UnitedHealth Drops Equity-Based Awards

UnitedHealth Group Inc., under fire for the timing of stock-option grants, said its board discontinued equity-based awards for Chief Executive William McGuire and Chief Operating Officer Stephen Hemsley.

McGuire’s compensation has been at issue after disclosures that he held $1.6 billion in unexercised stock options at the end of 2005 and was granted stock options dated when the shares were at their low in 1997, 1999 and 2000. The favorable timing raised questions on whether the options were backdated.

Also, the California Public Employees’ Retirement System said that it would withhold votes from its 6.7 million shares for four UnitedHealth directors. CalPERS, the nation’s largest public pension fund, said it wanted to protect “inconsistent disclosure of compensation practices as well as poor board oversight of compensation practices and corporate governance.”