In a statement, CalPERS cited “inadequate and inconsistent disclosure of compensation practices as well as poor board oversight of executive compensation practices and corporate governance.”
Chairman and CEO William McGuire - whose stock options have been estimated at $1.6 billion at the end of 2005 and directors James Johnson, Mary Mundinger and Douglas Leatherdale were up for election when the company held its annual meeting on Tuesday, according to the AP.
Withholding votes would not create much of an opposition to the directors up for re-election, as all four are largely running unopposed. CalPERS' clout as the largest public pension fund is far more than its actual voting power, as it only holds a fraction of 1% of UnitedHealth Group's shares.
On Monday, UnitedHealth's directors moved to cut down compensation levels and perquisites for McGuire by discontinuing his "equity-based awards," the wire service reported. The directors also made plans to reduce compensation for the company's president and CEO, Stephen J. Hemsley, and president and chief operating officer, as well as cutting the compensation for board members by 40%, immediately.
According to the AP, CalPERS spokeswoman Pat Macht said UnitedHealth's board could "restore its leadership" if McGuire agreed to either cancel or not exercise some of his options.
CalPERS became the latest shareholder to say it would withhold votes for McGuire and other directors. Minnesota's Board of Investment, which also invests public pension money, decided Thursday to withhold its votes for the four directors up for re-election, according to the AP.