Definition of option backdating united kingdom men dating
But first, on the same page of the July 15 Wall Street Journal is another article quoting an early whistle-blower in the backdating scandal.He suspects that it will turn out much worse than what has been exposed in the media thus far (emphasis added): “Erik Lie, a University of Iowa business professor whose work helped fuel regulatory inquiries into backdating, is expected to release fresh research this weekend showing anomalies that suggest a huge cohort of companies may have played games with their options grants.In his new research paper, which analyzes options prices and share movements, Dr.Lie estimates that 29% of the nearly 8,000 firms studied had backdated or otherwise manipulated grants to top executives at some point between 1996-2005.“The paper, authored by Dr.I recall reading somewhere that the board is supposed to represent shareholders’ interests, not the CEO’s!I’ll have more to say about this practice using one of the “poster boy” option abuse companies.
It found evidence of manipulation involving 23% of those grants between 1996-2002, when a new rule required executives to report grants within two business days of receiving them — making backdating far more difficult to achieve.
The SEC and other federal authorities are currently investigating more than 50 companies suspected of illegal, undisclosed options backdating practices, and the first criminal charges relating to these practices are expected shortly.
The practice of backdating options is not illegal as long as it is disclosed to shareholders.
Backdating is perpetrated by “cherry-picking,” after the fact, the lowest points the company stock traded throughout the previous year when calculating the exercise price of option grants.
The exercise price of an option is crucial because it is the price the executive or employee option holder must pay to the company when exercising options in return for newly issued shares.