Most shareholder approved option plans prohibit in-the-money option grants (and thus, backdating to create in-the-money grants) by requiring that option exercise prices must be no less than the fair market value of the stock on the date when the grant decision is made.
In the worst cases of options backdating abuse, the stock exchange on which the offending company's stock trades and/or regulatory bodies such as the securities and exchange commission (sec) or.
Former executives of comverse technology, inc charged with backdating millions of stock options and creating a secret stock options slush fund, press release of the united states attorney's office, eastern district of new york, august 9, 2006. Options backdating is the practice of altering the date a stock option was granted, to a usually earlier (but sometimes later) date at which the underlying stock price was lower this is a way of repricing options to make them valuable or more valuable when the option strike price (the fixed price at which the owner of the option can.
With apple facing a federal investigation into its stock option backdating practices, we look at what the rules are, what regulators are looking at, and what's next for the company. Stock options are promoted by their supporters as the most effective way to align executive and employee interests with those of shareholders they are supposed to transform executives from fly-by.
Q: what is stock option backdating backdating, which refers to the practice of altering the dates of grants, is a way for employees of a company to make additional money from stock options.
By overlaying the option grant dates onto a historical stock price chart, one can easily see if options were granted at historically low prices, raising possible backdating concerns. Before the clamor about the lack of prosecutions from the financial crisis and the current crackdown on insider trading, the practice of backdating stock options came to light seven years ago and prompted a flurry of prosecutions.