Stock backdating definition
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According to a study by Erik Lie, a finance professor at the University of Iowa, more than 2,000 companies used options backdating in some form to reward their senior executives between 19.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 purchase stock) is fixed to the stock price at the date the option was granted.Milberg, Barroway Topaz and Bernstein Litowitz Jointly Announce $62 Million Settlement in Comverse Technology Stock Option Backdating Derivative Case; $60 million to be paid by former Comverse CEO Kobi Alexander; former general counsel and CFO also contributing, along with auditor Deloitte; additional corporate governance reforms undertaken scandal that not only forced Mc Guire to step down as United Health's CEO, but also served as one of the pivotal cases that thrust backdating into the spotlight as the biggest corporate accounting fiasco since the chicanery of Enron, et al.
Legal niceties color backdating cases; There hasn't been a huge wave of class-action suits triggered by the scores of investigations and allegations of improper stock option backdating.
Setting the date of an employee stock option to an earlier time than when the option was actually granted. Backdating the option is not illegal, but the improper disclosure of the activity to the Securities and Exchange Commission is considered illegal.
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