Options backdating wikipedia

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It would only mean that it would not qualify for the favorable tax statutes carved out to encourage employee stock options like SARs or Stock Appreciation Right and ISOs or incentive stock options.

Also since the Enron scandal, Congress enacted Section 409A of the Internal Revenue Code to deal with such non-qualified deferred compensation.

If not for that rule, executives could still be hiding backdating options from shareholders.

Even after the rule, some executives got away with it for years because they could legally delay reporting option grants for so long that it was virtually impossible to figure out whether any individual grant had been backdated.

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When done intentionally, the practice is equivalent to giving cash to the grantee at the expense of shareholders.Most of the legal issues arising from backdating are a result of the grantor falsifying documents submitted to investors and regulators in an effort to conceal the backdating.This practice is a hot-button issue with investors all over the world and is currently being investigated/debated by the United States Securities and Exchange Commission.Companies would simply wait for a period in which the company's stock price fell to a low and then moved higher within a two-month period.The company would then grant the option but date it at or near its lowest point.

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