Grant backdating

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These companies met their demands, and were allowed to do so by shareholders who were far too distracted in their quest to find tech companies with the best growth prospects.By the market bottom in 2002-2003, scores of tech companies were left with unhappy employees holding worthless options with triple-digit exercise prices.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.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.

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The stock option “backdating” scandal has implicated several (mostly technology) companies over the past few months.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.But long-term executive/shareholder interest alignment gets thrown out the window when unforeseen circumstances cause a temporary crash in a company’s stock.Executives can profit quickly at shareholders’ expense in such instances.

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