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    Monday, October 16, 2006

    So Much for those Billions: United Healthcare's billionaire doctor CEO has been caught up in the stock options scandals:

    The stock options scandal claimed its biggest corporate chief Sunday, with UnitedHealth Group Inc. saying Chairman and Chief Executive Officer William McGuire would step down because an outside report found that his option grants "were likely backdated."

    ...The report by a firm hired by the company's board said McGuire's huge awards of stock options got a boost because they were issued on one day but priced as if they'd been issued earlier, when the stock price was lower.

    Does that mean they're really worth only millions instead of billions?

    posted by Sydney on 10/16/2006 09:57:00 PM 2 comments


    The problem goes deeper than Dr. McGuire. We now have over 100 companies under investigation for back dating stock options. We have a former, short term, FDA commissioner under investigation for conflict of interest. The WSJ recently highlighted a university president for his lavish spending on housing renovations, entertainment expenses, and his wife's marijuana smoking.

    The most telling part of the university's presidents story was the support in the letters to the editor section. The consensus was that the increase in endowment funds covered the increased expenses, even if off the books, and the wife's drug usage was a minor embarrassment.

    We have simply reached a point where government, academic, and professionals, cannot be trusted. Our best interest have simply become secondary too, what is often, a very minimal financial gain. We cannot expect our young students, and professionals, to uphold a higher standard, when those teaching them and in positions of authority, are themselves biased and corrupt.

    Many years ago I was taught we cannot pass enough laws to cover every situation. There is a dependence on the moral compass of the individual to guide them in their every day dealings. We seem to have lost this moral guide and I fear it will only get worse over time.

    Steve Lucas

    By Anonymous Anonymous, at 7:36 AM  

    That article is pure fearmongering. Options back-dating is perfectly legal, ethical, and above-board. The strike price of stock is an arbitrary number that the company just pulls out of thin air. If a company chose, they could perfectly well roll dice to come up with the strike price, or pick something fun like 14 head of Texas longhorns per share.

    The sticky point is how the option grant is accounted for. The company's expense is the market value ON THE DAY OF GRANT minus the strike price, and the EXPENSE OCCURS ON THE DAY OF GRANT. Period.

    By Anonymous dn, at 12:51 PM  

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