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Ex-Monster CEO Settles Options Backdating Case

January 23, 2008
Related Topics: Internet, Miscellaneous Legal Issues, Ethics, Latest News
Former Monster Worldwide Inc. chairman and chief executive Andrew McKelvey, suffering from a life-threatening medical condition, settled charges Wednesday, January 23, concerning his involvement in a multi-year scheme to backdate employee stock options.

Under a settlement with the Securities Exchange Commission, McKelvey, 73, will pay about $276,000 in penalties and be barred from serving as an officer or director of a public company, the SEC said.

The founder of Monster agreed to the settlement without admitting or denying any wrongdoing. Charges alleged that from between 1997 and his departure in 2006, McKelvey and other company officials backdated stock option grants to coincide with the dates of low closing prices of Monster’s common stock.

Their alleged actions caused Monster to misrepresent itself in SEC filings and overstate its aggregate pretax operating income by approximately $339.5 million for fiscal years 1997 to 2005. McKelvey resigned as chairman and CEO of Monster in October 2006.

Separately, McKelvey entered into a deferred prosecution agreement with federal prosecutors and a memorandum of understanding with Monster in their probes of his stock options backdating.

“In light of McKelvey’s terminal medical condition, the government agreed to, and the court approved, a deferral of prosecution,” the U.S. Attorney’s Office for the Southern District of New York said in a press release. Charges against McKelvey will be dismissed after 12 months if he abides by the terms of the agreement, which include a statement accepting his responsibility for his role in the backdating scheme.

McKelvey has also resolved charges brought against him by Monster. He will pay the company $8 million and convert his stock holdings in the company so his voting power will be reduced from about 31 percent to 7 percent. The agreement is subject to court approval.

“This settlement will result in a significant increase in the voice of the company’s other investors, allow our employees to focus on the needs of our customers and is a confirmation of Monster’s commitment to the achievement of world-class corporate governance,” Monster chairman and CEO Sal Iannuzzi said in a statement.

McKelvey launched Monster in 1999 by merging two career Web sites, Monsterboard and Online Career Center, which his recruitment advertising firm, TMP, acquired in 1995.

Filed by Amanda Fung of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail

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