Dear Dr. McGuire,

I think UnitedHealth (NYSE:UNH) is a fine company that has rewarded long-term shareholders with multibagger returns. In such circumstances, I have no problem with the architects of these returns being rewarded with increasing salaries, restricted stock grants, or stock option grants. After all, Berkshire Hathaway Chairman Warren Buffett became the world's second-richest man by providing consistent long-term returns for partners and shareholders. And while stock options are not my favorite form of compensation (I much prefer restricted stock-based compensation because it better aligns management with shareholders), I have grave concerns about the possible backdating of options that recently came to light. This practice is highly unethical and possibly illegal.

By my rough estimation, by the end of 2005 you had personally benefited to the tune of more than $110 million from this fortuitous timing. Even for senior executives, it seems highly unlikely to hit the low share price of the year for several years running without hindsight. In the event that backdating took place, the beneficiaries of backdating should resign effective immediately and the compensation committee should be overhauled.

Integrity is critical at any public company. At a medical company with tens of millions of members, it is only that much more critical. To protect UnitedHealth's good name, its business relationships, and its shareholders' respect, I call on you to come forward in advance of the investigation's completion, and state clearly whether there was backdating, present evidence to support your assertion, and comply with any investigation that seeks to confirm the truth in this matter.

The needs of company constituents must be made the priority -- and the primary need of UnitedHealth employees, customers, and shareholders is to inherently trust the leadership group. Backdating of options is a violation of that trust, and at a historically great company such as UnitedHealth, it would be altogether indefensible.


Philip Durell (TMFAdmiral)

Philip Durell is advisor/analyst of Motley Fool Inside Value. Philip owns shares of Berkshire Hathaway. UnitedHealth Group is a Stock Advisor recommendation. The Motley Fool has a disclosure policy.