updated 12/6/2007 6:27:57 PM ET 2007-12-06T23:27:57

Former UnitedHealth Group Inc. Chairman and CEO William McGuire has agreed to surrender more than $400 million to settle a lawsuit related to a stock-options backdating scandal, the company and the Securities and Exchange Commission announced Thursday.

McGuire, who stepped down a year ago as the highest-profile corporate chief caught in the probe, will give up $320 million in stock options and forego more than $99 million in other retirement and executive savings benefits, the company said.

In a statement, the Securities and Exchange Commission valued the settlement at $468 million. The SEC said McGuire did not admit or deny guilt.

The SEC said it includes a $7 million civil penalty and reimbursement to the Minnetonka-based insurer for all incentive-and equity-based compensation he received from 2003 through 2006.

The SEC said it was the largest penalty assessed against a person in an options backdating case. The settlement “reflects the magnitude and scope of Dr. McGuire’s misconduct,” said Linda Chatman Thomsen, director of the SEC’s Enforcement Division.

It was already known that McGuire had been allowed to choose the dates for his stock option awards, and a law firm hired by the company concluded last year that McGuire probably received backdated stock options. But the SEC on Thursday pointed a finger directly at McGuire.

It alleged that from at least 1994 through 2005, “McGuire looked back over a window of time and picked grant dates for UnitedHealth options that coincided with dates of historically low quarterly closing prices for the company’s common stock, resulting in grants of in-the-money options.”

The complaint also alleges that McGuire “signed and approved backdated documents falsely indicating that the options had actually been granted on these earlier dates when UnitedHealth’s stock price was at or near these low points. These inaccurate documents caused the company to understate compensation expenses for stock options,” the SEC said.

UnitedHealth also said former general counsel David Lubben will surrender $3 million worth of stock options and repay $20.5 million he got by exercising stock options in March of this year — a period when McGuire’s stock options were frozen by a federal judge because of the shareholder lawsuit.

An arbitrator will determine a settlement amount for former director William G. Spears. Lubben’s retirement and Spears’ resignation were announced the same day that McGuire’s departure was announced in October 2006.

Spears, who was listed as an independent director, resigned after it was disclosed that he served as a trustee for McGuire’s children’s trusts and as an investment manager for McGuire and his family, with as much as $55 million under management in 2006.

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