Hatch to investigate UnitedHealth over stock options
June 18, 2006
ST. PAUL - Attorney General Mike Hatch said Wednesday he plans to investigate UnitedHealth Group Inc., the Minnetonka-based health insurer whose executive stock options have come under fire.
The attorney general said he wants to probe compensation given to the company's board of directors, how that may have influenced their oversight of executive compensation, and how much was disclosed to shareholders. Hatch is charged with enforcing consumer fraud laws in the state.
"If you go on a board and you're receiving $5 million, how can you be in a position to really be prudent with regard to the type of compensation you're going to be giving to the executives?" he said after a meeting of the State Board of Investment.
Hatch said Wednesday he will seek to change the state's role in a lawsuit filed by shareholders who challenge the timing of stock options to executives. He aims to participate as a friend of the court, instead of a direct party to the lawsuit, thereby preserving his right to subpoena documents from UnitedHealth.
"The problem is if we participate in the proceeding, it shuts off our ability to conduct our own investigation," the attorney general said.
The state of Minnesota owns approximately 2.6 million shares of UnitedHealth, with a market value of roughly $120 million, according to the State Board of Investment.
Hatch went to court Wednesday to argue that the state should retain its right to join the shareholder lawsuit later. A federal judge didn't immediately rule.
The Securities and Exchange Commission and federal prosecutors are investigating at least 30 companies over the timing of stock option grants to executives. UnitedHealth Group is one of the largest and best-known.
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