Lexington, VA • Friday, December 07, 2007
Lyman Johnson, Robert O. Bentley Professor of Law at the Washington and Lee University School of Law, served as an advisor in the nation's largest stock options backdating case, settled Thursday, December 6, 2007. The resolution led to a record $620 million repayment by UnitedHealth Group CEO William McGuire to settle several shareholder lawsuits.
UnitedHealth Group Inc., one of the largest health insurers in the United States, was rocked by a huge stock options backdating scandal in 2006 where dozens of companies falsified that options were granted at an earlier date than they actually were. By picking dates when stock prices were at a low point, executives were able to reap huge gains when cashing in their stock options. More than 80 corporate officials lost their jobs in the scandal.
After the scandal erupted and several shareholder lawsuits were filed against McGuire and the company, UnitedHealth's board of directors established a special committee to determine the company's position on the litigation. During the investigation, Prof. Johnson was retained by the committee and advised on various corporate governance issues, his area of expertise. Prof. Johnson writes and advises widely on current corporate and securities issues.
The members of the special litigation committee established by UnitedHealth were Kathleen Blatz, former Chief Justice of the Minnesota Supreme Court, and Edward Stringer, former Justice of the Minnesota Supreme Court and former General Counsel of Pillsbury. In addition to Prof. Johnson, the committee worked with the law firms of Kelly and Berens (Minneapolis, MN) and Munger, Tolles, and Olson (Los Angeles).
The settlement is likely to set a new standard for how special litigation committees perform their functions in fiduciary duty litigation.