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Monster Under Investigation For Questionable Options Practices
It was reported this week that Monster Worldwide has become a target in the ever-widening scandal involving companies that have backdated options grants to senior executives. Stock options, which give the recipient the right to buy shares of stock at a set price or â€˜strike price,â€™ are granted to reward employees when the companyâ€™s share prices rises in the future. If an option is backdated, the recipient receives the benefit of 20/20 hindsight vision because the strike price would be artificially low, thereby assuring that the options were â€˜in the money.â€™
In the case of Monster, for example, an option granted to a senior executive in 2001 was dated April 4th, the low-water mark for Monsterâ€™s stock price in the first half of 2001. The stock climbed 67% in the subsequent 20 trading days following that date. The Wall Street Journal, in examining the odds that Monsterâ€™s option grants were random, determined that the odds of picking the lowest share price across the series of grants in question were 9,000,000 to 1. I think itâ€™s a pretty safe bet that Monster is guilty of backdating their option grants.
In one of the most ridiculous quotes ever by a senior executive, the Monster executive who received the options claimed he was unaware of the fortuitous dates of the options grants, stating in the Wall Street Journal article, â€œI was busy working and there was a lot to do and there were a lot of moving parts and a family to get home to.â€ Weâ€™ll see if playing the family-man card helps at all with the SEC.
tags]Monster, Options Backdating, Options Scandal, Egregious Executive Compensation, CEO Pay, Corporate Fraud, White-Collar Crime, Job Boards, Long Jail Sentences, Options, Stock Options, Wall Street Journal[/tags]