Former Monster President gets $6.3M fine plus 2 years in jail for backdating - 4 Sep 2009
Dan Walter, Performensation
September 4, 2009
It was recently announced that James J. Treacy, the former President and COO of Monster Worldwide, Inc was fined 6.3 million and handed a 2 years sentence (followed by two additional years of court supervision). The case is U.S. v. Treacy, case number 1:08-cr-00366, in the U.S. District Court for the Southern District of New York.
Looking into this further I found that earlier this year it was announced that Monster had paid more than $50 million dollars in fines and fees regarding this issue. Another former Monster executive paid the company $8 million in restitution.
Just a few days ago Broadcom announced fees and fines of more than $200 million related to backdating. I wonder how many of these stories have been lost in the swirl of other stories. We know that hundreds of companies were investigated or performed preemptive "409A correction" programs related to mis-priced options. We know that many cases are still pending in the courts.
The total cost of backdating in fees, fines, lost opportunity, shareholder losses and more was in the billions of dollars. How could all of us as equity compensation professionals (plan designers, lawyers, administration professionals, Compensation Committee members, auditors, valuation experts etc.) helped to avoid or minimize this issue?
- What were the warning signs that should have thrown red flags?
- How can we apply this knowledge to potential future issues?
- How do we ensure that everyone involved has knowledge, a voice and confidence to use it?
Let's hear from the ECE. Backdating has been lingering for more than 5 years. How do we avoid the next problem that cause years of angst and effort?
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Quest Investors Win Class Cert. In Backdating Suit
Law360,
New York (September 09, 2009) -- A federal judge has granted class
certification to a group of Quest Software Inc. stockholders alleging
that a stock options backdating scheme led investors to purchase
company stock at artificially inflated prices.
In addition to the legal liability that backdating causes, it also may create a signifcant burden for the acoounting/operations support team. This is due to the potential for creating multiple grant dates (and valuations) where otherwise there would have been one grant date and one valuation.