Backdating of executive stock options bellevue dating

Simply put, backdating a stock option grant amounts to ripping off shareholders by shortchanging the company treasury.Shares are issued to option holders at artificially low prices and the company gets an artificially low amount of capital in return for its shares.

This practice requires at least a nominal investment on the part of the option holder if he or she wishes to exercise.

The CEO’s conflict of interest between short-term personal wealth maximization and long-term shareholder interests tends to tilt in the shareholders’ favor.

I recall reading somewhere that the board is supposed to represent shareholders’ interests, not the CEO’s!

I’ll have more to say about this practice using one of the “poster boy” option abuse companies.

Afterward, the number of suspicious grants dropped in half. (BRCM), a communications chip company, stands out as one of the best examples of how an excessive option plan can dilute shareholder interests.

The tech bubble of the late 1990s was a time when top-notch engineers and programmers routinely demanded generous stock option packages as inducement to sign on with public companies.The SEC and other federal authorities are currently investigating more than 50 companies suspected of illegal, undisclosed options backdating practices, and the first criminal charges relating to these practices are expected shortly.The practice of backdating options is not illegal as long as it is disclosed to shareholders.But first, on the same page of the July 15 Wall Street Journal is another article quoting an early whistle-blower in the backdating scandal.He suspects that it will turn out much worse than what has been exposed in the media thus far (emphasis added): “Erik Lie, a University of Iowa business professor whose work helped fuel regulatory inquiries into backdating, is expected to release fresh research this weekend showing anomalies that suggest a huge cohort of companies may have played games with their options grants.But abuse of stock options has been allowed to perpetuate for years.

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