Is backdating stock options ethical error validating dyndns svr answer
The backdating companies broke this rule: they reported how many options they were issuing, but conveniently omitted the fact that they had been backdated. The bigger reason for choosing to backdate is to get around some bothersome accounting regulations.In Washington, people say that it’s not the crime that gets you—it’s the coverup. [C]ompanies didn’t need backdating to lavish huge sums of money on their executives: they could have issued more at-the-money options to make up the difference, or they could have just handed out grants of stock. Until recently, the regulations distinguished, for no good reason, between in-the-money and at-the-money options.
Never, you might say, have so many cheated so much to gain so little.
The Dating Game, by James Surowiechi, The New Yorker: ..
When news broke, earlier this year, that some companies had backdated stock-option grants ...
In testimony before a Senate Committee on Banking, Housing, and Urban Affairs on Wednesday, regulators, an academic, and private sector representatives roundly condemned backdating, the practice of adjusting stock option grant dates to an earlier time than they were actually granted in order to provide a windfall to the new option holder.
But spring-loading, which was also discussed during the hearing, received more mixed comments, underscoring general disagreement among regulators and in the marketplace over whether the practice is, in fact, illegal — or even unethical.