Stock option backdating accounting
Cal PERS says in its brief that Hemsley should have known about the backdating problems "given his considerable background as a former Arthur Andersen partner." "Hemsley also understood the broad-based grants were in-the-money and should have been expensed [under an accounting rule]," the plaintiffs' brief states.
"Hemsley routinely approved backdated mass grants." United Health said Thursday "these are issues that will be addressed and dealt with in court, not the press." A sharp contrast The Cal PERS filing contains a number of blacked-out references to internal corporate memos, e-mails and documents that were sealed under a protective order to keep company business and employee records confidential.
"Hemsley personally offered backdated options to new hires, was required to approve all grants in excess of 5,000 shares [and] approved backdated mass grants," asserts the brief in the lawsuit that has the California Public Employees' Retirement System (Cal PERS) as lead plaintiff.The company denies the assertions, noting that Hemsley was cleared from involvement by independent organizations paid for by the United Health board to examine the practice of awarding options at a hand-picked low price to maximize value as United Health's stock rose.