8-KOther Events

Monster Beverage Corp 8-K Report, Corporate Update (Nov 14, 2006)

Filed November 14, 2006For Securities:MNST

Summary

This 8-K filing by Hansen Natural Corporation (now Monster Beverage Corp) on November 14, 2006, reports the filing of a shareholder derivative lawsuit. The lawsuit was filed in California Superior Courts on November 7th and 8th, 2006, by a shareholder, Patrick Chandler, on behalf of the company. The suit names several officers and directors as defendants and alleges breaches of fiduciary duties, gross mismanagement, and other violations of state law. The core of the complaint centers on allegations of stock option backdating. The plaintiff claims that company insiders manipulated option grant dates to maximize personal profits without recording the appropriate compensation expense. This allegedly led to the filing of materially false and misleading financial statements, understating compensation expenses and overstating net income and earnings per share. The suit also claims that company disclosures falsely represented option grants as having exercise prices equal to the fair market value on the grant date.

Key Highlights

  • 1Shareholder derivative lawsuit filed against Hansen Natural Corporation officers and directors.
  • 2Lawsuit alleges stock option backdating to maximize insider profits.
  • 3Claims of materially false and misleading financial statements and disclosures.
  • 4Allegations include breaches of fiduciary duties, gross mismanagement, and waste of corporate assets.
  • 5The company denies the allegations and intends to vigorously defend itself.
  • 6The lawsuit seeks damages, corporate governance reforms, and restitution on behalf of the company.

Frequently Asked Questions

The main issue is the filing of a shareholder derivative lawsuit against certain officers and directors of Hansen Natural Corporation (now Monster Beverage Corp). The lawsuit alleges widespread stock option backdating, which resulted in the company allegedly filing false financial statements.

The lawsuit alleges that defendants manipulated stock option grant dates to benefit insiders, failed to record material compensation expenses, filed materially false and misleading financial statements that overstated income and earnings per share, and made inaccurate disclosures regarding option grants.

Hansen Natural Corporation believes the complaint is without merit and intends to vigorously defend itself against the lawsuit.

A derivative lawsuit is a legal action brought by a shareholder on behalf of a corporation. The lawsuit alleges that the company's management or board of directors has harmed the company, and the shareholder seeks to recover damages or enact reforms for the benefit of the corporation itself.