of
matters currently subject to an injunction issued by the United States
District Court for the District of Minnesota, a purported notice of
acceleration with respect to certain of the Company's debt securities
based upon an alleged event of default under the indenture governing
such securities, and recent management and director changes, and the
potential impact of each of these matters on our business, credit
ratings and debt; increases in health care costs that are higher than
we anticipated in establishing our premium rates, including increased
consumption of or costs of medical services; heightened competition as
a result of new entrants into our market, and consolidation of health
care companies and suppliers; events that may negatively affect our
contract with AARP; uncertainties regarding changes in Medicare,
including coordination of information systems and accuracy of certain
assumptions; funding risks with respect to revenues received from
Medicare and Medicaid programs; failure to achieve business growth
targets, including membership and enrollment; increases in costs and
other liabilities associated with increased litigation, legislative
activity and government regulation and review of our industry; our
ability to execute contracts on competitive terms with physicians,
hospitals and other service providers; regulatory and other risks
associated with the pharmacy benefits management industry; failure to
maintain effective and efficient information systems, which could
result in the loss of existing customers, difficulties in attracting
new customers, difficulties in determining medical costs estimates and
appropriate pricing, customer and physician and health care provider
disputes, regulatory violations, increases in operating costs, or
other adverse consequences; possible impairment of the value of our
intangible assets if future results do not adequately support goodwill
and intangible assets recorded for businesses that we acquire;
potential noncompliance by our business associates with patient
privacy data; misappropriation of our proprietary technology; failure
to complete or receive anticipated benefits of acquisitions; and
change in debt to total capital ratio that is lower or higher than we
anticipated.
This list of important factors is not intended to be exhaustive. A
further list and description of some of these risks and uncertainties
can be found in our reports filed with the Securities and Exchange
Commission from time to time, including annual reports on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K. Any or
all forward-looking statements we make may turn out to be wrong. You
should not place undue reliance on forward-looking statements, which
speak only as of the date they are made. Except to the extent
otherwise required by federal securities laws, we do not undertake to
publicly update or revise any forward-looking statements.
UnitedHealth Group
Media:
Don Nathan, 952-936-1885
Senior Vice President
or
Investors:
John S. Penshorn, 952-936-7214
Senior Vice President
Copyright Business Wire 2007
