Now that we've seen a number of options-backdating cases go through the courts, we can see how much sentencings vary depending on degree of involvement, and in the case of Monster Worldwide Inc, the health of the executive.
The SEC announced a settled enforcement action against Andrew McKelvey, founder of Monster, for backdating options. The ‘deferred prosecution’ agreement reached by the Federal prosecutors predicates McKelvey will admit to wrongdoing but will neither get put behind bars or have to plead guilty. People informed on the matter say McKelvey isn't well enough to receive civil penalty, or, according to the SEC press release, it’s ‘due to overriding personal circumstances related to McKelvey.’
McKelvey will also disgorge $250,000 as part of a settlement with the SEC.
Though McKelvey wasn’t the one to receive the options, Monster sites that former officials backdated options to increase the value to recipients. Myron Olesnyckyj, former general counsel, plead guilty last year to backdating and cooperated against McKelvey and other previous executives at Monster.
Brocade’s former CEO Gregory Reyes wasn’t so lucky, and has been sentenced to prison. Even though backdating seems to be ever-present in the news, general counsel and corporate secretaries are still experiencing a lot of difficulty deciphering how to prevent further difficulties. For more insight into how to protect against further misdemeanors and what the government is looking for, see Erik Sherman’s article, 'Mining new depths', in the February issue of Corporate Secretary magazine.
Corporate Secretary magazine