Backdating stock options definition


21-Sep-2017 08:06

This fact is often used as a reason to downplay the seriousness of the issue.You’d think that shareholders wouldn’t tolerate the use of accounting sleight of hand to compensate executives while bypassing the traditional “selling, general, and administrative” line in the income statement.Corporations, however, have defended the practice of stock option backdating with their legal right to issue options that are already in the money as they see fit, as well as the frequent occurrence in which a lengthy approval process is required.In 1972, a new revision (APB 25) in accounting rules resulted in the ability of any company to avoid having to report executive incomes as an expense to their shareholders if the income resulted from an issuance of “at the money” stock options.Mr Stephen , 24 July 2006 (UTC) The external links: "Background on the Options Backdating Scandal, ISS, retrieved 2006-07-24." "CNBC's Closing Bell interview with CFRA's Marc Siegel May 19, 2006, retrieved 2006-12-27" "Ex-Comverse lawyer settles with SEC for million, retrieved 2007-01-10" are broken.

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Since then, laws about backdating have gotten stricter.

But are options really as great for all parties as many have assumed?