In November 1989, he became president of the company, a position he held until May 1991.He was named chief executive officer in February 1991, and chairman of the board of directors in May of the same year.In comparison, had the options been granted at the year-end price when the decision to grant to options actually might have been made, the year-end intrinsic value would have been zero.Backdating does not violate shareholder-approved option plans.United Health Group is one of many companies that became the target of investigations by federal prosecutors and the U. Securities and Exchange Commission over alleged stock options backdating. Financial Services Law360 UK and Insurance Law360 UK provide breaking news and in-depth analysis on U. and European Union regulation, enforcement, legislation, and litigation involving banks, investment firms, insurers, and more.Clearly, the Enron trials have not closed the book on corporate fraud.The lower the strike price, the greater the potential for making money when exercising the options.
Or did a lot of CEOs just have amazingly good luck?
Most shareholder approved option plans prohibit in-the-money option grants (and thus, backdating to create in-the-money grants) by requiring that option exercise prices must be no less than the fair market value of the stock on the date when the grant decision is made. For example, because backdating is used to choose a grant date with a lower price than on the actual decision date, the options are effectively in-the-money on the decision date, and the reported earnings should be reduced for the fiscal year of the grant.
(Under APB 25, the accounting rule that was in effect until 2005, firms did not have to expense options at all unless they were in-the-money.
Mc Guire joined United Healthcare in November 1988 as an executive vice president when the Peak Health Plan, of which he was then president and chief operating officer, was acquired by United.
In May 1989, he was appointed to the board of directors and became chief operating officer of United.