Options backdating law
SEC Chairman Christopher Cox recently stated that the proposed SEC rules on disclosure of executive compensation will “almost certainly address options backdating explicitly.” I. Companies have considerable discretion in determining the timing of stock option awards.Most employee stock options are, or purport to be, granted “at-the-money,” meaning that the exercise price of the option equals the market price of the underlying stock on the date of the grant.It could also lead to delays in filing financial statements while the magnitude of the problem is determined.Adverse tax consequences may result from option backdating practices.Two grandfather clocks stood in opposite corners, each telling a different time.In a few, spare stokes, Larkin not only vividly describes a specific place, she also manages to evoke an entire country where time is out of place and that is haunted by fading memories.In its most basic form, backdating can range from the blatant falsification of a document to take advantage of a lower stock price to allowing executives to select a grant date during a specified period, for example during the 30 days after the grant is approved by the board or committee.
The SEC’s Enforcement Division and the offices of the United States Attorney are investigating the option granting practices of dozens of companies and actions taken by their executives.
Grants to new employees based on inaccurate employment commencement dates are troublesome.
Options granted as of the commencement of employment based on the market price as of the date of acceptance may be problematic if the plan does not permit below-market grants or the grant is not treated as a discounted option for accounting and tax purposes.
It is the kind of writing Mukasey had in mind when he required his clerks to read Orwell’s essay.
Option backdating scandals: how management accountants can help: backdating of employee stock options can have a significant negative effect on a public company.
When there is a gap between one’s real and one’s declared aims, one turns to long words and exhausted idioms, like a cuttlefish spurting ink." After providing many examples of bad writing, Orwell reduced his principles for clear writing to six rules, which undoubtedly are the reason Mukasey required his law clerks to read the essay. Never use a metaphor, simile, or other figure of speech you are used to seeing in print. As Larkin notes, "Orwell’s description of a horrifying and soulless dystopia paints a chillingly accurate picture of Burma today, a country ruled by one of the world’s most brutal and tenacious dictatorships." Larkin’s book about Burma and what Orwell experienced there is more than just a travelogue of an oppressed country.