Legal issues with backdating stock options nymfomane dating
That concealed the additional executive pay and overstated financial results.Companies collectively took about .1 billion in restatement charges to earnings from the scandals, according to the analysis.The article concludes by presenting the potential financial implications of backdating for investors. Because of accounting treatment differences between in-the-money and at-themoney option grants, backdating resulted in materially understated employee compensation expenses and overstated operating income and company performance.
Because prosecutors view Brocade as a litmus test for future backdating litigation, this article begins by examining the Brocade case's legal complexities and the severe consequences of backdating stock options.
The fixed price at which an employee can purchase stock is supposed to be whatever the selling price was on the day that the option was made available to them.
However, some companies manipulated this data by creating documentation to make it look as though the option was granted on a day when the price was very low.
By providing large profits for its employees through stock options, a company can lure qualified individuals to come work for them, and make sure that they have incentive to stay with the company and not go to work for a competitor.
By backdating stock options, that employee's profits are even larger, providing even more incentive for the employee to work hard and stay with the company.