On July 2, 2008, United Health Group announced that it has reached a tentative agreement to settle a federal securities class action lawsuit relating to its historical stock options practices. The $895 million settlement is the largest settlement of any stock option backdating securities class action to date. The previous high was reached last month when Brocade Communications Systems agreed to pay $160 million to settle a securities class action lawsuit involving its alleged stock options backdating.
In addition to the $895 million in monetary consideration, United Health Health will make several corporate governance changes, including a process for election of a shareowner-nominated director, enhanced standards for director independence, a mandated holding period for option shares acquired by executives, and shareowner approval of any stock option repricing.
Notably, the $895 million settlement does not resolve the causes of action against United Health's former CEO, William McGuire, or United Health's former General Counsel, David Lubben. The lead plaintiffs, the California Public Employees' Retirement System ("CalPERS") will continue to pursue the case against those defendants.
The CalPERS Board of Administration, United Health Group Board of Directors, and U.S. District Court for the District of Minnesota still must approve the settlement.