Summary
This 8-K filing from Hansen Natural Corporation (now Monster Beverage Corp.) addresses the completion of an independent investigation into the company's stock option grant practices and procedures. The investigation, conducted by a Special Committee of the Board of Directors with independent legal counsel and forensic accountants, covered stock option grants from January 1, 2001, to November 13, 2006. The findings indicate no willful or intentional misconduct related to the granting, dating, or accounting of stock options, and that the late filing of certain Form 4 reports did not stem from backdating. While the investigation found no issues with management's integrity and noted cooperative personnel, it did identify significant weaknesses. These include inadequate internal accounting controls concerning the stock option grant process, deficiencies in documenting approval of grants, and errors or potential errors in accounting for certain options. The company and its auditors are assessing whether financial statement adjustments or restatements are necessary. New procedures implemented in January 2007 are considered "best practices," and the Board has adopted further remedial measures recommended by the Special Committee to address the identified control deficiencies.
Key Highlights
- 1Independent investigation into stock option grant practices is substantially complete.
- 2No evidence of willful or intentional misconduct in granting, dating, or accounting for stock options found.
- 3Late filing of Form 4 reports did not indicate backdating of options.
- 4Investigation found inadequate internal accounting controls and documentation deficiencies in the stock option process.
- 5Errors and potential errors in accounting for certain stock options were identified.
- 6New written option grant procedures adopted January 1, 2007, are considered "best practices."
- 7Company is working to file delinquent reports and potential restatements to maintain Nasdaq listing.