Re: Robert Modugno MD sent you an article from startribune.com
From: art fougner, md (evsono@pipeline.com)
Thu Jun 8 10:56:56 2006
Classic Pyramid Scam ...
art
At Thu, 8 Jun 2006, Robert Modugno MD wrote:
>
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>This article from <a href="http://www.startribune.com">StarTribune.com</a>
>has been sent to you by Robert Modugno MD.<br>
><b>*Please note, the sender's identity has not been verified.</b><br><br>
>The full article, with any associated images and links can be viewed
><a href="http://www.startribune.com/535/story/477480.html" target="_new">here</a>.<br></td></tr><tr><td><font face="arial,helvetica" size=2><b>Options benefit relatively few at UnitedHealth</b><br>H.J. Cummins, Star Tribune<br/><br/>
>Speaking to a group of business journalists last month, UnitedHealth Group CEO William McGuire defended his company's use of stock options as key to attracting and keeping the kind of talent that will help the Minnetonka-based company reshape the nation's health care system.<br/><br/>
>Those options to top executives, and the company's 1,000 percent stock appreciation since 1999, have made them wealthy.<br/><br/>
>However, unlike at some other fast-growing companies, such as high-tech and biomedicine start-ups, that wellspring of stock wealth doesn't appear to have trickled far down the UnitedHealth employee ranks. <br/><br/>
>All told, 14,000 United employees -- from McGuire down -- have received stock options since 1994, company spokesman Mark Lindsay said. UnitedHealth has about 55,000 employees.<br/><br/>
>According to the employee handbook, employees earning $47,900 or more are typically eligible to participate in the stock-option program.<br/><br/>
>During the past three years, about 13 percent of option awards have been to the five highest-paid UnitedHealth executives, with half going to McGuire, company filings show. <br/><br/>
>McGuire's reported $1.6 billion in stock options, and a technical question about their timing, has put UnitedHealth among the companies making headlines for high CEO pay. The case also highlights the big gap in this country between the pay and benefits of top executives and those of average employees.<br/><br/>
>Research examining the effects of that gap is mixed. Some show higher executive salaries engendering cynicism and high turnover down the ranks, but at least one turned up a ho-hum response.<br/><br/>
>Lindsay defended the value of McGuire's stock options as being "the result of absolutely extraordinary performance."<br/><br/>
>Compensation experts generally praise option grants to top executives because it means they gamble right along with stockholders on the company's future, said Paul Oyer, an associate economics professor at the Stanford University Graduate School of Business who researches their use.<br/><br/>
>"Stock options are a very, very risky way to pay people," Oyer stressed. "Having said that, $1.6 billion sounds like a lot to pay anybody. That's not the going rate for a good CEO."<br/><br/>
>Beyond its top executives, precise data about pay and benefits at UnitedHealth are hard to come by.<br/><br/>
>Lindsay said employee benefits are strong and pay is calculated according to the company's "performance-based culture."<br/><br/>
>Based on information collected from UnitedHealth's financial filings, its website and employee benefits handbook, as well as interviews with a handful of employees -- who spoke on the condition of anonymity -- the picture that emerges is that of a very cost-conscious company.<br/><br/>
>"I think it's safe to say our overall operations costs, our overhead costs, are very low in comparison with a lot of our competitors," Lindsay said. "That, we believe, is part of the formula of delivering more value to consumers."<br/><br/>
><b>Less value for employees?</b><br/><br/>
>But some employees said that has translated for them into raises that don't keep up with inflation, less time off and a more limited choice in health plans.<br/><br/>
>For example, UnitedHealth, the nation's second-largest health insurer, pays employees up to $650 a year if they choose to use any outside health coverage available to them, according to its website. <br/><br/>
>That's a matter of employee choice, not saving money, Lindsay said.<br/><br/>
>UnitedHealth's only employee health coverage is consumer-driven health plans, relatively new kinds of low-premium, high-deductible plans commonly referred to by their acronyms, HSAs and HRAs. Until two years ago, the company had other options, one employee said.<br/><br/>
>An April letter from the California Public Employees' Retirement System to UnitedHealth faulted the company for the limited health care options available to most employees vs. those offered top executives.<br/><br/>
>But Lindsay said United's current health plans have advanced information tools and technology that help employees shop wisely for their care.<br/><br/>
>"It is our view the best way to make health care more affordable to more Americans ... is to help consumers become more active participants in the health care system," he said.<br/><br/>
>As for employee pay raises, one first-line supervisor said he was given formulas to use. Three years ago it was 3 percent for "exceeds expectations," 2 percent for "meets expectations," and zero percent below that; for the past two years it has been 2 percent, 1 percent and zero percent.<br/><br/>
>During that time, inflation averaged 2.8 percent; McGuire's raises averaged 5.2 percent.<br/><br/>
>Lindsay stressed that wages are based on performance and said that all employees benefit from United's continued success. Also, all employees can buy company stock at a 15 percent discount, and 52 percent of them do, he said.<br/><br/>
><b>Who cares?</b><br/><br/>
>One study in the Journal of Organizational Behavior, in 1997, said that high CEO compensation makes employees more cynical.<br/><br/>
>Other research reported this year said it leads to higher turnover down the ranks. In fact, the study found that even if low-level managers were better paid than their counterparts in other companies, they still were more likely to leave if their CEO was more overpaid than they were, said Charles O'Reilly, a study author and management professor at Stanford University's Graduate School of Business.<br/><br/>
>That's because "the question of, 'Am I well paid or not?' can only be answered comparatively," O'Reilly said.<br/><br/>
>However, new, unpublished research from the University of Minnesota found that CEO compensation had only a negligible impact on employees' general satisfaction with their jobs.<br/><br/>
>"People probably care more about how much their co-workers make, how much they like their supervisor, if it's a pleasant place to work and if they like the job itself," said lead researcher Elizabeth Welsh, a Ph.D. student at the Carlson School of Management.<br/><br/>
>Oyer, at Stanford, said stock options generally don't make good pay-for-performance strategy for average employees.<br/><br/>
>"If they gave me a small portion of stock, it wouldn't mean much," he said. "They could give me a lot of stock, like half my salary. But I and most people are risk-averse, so I'd rather have $1,000 for sure than a lottery ticket that gave me a 50-50 chance for $2,000."<br/><br/>
><p class="contact">H.J. Cummins • 612-673-4671<br/><br/></td></tr></table>
--
art fougner, md
"I drank what?" - Socrates
