May 23, 2006BLB&G Partner Jerry Silk, lead attorney in the shareholder derivative litigation filed against UnitedHealth Group Inc. (“UnitedHealth,”) was a featured speaker on CNBC’s television program, Morning Call. In a lengthy segment, Mr. Silk provided extensive commentary on the emerging and widening accounts of stock options backdating, which are the focus of numerous regulatory investigations and private actions.
The UnitedHealth suit was filed by BLB&G on behalf of five public pension funds against certain current and former executive officers and members of the Board of Directors of UnitedHealth, charging that they obtained, approved, and/or acquiesced in the issuance of stock options to senior executives that were unlawfully backdated to provide the recipients with windfall compensation, at the direct expense of UnitedHealth.
As Mr. Silk explains on Morning Call, options backdating results in illegal excess compensation for these executives:
“If you know how the stock performed, then you can go back in time and pick a date when the stock was lower; your option is immediately in the money-and that’s extra compensation to the executives... sometimes hundreds of millions of dollars.”