William McGuire, the former CEO of UnitedHealth Group, has agreed to pay a whopping $600 million to settle claims with federal regulators and his former employer over the company’s illegal backdating of stock options.

Under Section 304 — the “clawback” provision — of the Sarbanes-Oxley Act, McGuire will reimburse UnitedHealth for all incentive- and equity-based compensation he received from 2003 through 2006, totaling about $448 million in cash bonuses, profits from the exercise and sale of UnitedHealth stock, and unexercised options.

He also agreed to disgorge nearly $11 million in illegally received gains pay about $1.7 million in prejudgment interest, and pay a $7 million civil penalty.

Under a separate settlement announced Thursday by UnitedHealth, McGuire will surrender to his former employer options to acquire more than nine million shares of company stock, valued at about $320 million; his interest in the company’s Supplemental Executive Retirement Plan, valued at approximately $91 million; about $8 million in his Executive Savings Plan Account; and claims to other post-employment benefits.

These amounts, combined with a previous repricing of all stock options awarded to McGuire from 1994 to 2002, mean the value to be relinquished by McGuire will be more than $600 million, according to the company.

The Securities and Exchange Commission announced that under its settlement with McGuire, his disgorgement plus prejudgment interest and his Section 304 reimbursement would be deemed satisfied by his $600 million payment to UnitedHealth.

UnitedHealth also announced that former general counsel David Lubben agreed to relinquish $30 million, including $20.55 million of the compensation realized by him as a result of his March 2007 exercise of stock options.

The company also said it reached a settlement with former director William Spears, but the settlement value of the company’s claims against him will be determined by binding arbitration.

Without admitting or denying the SEC’s charges, McGuire also consented to be barred from serving as an officer or director of a public company for 10 years.

“The $468 million settlement in this case, including the largest penalty assessed against an individual in an options backdating case, reflects the magnitude and scope of Dr. McGuire’s misconduct,” said Linda Chatman Thomsen, director of the SEC’s Enforcement Division.

McGuire resigned from the health insurer in October 2006 after an internal report found that options awarded to him and others likely were backdated; CFO Patrick Erlandson resigned a month later.

The commission’s complaint alleges that during a 12-year period, McGuire repeatedly caused the company to grant undisclosed, in-the-money stock options to himself and other UnitedHealth officers and employees without recording them in the company’s books or disclosing them to shareholders.

The SEC also alleges 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. According to the complaint, 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 the low points.

According to the SEC complaint, these inaccurate documents caused the company to understate compensation expenses for stock options, and were routinely provided to the company’s external auditors in connection with their audits and reviews of UnitedHealth’s financial statements.

In March 2007, UnitedHealth restated its financial statements for each year from 1994 through 2005, and disclosed material cumulative pre-tax errors in stock-based compensation accounting that totaled $1.526 billion for that period.

The SEC further alleges that from 1994 through 2005, McGuire personally received more than 44 million split-adjusted UnitedHealth options, most or all of which were backdated.

McGuire exercised and sold more than 11 million of these backdated options for an in-the-money gain of more than $6 million. He also received nearly $5 million of incentive-based cash bonuses in 2005 and 2006 tied to earnings per share targets that UnitedHealth would not have achieved under financial statements restated due to errors in stock-based compensation accounting, the SEC asserts.

The settlements with the company were reached by a Special Litigation Committee (SLC), an independent committee comprising two former Minnesota Supreme Court Justices. It had reviewed claims relating to the company’s historical stock option practices brought against current and former officers and directors in federal and state derivative lawsuits.