United Healthcare’s stock plunged yesterday after it reported it could not file its second quarter financials on time due to difficulties dealing with stock options for Chairman Bill McGuire and others.
UHC’s stock has dropped 22% this year, largely due to regulatory scrutiny of UHC’s practice of backdating stock options for McGuire, who now holds options valued at about $1.6 billion. At least that was the options’ value before the stock’s slide.
This is not the only issue UHC is facing. It’s management of HMO Medica has come under scrutiny of late as well. There are allegations that the management contract was much too lucrative and UHC’s performance was substandard.
UHC grew in large part due to McGuire’s visionary leadership, business acumen, and focus on building value. The dark side of the McGuire era, one that may now be ending, is now showing itself, and it isn’t pretty. It looks like outright greed from here.
Aug
11
It used to be back in the 1970’s and early 1980’s that CEO’s earned total compensation that equalled about 40-45 times the pay of the average worker. Now its something like 500 times (often more) primarily because of extremely generous stock option awards (even when the award date isn’t manipulated to create a favorable strike price). Do we really need to make CEO’s billionaires in order to incentive them to work hard and do a good job for shareholders? Do we need to make them ultra rich even when they do a mediocre or lousy job? What the heck ever happened to the doctrine of enough is enough!
McGuire is Exhibit A for the adage, “pigs get fat, hogs get slaughtered.”