When former UnitedHealth Group (NYSE:UNH) CEO William McGuire hands over his $30 million check to shareholders to settle lawsuits over backdating of stock options, do you think they'll have him use one of those big checks -- the kind charities and lottery winners get?
That is a heck of a lot of zeros for a one-man payout, although it pales in comparison to the $895 million that his former company had to pay two retirement systems for the backdating scandal.
Then again, it's hard to feel sorry for McGuire, since he's benefited handsomely from all the backdated options. The settlement did require him to cancel options to buy nearly 3.7 million shares of UnitedHealth, not that the health insurer's stock has been doing so hot this year.
Like Apple's (NASDAQ:AAPL) Steve Jobs, McGuire claims he did nothing wrong. His defense in the past has been that he couldn't have possibly known that it was wrong since he's not an accountant. Yeah, neither am I, but it's pretty obvious to me that, if the purpose of the stock option is to align managements' goals with shareholders' goals, then changing the stock options so that they're already worth something doesn't get the job done.
With its CEO ousted and the backdating scandal mostly behind it, UnitedHealth can get back to making money for shareholders. The industry has started the process with UnitedHealth, Aetna (NYSE:AET), and WellPoint (NYSE:WLP) all well off their 52-week lows. While they've got a ways to go to get back to the heydays of 2007, the industry is definitely looking more like a value play than a value trap.
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