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Monster Worldwide Inc. (MNST)
Monster Worldwide Caught in Options Backdating Scandal, Loses 6.47%
Monster.com's parent company has announced it will look into allegations that it has given out options packages backdated previous to upsurges in the company's sharevalue. Monster Worldwide has said it will investigate instances of the increasingly common practice of giving employees the option to buy stock dated back to before there was a high jump in the stock's price. While options are supposed to be used to hedge against price volatility, this practice has been seen by shareholder activists and the SEC as taking things a bit too far. Has the company made a monstrous error in choosing this practice, and will it be able to salvage its share price in the near future?
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Monster Worldwide's share price plunged from 39.54 per share at open to 38.30 in early morning trading as news broke of the practice of providing employees with cushy bonuses through back-dated options packages. According to BusinessWeek, the company announced an internal investigation into the situation after the practices were discussed in Monday's Wall Street Journal.
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Monster is not alone in its date fudging. Recently Michaels Stores (MIK: Charts, News, Offers) and Apollo Group Inc. (APOL: Charts, News, Offers) announced they would review company perks and award programs too. In fact, the SEC has opened inquiries into grant and perks at more than thirty publicly-traded companies. But Monster's case may have set itself in a category of its own from 1997 to 2001 after, according to the Journal, former Monster executive James Treacy received seven separate options grants.
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If all of this is true, Monster will have to try to reaffirm that it is a company owned by shareholders and run for them by VIPs. The company may not be able to keep its share price moving in the right direction if investors believe that the company operates solely for its executives' gains. Will it be able to recover? An internal investigation may be a good start, but if the SEC decides to take punitive action, share price may falter. On the bright side the job market appears to be strong, according to last week's initial claims data. This means that employers may be hungry for employees, which could send revenue in Monster's direction.
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Profile |
The Company operates under three business segments: Monster, Advertising and Communications, and Directional Marketing. The Monster segment provides its clients with one-stop-shopping for their recruitment needs online. The online services include providing free access to national and international job listings. The Advertising and Communications business designs global, national and local recruitment advertising campaigns for clients. The services provided include recruitment advertising, interactive communications, employer branding and employee communications. The Directional Marketing is a yellow pages advertising agency based on annual gross billings. The Company provides its services in North America, Europe and the Asia/Pacific region. On 31-Mar-2003, the Company spinned-off its subsidiary company Hudson Highland Company Inc. In 2004, the Company acquired Jobpilot GmbH from Adecco S A ,Military Advantage Inc. and Tickle Inc.
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