Dating of stock option

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.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.If the exercise price were

He added that he couldn’t remember a time when the board didn’t follow his advice.”So both the CEO and compensation committee are clearly in favor of giving Stryker shareholders as little cash as possible for each option granted to the CEO.Lillard, the former member of Stryker’s stock option committee. 11 and say, ‘Gee, how can we take advantage of this? Brown said that for the past 10-12 years, the company, to compensate for a relatively small number of options given to executives, has tried to ‘pick what we think would be the low point of the year.That’s what we’re gunning for.’“Stryker’s option grant came on the lowest closing stock price for the second half of the calendar year. Brown said he believes that he called both members of the stock option committee on Sept.But long-term executive/shareholder interest alignment gets thrown out the window when unforeseen circumstances cause a temporary crash in a company’s stock.Executives can profit quickly at shareholders’ expense in such instances.

, then options would be nothing more than free stock grants, and treated as such in the eyes of recipients.But the great majority of public companies issue options with an exercise price equal to the market price at the date of grant.Instead of using excess cash to buy back stock at a short-term discount, a long list of blue chip companies used the post-Sept. A recent Wall Street Journal article entitled “Executive Pay: The 9/11 Factor,” describes the sequence of events (my emphases):“A Wall Street Journal analysis shows how some companies rushed, amid the post-9/11 stock market decline, to give executives especially valuable options.

He added that he couldn’t remember a time when the board didn’t follow his advice.”So both the CEO and compensation committee are clearly in favor of giving Stryker shareholders as little cash as possible for each option granted to the CEO.Lillard, the former member of Stryker’s stock option committee. 11 and say, ‘Gee, how can we take advantage of this? Brown said that for the past 10-12 years, the company, to compensate for a relatively small number of options given to executives, has tried to ‘pick what we think would be the low point of the year.That’s what we’re gunning for.’“Stryker’s option grant came on the lowest closing stock price for the second half of the calendar year. Brown said he believes that he called both members of the stock option committee on Sept.But long-term executive/shareholder interest alignment gets thrown out the window when unforeseen circumstances cause a temporary crash in a company’s stock.Executives can profit quickly at shareholders’ expense in such instances.

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Lie and Randall Heron of Indiana University’s business school, examined almost 40,000 grants during that period.

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