Options backdating which companies are at risk Sex text chat matures
Technically, any options granted today should bear a strike price of .
In a backdated situation, however, the options would be granted today (August 16), but their listed day of granting would be June 1 in order to give the options a lower strike price.
This process makes the granted option in-the-money and of value to the holder.
This process occurred when companies were only required to report the issuance of stock options to the SEC within two months of the grant date.
This adjustment to the filing window came in with the Sarbanes-Oxley legislation.
Do you ever wish that you could turn back the hands of time?
Options backdating occurs when companies grant options to their executives that correspond to a day where there was a significantly lower share price.
It is suspected that these situations are not a coincidence and that the board or executives were granted options based on a past date in order to make these options more profitable.
In essence, the revision enabled companies to increase executive compensation without informing their shareholders if the compensation was in the form of stock options contracts that would only become valuable if the underlying stock price were to increase at a later time.An option's strike price is usually chosen by taking the stock's closing price on the day that the option was granted, calculating an average of the day's high and low prices or by taking the closing price from the previous day's trading.For example, suppose that it is August 16, 2006, and the closing share price of XYZ Corp. On June 1, 2006, XYZ Corp.'s stock price was at a six-month low of .One possible explanation is that everyone in Silicon Valley at the time was so convinced in the potency of options that the possibility of illegality was not even contemplated.After all, the accounting rules did not even count options as a cost of doing business—unless, as it turned out, they were backdated.