U.S. News

Monster Says It Overstated '97-'05 Profit


Monster Worldwide said it overstated profit from 1997 to 2005 by a total of $271.9 million, a result of its investigation into historical stock option grants and accounting.

In a filing with the U.S. Securities and Exchange Commission, the parent of job search Web site Monster.com recorded a net charge of $9.2 million for 2005, $14.4 million for 2004, $27 million for 2003, $44.9 million for 2002, $65.6 million for 2001, and $110.8 million for the cumulative period of 1997 through 2000.

New York-based Monster, whose chief executive resigned in October during the stock option scandal, said the investigation is substantially complete but that the special committee will continue to analyze facts to make remedial recommendations to the board. It expects to make the recommendations in the first quarter of 2007.

Monster said in June it was subpoenaed by the U.S. Attorney for the Southern District of New York and that it had a committee of independent directors to analyze its stock options practices.

It is part of the widespread investigation into stock option backdating, which discovered that more than 160 companies may have fraudulently manipulated stock option grant and exercise dates to maximize the value of the options while lowering the tax burden.

Monster said in its amended annual report on Wednesday that its special committee determined that the exercise price of a "substantial number" of stock option grants from 1997 through March 31, 2003, different from the fair market value of the underlying shares on the grant date.

In October, Andrew McKelvey resigned from his positions of CEO and chairman at Monster, and later refused to be interviewed by the special committee investigating Monster's stock options.

Following McKelvey resignation, the company's internal audit department and outside counsel examined transactions between McKelvey and the company, which required additional disclosure, Monster said. He has reimbursed the company about $533,000, and Monster is seeking additional funds.

As a result of the internal stock option review, the company in November fired Myron Olesnyckyj, the company's general counsel and secretary.