Estimated Annual Retirement Benefit: $5,092,000*

*Calculated by The Corporate Library for the AFL-CIO Executive PayWatch

UnitedHealth Group CEO William W. McGuire will receive an annual supplemental retirement benefit for his lifetime. If he retires at age 65, his pension benefit will equal 65 percent of his average cash compensation over his past 36 months of employment. This special pension benefit is part of McGuire’s employment agreement.[1]

Ironically, this special pension guarantee probably will not be necessary for McGuire to have a secure retirement. On paper, McGuire is a stock option billionaire with $1,776,547,635 in unexercised stock options as of Dec. 31, 2005.[2]

Until 2005, UnitedHealth Group permitted McGuire to choose the day of his own option grants by giving “oral notification.”  In 1997, 1999 and 2000 he received stock option grants on the day of the single lowest closing price of each year, and a grant in 2001 that came near the bottom of a sharp stock dip. According to The Wall Street Journal, “the odds of such a favorable pattern occurring by chance would be one in 200 million or greater.”[3]

On McGuire’s retirement, all his stock options will immediately vest. His employment agreement also provides for additional retirement perks. For the first 36 months of McGuire’s retirement, UnitedHealth Group will continue to pay his insurance premiums, provide him an office and a secretary and allow him personal use of the company jets.[4]

Should UnitedHealth Group need McGuire’s services after he retires, his employment contract provides for a consulting agreement for up to 36 months. During this period, he will be paid his full cash compensation that he earned as UnitedHealth Group’s CEO.[5] However, the provisions of his consulting agreement will ensure this consulting work does not impose on McGuire’s retirement.

Under McGuire’s contract, the UnitedHealth Group’s requests for consulting services “shall not unreasonably interfere with the personal, charitable or other business activities” of McGuire or interfere with him “pursuing other full time employment.” Moreover, UnitedHealth Group will continue to pay for McGuire’s consulting services to his beneficiaries in the event of his death during the consulting period.[6]

Lastly, McGuire’s contract requires that UnitedHealth Group provide him and his spouse with health care for the remainder of their lives at no cost to McGuire. Should UnitedHealth Group terminate its retiree health care plan, the company must reimburse McGuire for the full cost of alternative insurance coverage.[7] Unlike McGuire's coverage, the retiree health care of UnitedHealth Group’s 55,000 employees is not protected by law.