Ex-Monster Worldwide CEO Leaves Board
Monday, October 30, 2006; 5:38 PM
NEW YORK -- The scandal over stock options backdating spread to yet another executive as the former chief executive of Monster Worldwide Inc., Andrew J. McKelvey, quit his board seat and refused to sit for questions from fellow board members.
Monster Worldwide, parent of the world's largest job search Web site, announced McKelvey's resignation on Monday. A board committee conducting an internal investigation had sought to interview him further following a meeting in July. Monster has received a subpoena from the U.S. attorney's office in the Southern District of New York over stock options and has said it wants to complete its own investigation by the end of the year.
McKelvey, who is 71, is the latest company chief to be affected by investigations of the accounting of past options grants. In all, at least 135 U.S. companies have disclosed internal inquiries or government investigations and at least 39 executives and board directors at 19 companies have been fired or resigned.
McKelvey's full resignation from the board comes weeks after he stepped down from the posts of chairman and chief executive on Oct. 9. At that time, he retained a spot on the board and was named as a chairman emeritus.
Top executives who have recently resigned from other companies over options investigations include: UnitedHealth Group Inc. Chief Executive William McGuire, KLA-Tencor Corp. Chairman Kenneth Levy, CNET Networks Inc. Chief Executive Shelby Bonnie and McAfee Inc. CEO George Samenuk. McGuire quit as chairman earlier this month and will resign as CEO by Dec. 1.
So far, federal authorities have filed charges against former officials of two technology companies. And Securities and Exchange Commission Chairman Christopher Cox said on Monday that he expected more such charges in the coming days.
"This is very, very serious," said Jerry Reisman, an attorney specializing in corporate fraud at the firm Reisman Peirez & Reisman. About McKelvey, he said, "He doesn't want to answer questions because anything he says can be used against him in any criminal investigation. He may already be a target, we don't know."
Backdating involves issuing stock options retroactively to coincide with low points in a company's share price, potentially increasing profits for recipients when they sell their shares at higher prices.
Monster issued a statement Monday disclosing that, through a lawyer, McKelvey declined to be interviewed by a special committee of the board in a meeting that had been set for Monday. He also would not assure the board that he would appear at a later date.
A lawyer for McKelvey wrote in a letter that the former executive refused to meet because he did not have sufficient time to review the facts of what had happened over the course of several years. Attorney Steven Reich also clarified answers McKelvey gave in a July meeting, arguing that McKelvey did not know backdating was illegal.
"He did not understand that it was improper for the exercise price of stock to be different than the price on the grant dates, nor did he understand there were legal or accounting implications associated with that difference," Reich wrote in the letter.
The company's ongoing internal investigation had also delayed the release of its latest quarterly earnings results and led to the suspension of Myron Olesnyckyj, the company's senior vice president, general counsel and secretary.
When McKelvey resigned as CEO, he was replaced by William Pastore. Monster's board also created a three-person executive committee for board matters.
Shares of Monster Worldwide rose $1.03, or 2.56 percent, to close at $41.32 on the Nasdaq Stock Market.