Options backdating

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Options backdating

Awarding employees with stock options those are dated prior to the actual grant date. The date chosen could be one when the company’s stock was at a low, so the options can be in-the-money at the time of granting itself. The practice is illegal if it is not followed by proper disclosure and related expenses are not recorded in financial statements.
References in periodicals archive ?
Teakell delivers proven representation for companies and individuals in a variety of white-collar and other criminal defense matters, including grand jury proceedings and internal investigations involving allegations of fraud, bribery, embezzlement, insider trading, stock option backdating, tax evasion, and public corruption.
Altschuler has successfully litigated cases relating to multi-billion dollar buyouts, investment stakes, tender offers and contests for corporate control, breach of fiduciary duty, financial and accounting fraud, insider trading, requests for company books and records, stock option backdating, as well as many of the largest corporate bankruptcies in history.
In other words, newly granted options induce CEOs to engage in either option backdating or downwards earnings management.
We recently announced a settlement of litigation over stock option backdating that had cost the company hundreds of millions of dollars.
Enron Corporation, Parmalat SpA, Larry Ellison, stock option backdating, earnings management, Guam (I testified at a trial there for six weeks).
LexisNexis unit Mealey's (New York) has released "Mealey's Litigation Update: Stock Option Backdating," an executive summary that includes a collection of 57 case summaries and litigation updates reporting on complaints, motions, briefs, other pleadings, settlements and rulings involving stock options backdating litigation.
He stepped down as chairman and CEO in late 2006, the most prominent casualty in a stock option backdating scandal that has hit dozens of companies.
The most recent scandals associated with option backdating, the 2005 adoption by the Financial Accounting Standards Board (FASB) of Financial Accounting Standard No.
Stock option backdating can also have significant tax consequences for the company and option recipient.
Most option backdating probably falls into this category.