UnitedHealth Cleans House

With the political landscape changing, possibly putting its big Medicare opportunity in danger, UnitedHealth (UNH) has announced some major housecleaning of its own.

Stephen Hemsley, tapped to replace disgraced William McGuire as CEO, is expected to lead the company for another four years. But several other leaders -- including the CFO, the general counsel and the head of human resources -- have all been thrown out.

The shift in power, unimaginable less than a year ago, comes in response to a stock-option backdating scandal that likely will result in "material" charges for the company.

"These are the right changes, the necessary changes, the obvious changes," says Sheryl Skolnick, senior vice president of CRT Capital Group. "These are things that the company should do. But I don't want to congratulate them for what they should be doing -- because it's the minimum."

In the past, UnitedHealth has rewarded its executives with backdated stock options that made them even wealthier than they otherwise would be. The company is now repricing those questionable options to make them worth far less. Hemsley alone will see the value of his past option grants slashed by nearly $200 million.

He won't make nearly as much money as McGuire did, either. He gets no more stock options and no automatic bonuses under his new contract with the company.