Monster, Apollo Group Join Companies Investigating Stock Options

June 12, 2006 ( - Monster Worldwide and Apollo Group have announced internal investigations into their stock option grant practices.

Monster Worldwide, said that a committee of independent directors of the company is conducting its investigation, according to a company announcement. The company, which operates job search site, indicated in its securities filings that its compensation committee made seven options grants between 1997 and 2001 to executive James Treacy, according to the Wall Street Journal. The committee granted Treacy options on the stock’s lowest closing price in 1997, and he and other senior executives received grants three other times on the days of the lowest prices of their quarters.

Treacy denied to the Wall Street Journal that he had any say in when the options were granted. Monster founder and chief executive Andrew McKelvey, who never received options, told the newspaper that the company is reviewing its finances to pinpoint why executives received grants for options priced at low points in the year or quarter.

Other companies such as crafts retail chain Michael’s Stores and UnitedHealth Group, to name a few, are also conducting investigations into their companies’ finances and stock options practices (See Michael’s Is Re-examining Past Stock Options Grants and UnitedHealth Under Fire for Stock Options ).

McKelvey accounted for the status of the options for several steps of the process – he made a list of executives and employees to receive options and sent the list to the committee to be approved, but he said that is all he knows about how the committee decided what to do with the options.

Appollo Group said an outside firm will be investigating its grant practices. At Apollo Group, a for-profit education company that runs the University of Phoenix, John Sperling, Apollo’s founder and acting chairman, received five options – one at 2000’s lowest price and several others at quarter lows – between 1995 and 2001.

The company may have been basing its option grants on events in the media that could cause a dip or increase in the market, a practice called “news timing.”

The market has responded adversely to this scandal. An analyst deemed Apollo’s options timing practices as “highly questionable,” and Apollo shares have fallen 3.1% since late last week.

A Justice Department official is testifying at a Senate Finance Committee meeting tomorrow about the legal issues of options backdating and the status of federal investigations into backdating, the WSJ reported.