Friday, May 19, 2006

Caremark Rx Also Under Fire For Timing of Stock Options

Another large health care company has come under investigation over the timing of the stock-options given to its CEO. According to the Associated Press (via the Washington Post), "Pharmacy benefit manager Caremark Rx Inc said Thursday that it has received a federal grand jury subpoena for records about its stock options, a day after UnitedHealth Group Inc. was subpoenaed on the same subject. Caremark also received what it called an 'informal inquire' from the Securities and Exchange Commission (SEC), requesting information about the company's stock options and its relocation program." further reported the inquiries came "three weeks after highlighed the particularly well-timed stock option grants that Caremark gave CEO Mac Crawford and other company leaders last year. Caremark gratned those options at $37.92 a share, the lowest closing price of the year. Last week, the Wall Street Journal went on to show that Caremark had displayed some uncanny timing before. Notably, the Journal stated, Caremark issued stock options priced at $3.88 a share - 'which turned out to be tied for the low point of the year' - back in 2000."

Regarding the relocation issue, AP reported, "the Wall Street Journal last week reported that Caremark's chairman, president and chief executive, Mac Crawford, took part in the company's relocation program when it moved its headquarters from Birmingham, Ala., to Nashville in 2003." Furthermore, "Crawford was given a $2.9 million 'equity advance,' but has yet to sell his house in Alabama. A Caremark spokesman told the paper that Crawford's ill wife still lives there and that the home will be sold when renovations on the Crawford's Nashville home is [sic] complete."

Another day, another large health care organization under investigation for questionable practices. Yet patients, physicians, and other health care professionals have to deal with these large organizations every day. And we still wonder why health care is increasingly expensive and decreasingly accessible, while quality stagnates and physicians and nurses are ever more demoralized?

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