Wall street journal options backdating

Posted by / 22-Aug-2017 11:38

Wall street journal options backdating

Volatility is especially significant: 29% of companies with high volatility appear to have manipulated grant dates, compared to 13% of those with low volatility.

New rules under the Sarbanes-Oxley Act have reduced the practice to 10% of the companies granting options.

The auditors who failed to notice or to stop these potential violations may be equally culpable.

A number of chief executives already have been forced out or have resigned over the backdating issue.

(The administrative problem could be resolved if more companies would hire people with the right skills for stock plan administration, such as those with certification from the Certified Equity Professional Institute at Santa Clara University.) There are also companies, such as Microsoft, that issued options broadly but were concerned that because of the volatility of their stock, an employee who joined the company on one day might get an option grant at a price very different from one who joined a few days earlier or later.

Dozens of companies – including United Health Group, Comverse Technology, Vitesse Semiconductor and Affiliated Computer Services – have caught the eye of the Securities and Exchange Commission and the Department of Justice for the timing of their stock option grants.

The question: did these companies backdate options grants – and falsify records – to make them more lucrative for their top employees?

But if the grant date was a month earlier and the stock then was at, say , the options would bring in an extra

(The administrative problem could be resolved if more companies would hire people with the right skills for stock plan administration, such as those with certification from the Certified Equity Professional Institute at Santa Clara University.) There are also companies, such as Microsoft, that issued options broadly but were concerned that because of the volatility of their stock, an employee who joined the company on one day might get an option grant at a price very different from one who joined a few days earlier or later.

Dozens of companies – including United Health Group, Comverse Technology, Vitesse Semiconductor and Affiliated Computer Services – have caught the eye of the Securities and Exchange Commission and the Department of Justice for the timing of their stock option grants.

The question: did these companies backdate options grants – and falsify records – to make them more lucrative for their top employees?

But if the grant date was a month earlier and the stock then was at, say $20, the options would bring in an extra $1 million."Such backdating is not necessarily illegal.

But it could lead to a false disclosure, which may, in turn, violate federal securities laws.

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(The administrative problem could be resolved if more companies would hire people with the right skills for stock plan administration, such as those with certification from the Certified Equity Professional Institute at Santa Clara University.) There are also companies, such as Microsoft, that issued options broadly but were concerned that because of the volatility of their stock, an employee who joined the company on one day might get an option grant at a price very different from one who joined a few days earlier or later.Dozens of companies – including United Health Group, Comverse Technology, Vitesse Semiconductor and Affiliated Computer Services – have caught the eye of the Securities and Exchange Commission and the Department of Justice for the timing of their stock option grants.The question: did these companies backdate options grants – and falsify records – to make them more lucrative for their top employees?But if the grant date was a month earlier and the stock then was at, say $20, the options would bring in an extra $1 million."Such backdating is not necessarily illegal.But it could lead to a false disclosure, which may, in turn, violate federal securities laws.

million."Such backdating is not necessarily illegal.

But it could lead to a false disclosure, which may, in turn, violate federal securities laws.

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That exercise price, or strike price, usually takes one of three forms: the closing price on the day of the grant; an average of the highs and lows of the day; or the closing price from the previous day.

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