Former President and Chief Operating Officer of Monster Worldwide, Inc. Sentenced in Manhattan Federal Court to Two Years in Prison for Backdating Stock Options – 3 September, 2009 – PREET BHARARA, the United States Attorney for the Southern District of New York, announced that JAMES J. TREACY, the former President and Chief Operating Officer of Monster
Worldwide, Inc. (“Monster”), was sentenced today to two years on
securities fraud and conspiracy charges related to the backdating
of millions of dollars’ worth of employee stock option grants.
During his time at Monster, TREACY made more than $2.9 million in
salary and $1.4 million in bonuses. From the illegal backdating
scheme, he personally gained approximately $6.3 million in
illicit profits. In addition to the prison sentence, TREACY was
ordered to pay restitution in the amount of $6,332,995 and
ordered to forfeit $6,332,995.

TREACY was sentenced in Manhattan federal court by
United States District Judge JED S. RAKOFF. In sentencing
TREACY, Judge RAKOFF stated that Treacy “engaged in blatant
misconduct to line his own pockets and the pockets of others over
a period of years” and that “people making more money than the
average Joe can imagine, who take advantage of their position to
put even more, huge amounts of money into their pockets, cannot
. . . go undeterred.”

In May 2009, a federal jury in Manhattan found TREACY
guilty of one count of securities fraud and one count of
conspiracy to commit securities fraud, to file false statements
with the United States Securities and Exchange Commission
(“SEC”), to make false statements to auditors, and to falsify
books and records.

According to the evidence at trial and statements made
during today’s sentencing proceeding:
The grant of stock options — the right to purchase
company stock at a specific price — is a generally-accepted form
of compensation for corporate employees. If a company issues
stock options that are “in the money,” that is, having an
exercise price lower than the current market value of the stock,
applicable accounting principles require the company to increase
its compensation expenses and therefore reduce its earnings by
the amount that the options are “in the money.”

In an effort to grant “in the money” options without
increasing Monster’s compensation expenses, TREACY and other
senior executives at Monster systematically backdated option
grants between 1997 and 2003 by documenting them as though they
had occurred on earlier dates when Monster’s stock price was at
or near a periodic low point. The resulting backdated options
were thereby “in the money” at the moment they were issued, but
because they appeared to have been issued at the fair market
price on the earlier date that they were supposedly granted, the
need to take a charge against Monster’s earnings was fraudulently

As a result, Monster’s public filings with the SEC
between 1997 and 2005 understated the company’s compensation
expenses by over $300 million. For example, Monster’s Form 10-K
for 2001 reported that Monster’s net income was $69,020,000.
However, in 2006, after Monster correctly recorded the
appropriate compensation expense for the backdated options, its
actual net income for that period dropped to $3,439,000. TREACY
himself, while employed at Monster, received in excess of one
million backdated options (adjusted for a stock split and a spinoff
of a Monster division) on eight different grant dates.
Between December 2005 and April 2006, just before the backdating
scheme was disclosed, TREACY exercised approximately 745,000 of
those options for a total, personal net gain of approximately
$6.3 million.

TREACY and his co-conspirators also made false and
misleading statements about their options-grant practices to
Monster’s outside auditors. For example, TREACY signed
management representation letters in which he falsely represented
that Monster’s financial statements were presented in conformity
with Generally Accepted Accounting Principles and that there had
been no fraud involving management or employees who had
significant roles in internal controls.

TREACY, 51, resides in Glen Rock, New Jersey.
“Today’s sentence brings to justice a corrupt corporate
officer. Despite receiving a veritable king’s ransom in lawful
salary and cash bonuses, James Treacy still cooked the books to
make millions more, illegally,” said United States Attorney PREET
BHARARA. “Frauds perpetrated by corrupt executives not only
mislead shareholders but also degrade the investing public’s
trust in our financial markets.”

Mr. BHARARA praised the investigative work of the
United States Postal Inspection Service and the Criminal
Investigators of the United States Attorney’s Office. He also
thanked the SEC for its assistance in this matter.
This case is being handled by the Office’s Securities
and Commodities Fraud Task Force. Assistant United States
Attorney DEIRDRE A. McEVOY is in charge of the prosecution.

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