The Five Dumbest Things on Wall Street This Week

4. UnitedHealth We Fall

UnitedHealth (UNH Quote) is still struggling to clean up its stock-option mess.

The Minnetonka, Minn., health insurer this week rescinded $390 million in improperly granted options to outgoing CEO William McGuire and his successor, Stephen Hemsley.

Since news of top management's stock-option shenanigans emerged this past spring, the company has cut stock-based pay for execs, shuffled the furniture in its executive suite and upgraded its once-laughable boardroom. Last month, UnitedHealth accepted McGuire's resignation as evidence mounted that his reign was rife with option backdating and accounting irregularities.

"The senior leaders of UnitedHealth Group are clearly aligned with our board in striving for the highest standards of governance and business practices," Hemsley claimed in Wednesday morning's press release.

Yet shares remain 25% below their early-year high. Perhaps that's due to the sheer scope of the option fiasco, which UnitedHealth now says will cause it to restate earnings going back a remarkable 12 years. The company previously estimated a three-year restatement would cut $286 million from reported profits, but a regulatory filing this week indicates the tab will be "significantly greater."

Also unnerving is how the company has dealt with execs tied to the scandal. McGuire stepped down only after dodging questions for six months as lawyers compiled a list of his self-serving maneuvers. Longtime sidekick Hemsley scored a big promotion, on the grounds that he didn't know what was going on.

But strangest of all is the case of Patrick Erlandson, the chief financial officer who oversaw six years' worth of improper accounting. He resigned his post this week, along with the company's human resources chief. But UnitedHealth adds cryptically that Erlandson "will be assuming operational duties within the company."

If there's any justice, those duties will involve a sponge and a big bucket of soapy water.

Dumb-o-Meter score: 82. Maybe UnitedHealth just wants to keep its options open.

< Previous

1 2 3 4 5

Next >