Ohio pension funds are taking UnitedHealth Group Inc. to court over allegations of problems with executive compensation arrangements.
The Public Employees Retirement System of Ohio and the Teachers’ Retirement System of Ohio have filed a suit against UnitedHealth in the U.S. District Court in Minneapolis.
In the suit, which was brought as a derivative action and as a class action, the retirement plans allege that UnitedHealth began engaging in improper use of stock options in 1996 or earlier, by letting Dr. William McGuire, the company’s chairman, retroactively select the date on which options were granted.
The plans hold about 5 million shares of UnitedHealth stock.
Lawyers at Grant & Eisenhofer P.A., Wilmington, Del., are representing the retirement plans.
In addition to UnitedHealth, the defendants in the suit include McGuire and other current and former UnitedHealth board members, according to the retirement plans’ law
The retirement plans are asking that UnitedHealth give up all profits gained by McGuire and the company’s chief operating officer.
The retirement plans also are asking that UnitedHealth pay compensatory and punitive damages and cancel or rescind all outstanding options not yet exercised for which there is proof of back-dating or manipulation of the grant dates.
Individual shareholders have filed at least 2 other similar suits in the same court, and the Internal Revenue Service and the U.S. Securities and Exchange Commission have asked for information about the UnitedHealth executive stock option program, according to UnitedHealth.
UnitedHealth does not comment on pending litigation, company spokesman Mark Lindsay says.
The UnitedHealth board is looking into the company’s stock option program, and the company also has authorized a second, independent review of the program. UnitedHealth is not commenting about recent allegations about the program while the reviews are under way, Lindsay says.