The chief executive of one of the nation's largest health insurance companies retired under pressure Sunday, the latest executive to fall in an options-based pay scandal that is unfolding at scores of companies nationwide.
UnitedHealth Group Inc. announced that William McGuire, 59, was leaving -- along with a director who oversaw executive compensation and the firm's top lawyer.
The announcement came in the wake of a board-commissioned investigation that found that stock option grants were "likely backdated" to allow insiders to maximize financial gains.
President and Chief Operating Officer Stephen Helmsley was tapped to replace McGuire. He said little about the stock options controversy in a statement released Sunday.
"In light of the recently completed investigation, I have determined that it is in the best interests of the company that I assist Steve Helmsley in an orderly transition to succeed me as CEO," McGuire said.
UnitedHealth doubled its presence in California last year when it bought Cypress-based PacifiCare Health Systems Inc. for $9.2 billion.
During McGuire's 15-year tenure, UnitedHealth's share price increased fiftyfold and he amassed a potential fortune in unexercised stock options. Now, U.S. and state regulators are probing the dating of the stock options.
An investigation by a law firm hired by UnitedHealth's board concluded that 1.5 million options -- most of which were granted to McGuire as a part of his 1999 compensation package -- were "likely backdated."
The results of that investigation -- given to board members last week and made public Sunday -- were viewed as creating pressure on McGuire to leave.
Yet, because the investigation had been underway for more than six months, there was a sense among investors until only recently that McGuire would survive the scandal, said Sheryl Skolnick, an analyst at CRT Capital in Stanford, Conn.
"I don't think anybody expected Bill to be forced to retire," she said.
McGuire's departure was announced only days after the leaders of two technology companies stepped down, all signs of the growing scope of a scandal over once-hidden stock option practices designed to pad insiders' compensation packages.
Various government investigators have drawn more than 100 companies into their crosshairs, and analysts said the shake-ups in the executive suites suggested corporate boards were rushing to clean house before potential crackdowns by federal regulators or prosecutors.
