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Review of Hain Celestial historical equity granting process
01 Feb '08
4 min read
The investigation also included a review of the Company's accounting policies, accounting records, supporting documentation, email communications and other documentation, as well as interviews with a number of current and former directors, officers and employees.
Based on this review, the Company has determined that additional pre-tax, non-cash charges for stock-based compensation expense aggregating $16.9 million ($11.7 million after taxes) over the 12-year period from 1994 through 2005 should be recognized.
The Company has determined that, based on revised measurement dates for certain stock options, the pre-tax, non-cash charges for stock-based compensation expense aggregated $20.5 million, before the reversal of a 2005 stock option vesting acceleration charge of $3.6 million recorded in 2005.
The Company granted options to purchase approximately 12 million shares to more than 1,200 employees and directors on 125 separate grant dates during the period reviewed. The grants included (1) broad-based grants to large numbers of Hain Celestial employees, (2) new hire/promotion grants, (3) grants to senior executives and (4) director grants.
On January 29, 2008, the Independent Directors reported to the Board their final findings. The Independent Directors indicated that they and their advisors received the Company's full cooperation throughout the review.
As described in more detail below, the review of the Company's stock option grants and procedures identified various deficiencies in the process of granting and documenting stock options.
The stock option granting process was informal and inadequately documented throughout much of the period under review. In addition, for many grants there were insufficient or incomplete approvals and inadequate or incomplete establishment of the terms of the grants, including the list of individual recipients.
Revision of Measurement Dates as a Result of the Review: As a result of the deficiencies, the Independent Directors recommended, among other things, that the Company revise the accounting measurement dates for 48 dates where the market price of the Company's stock on the revised dates was higher than on the measurement dates previously used by the Company. A number of these revised measurement dates impacted stock option grants made to senior management and directors of the Company.
Based on this review, the Company has determined that additional pre-tax, non-cash charges for stock-based compensation expense aggregating $16.9 million ($11.7 million after taxes) over the 12-year period from 1994 through 2005 should be recognized.
The Company has determined that, based on revised measurement dates for certain stock options, the pre-tax, non-cash charges for stock-based compensation expense aggregated $20.5 million, before the reversal of a 2005 stock option vesting acceleration charge of $3.6 million recorded in 2005.
The Company granted options to purchase approximately 12 million shares to more than 1,200 employees and directors on 125 separate grant dates during the period reviewed. The grants included (1) broad-based grants to large numbers of Hain Celestial employees, (2) new hire/promotion grants, (3) grants to senior executives and (4) director grants.
On January 29, 2008, the Independent Directors reported to the Board their final findings. The Independent Directors indicated that they and their advisors received the Company's full cooperation throughout the review.
As described in more detail below, the review of the Company's stock option grants and procedures identified various deficiencies in the process of granting and documenting stock options.
The stock option granting process was informal and inadequately documented throughout much of the period under review. In addition, for many grants there were insufficient or incomplete approvals and inadequate or incomplete establishment of the terms of the grants, including the list of individual recipients.
Revision of Measurement Dates as a Result of the Review: As a result of the deficiencies, the Independent Directors recommended, among other things, that the Company revise the accounting measurement dates for 48 dates where the market price of the Company's stock on the revised dates was higher than on the measurement dates previously used by the Company. A number of these revised measurement dates impacted stock option grants made to senior management and directors of the Company.
The Hain Celestial Group Inc
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