Monster agrees to pay $2.5 million penalty over option backdating
Monster Worldwide, the New York parent company of the monster.com employment site, has agreed to pay a $2.5 million penalty to settle charges of backdating brought against the company by the Securities and Exchange Commission. The payment, which had been set aside by the company in anticipation of its resolution, conludes the SEC’s formal investigation in to Monster’s historical stock option granting practices.
A special committee of the board was set up in June 2006 to examine the company’s past stock option practices. The committee determined that prices “for a substantial number of stock option grants during the periods between 1997 through March 31, 2003 differed from the fair market value of the underlying shares on the measurement date.”
Accordingly, the Company announced that its previously filed financial statements should no longer be relied upon; and the Company filed an amended annual report on Form 10-K/A with restated financial statements.
An investigation by the United States Attorney’s office for the Southern District of New York also resulted in the Monster’s former general counsel pleading guilty to two felony counts; a deferred prosecution with Monster’ former chairman and chief executive who subsequently died before the prosecution was concluded; and an indictment of a former senior executive of the company and member of its board for securities fraud and conspiracy for which he is expected to stand trial in the near future.
