NEW YORK (AP) — The scandal over backdating stock options spread to yet another executive as the former chief 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 Mr. McKelvey’s resignation yesterday. A board committee conducting an internal investigation had sought to interview him further after 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.
Mr. McKelvey, 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 or board of director members at 19 companies have been fired or resigned.
Mr. McKelvey’s full resignation from the board comes weeks after he stepped down from the posts of chairman and chief executive officer 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 CEO William McGuire, KLA-Tencor Chairman Kenneth Levy, CNET CEO Shelby Bonnie and McAfee CEO George Samenuk. Mr. 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 yesterday that he expected more such charges in coming days.
“This is very, very serious,” said Jerry Reisman, an attorney specializing in corporate fraud at the firm Reisman Peirez & Reisman. About Mr. 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 yesterday disclosing that, through a lawyer, Mr. McKelvey declined to be interviewed by a special committee of the board in a meeting that had been set for yesterday. He also would not assure the board that he would appear at a later date.
A lawyer for Mr. 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 Mr. McKelvey gave in a July meeting, arguing that Mr. McKelvey did not know backdating was illegal.
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