Human Capital & Careers

Citing Apparent Backdating, Hain Restates

Some grant dates "appear to have been selected with hindsight," the organic-foods maker acknowledged.
Stephen TaubFebruary 4, 2008

Hain Celestial Group, which will file an earnings release Monday, has restated results for the four years ended 2006 to correct errors linked to accounting for stock-based compensation costs. The company said that it appeared that some backdating of stock options had occurred.

In a release issued last Thursday, the organic-foods maker reported that some “grant dates in earlier periods appear to have been selected with hindsight.” The company also acknowledged that beginning in 2003, it had supplied inadequate documentation supporting the measurement dates for some company-wide annual grants, executive grants, and grants to new employees. About one-third of all options granted by the company from its 2003 initial public offering until 2005 were priced at quarterly or annual lows, the company reported.

Based on a review by independent directors following an informal inquiry by the Securities and Exchange Commission last June, the organic foods maker will take added pre-tax, non-cash charges for $16.9 million ($11.7 million after taxes) for stock-based compensation expense aggregated from 1994 through 2005.

In a 10-K for fiscal year ended June 30, 2007 that it filed on Thursday, the organic foods maker restated its balance sheet as of June 30, 2006 and its operations, stockholders’ equity, and cash-flow statements for 2006 and 2005. The 2007 10-K also restates selected financial data for 2003 through 2006.

Company granted options to purchase approximately 12 million shares to more than 1,200 employees and directors on 125 separate grant dates over the 12-year period reviewed. The grants included broad-based ones to large numbers of Hain employees, new hire or promotion grants, grants to top executives, and director grants.