Dec. 7 (Bloomberg) -- UnitedHealth Group Inc.'s former Chief Executive Officer William W. McGuire will keep more than $800 million in stock options after repaying over $600 million because of a backdating scandal.

Other past and present officers have relinquished about $300 million, including $190 million that current CEO Stephen J. Hemsley gave up voluntarily a year ago, UnitedHealth said. The company announced the repayments yesterday in connection with the settlement of a lawsuit filed by pension funds and other investors on behalf of the company.

UnitedHealth, the largest U.S. health insurer, is among at least 200 companies that have disclosed internal or federal probes of backdating, the practice of retroactively setting dates for stock options to increase their value. McGuire was forced out as chairman and chief executive of UnitedHealth in October 2006 after an independent law firm found his options were backdated.

``We now can attach a dollar value to hubris,'' said Sheryl Skolnick, an analyst with CRT Capital Group in Stamford, Connecticut, in an e-mail today. ``And it ain't over yet for UnitedHealth or even Dr. McGuire.''

The actions yesterday didn't conclude a U.S. Justice Department criminal investigation, the Securities and Exchange Commission's probe of the company itself, or various shareholder class-action lawsuits, Skolnick said. The criminal investigation remains the ``wild card,'' she said.

UnitedHealth rose 67 cents, or 1.2 percent, to $56.65 at 4 p.m. in New York Stock Exchange composite trading. The company gained 5.4 percent this year.

Largest Derivative Settlement

If approved by a court, the settlement with the pension funds would be the largest ever in a ``derivative'' suit, in which investors seek reimbursement on behalf of a company, according to data compiled by Bloomberg.

Under the settlement, McGuire agreed to relinquish about $419 million in options and other benefits in addition to about $200 million of options that he previously surrendered.

``Corporate executives must realize that public corporations are not their private piggy banks,'' said Attorney General Richard Blumenthal of Connecticut, whose state pension fund was one of the plaintiffs, in a statement today. ``This landmark agreement is a powerful step toward enforcing real accountability. Executives work for their companies and shareholders, not solely for their personal enrichment.''

McGuire also agreed to pay a $7 million fine in an agreement yesterday with the U.S. Securities and Exchange Commission, the largest levied by the regulatory agency so far for options backdating. McGuire didn't admit or deny wrongdoing under the SEC settlement.

First `Clawback' Sanction

McGuire is the first person to be sanctioned by the SEC under the Sarbanes-Oxley Act's so-called clawback provision, requiring executives to return bonuses and stock-sale profits paid while a company misstates earnings. Congress passed the law in 2002 to combat corporate fraud after Enron Corp.'s collapse.

The repayments will leave McGuire with 24 million stock options with exercise prices of $7.50 to $60.90, UnitedHealth spokesman Don Nathan said in an e-mail today. At the current share price, they are worth more than $800 million, Nathan said.

Skolnick, the analyst, estimates McGuire's remaining fortune at $850 million plus $36.5 million from 651,111 shares owned directly as of the last proxy statement.

`Stick in the Throat'

While McGuire's surviving wealth ``may stick in the throat of some,'' Skolnick said in a note to clients today, ``he did lead a company that for all its flaws did create significant value for shareholders from 1988 through 2006 and therefore is arguably entitled to retain some of the benefit of his efforts.''

The lawsuit filed by the state pension funds claimed McGuire, Hemsley and 18 other officers and directors engaged in a ``fraudulent options scheme'' to provide company officers with ``billions of dollars of windfall compensation at the direct expense of UnitedHealth.''

UnitedHealth challenged the assertion made by plaintiffs' attorneys in a statement that current CEO Hemsley ``will repay'' $240 million as part of the suit's settlement. Hemsley relinquished $190 million of those benefits a year ago, the company said yesterday.

In the settlement report filed in court yesterday by a UnitedHealth special litigation committee consisting of two former Minnesota Supreme Court justices, Hemsley was singled out as a praiseworthy ``non-settling defendant.''

Hemsley's Remedial Steps

``Mr. Hemsley neither asked for nor received any financial or legal benefit in connection with the remedial steps he took in 2006,'' the justices wrote. By the end of this month, Hemlsey will return an additional $50 million, the justices said.

``It is plainly in the company's best interests to have Mr. Hemsley continue in his role as chief executive officer and to have the claims against him in the derivative actions dismissed,'' the report said.

After McGuire was forced out, UnitedHealth promoted Hemsley to CEO, named a new chief financial officer and restated earnings since 1994, reducing them by $1.53 billion.

The pension funds and other investors filed the suit in March 2006 on behalf of the company, seeking reimbursement and damages from the individual officers and directors. Other shareholders have filed a separate class-action lawsuit against the company, alleging securities fraud over the practices.

Since the scandal erupted in March 2006, UnitedHealth has languished as the worst performer in the six-member Standard & Poor's 500 Managed Health Care Index.

New Attitude

UnitedHealth has adopted a new attitude, Hemsley told an investor conference Dec. 4.

``We have changed in important, positive ways,'' he said.

UnitedHealth's former general counsel, David Lubben, will pay about $30 million, including $20.6 million gained through the March 2007 exercise of stock options, the company said.

William Spears, former head of the company board's compensation committee, also agreed to settle. The amount will be determined by binding arbitration, the company said.

Spears' attorney Carl Loewenson Jr. and Lubben's lawyer Seth Levine didn't immediately return calls for comment.

Of at least 200 companies that have disclosed investigations of backdating, 100 announced they must restate financial results, according to data compiled by Bloomberg. The restatements, revisions and charges exceed $12.9 billion to date. More than 90 executives and directors left their jobs, and over 400 lawsuits were filed against more than 100 companies.

The case is In re: UnitedHealth Group Inc. Shareholder Derivative Lawsuit, 06-cv-1216, U.S. District Court, District of Minnesota.

To contact the reporters on this story: Avram Goldstein in Washington at agoldstein1@bloomberg.net; Margaret Cronin Fisk in Southfield, Michigan at mcfisk@bloomberg.net.

Last Updated: December 7, 2007 16:22 EST