CalPERS wants to prevent departing UnitedHealth CEO William McGuire from obtaining a $1.1 billion retirement package.
A motion filed in U.S. District Court in Minneapolis by the $221.3 billion California Public Employees' Retirement System, Sacramento, claimed Mr. McGuire could cash in nearly $1 billion from mispriced stock-option grants stemming from his 1999 employment contract. In addition, Mr. McGuire is eligible to receive a lump-sum pension payment of $6.4 million plus $5.1 million a year for life, the motion said. Mr. McGuire, who stepped down as the company's chairman on Oct. 15, will quit as CEO, following a review by outside counsel into alleged backdating practices the company used in pricing stock options.
The motion also seeks to prevent Mr. McGuire from exercising any United Health stock options without court approval and to restrict proceeds of sales of UnitedHealth stock he acquired by exercising stock-option grants, including freezing a $135 million gain he obtained from a Feb. 23 sale.
CalPERS is the lead plaintiff in a class-action lawsuit challenging UnitedHealth's stock-options practices.
Mr. McGuire's attorney, David Brodsky, a partner in the law firm of Latham & Watkins, did not respond to requests for comment. An Oct. 15 statement from UnitedHealth said Mr. McGuire had voluntarily agreed to reprice all options awarded to him from 1994 through 2002 to the annual high share price for each year.
