(The options would be worthless if the stock fell to, say, .) Think of options as coupons you can sell.

If you have a coupon to buy a Ferrari for 0,000, and the market price of the car is 0,000, your coupon is worth ,000.

the options backdating-80the options backdating-3

Gregory Reyes, Brocade's chief executive until 2005, and Stephanie Jensen, the company's vice president of human resources from 1999 to 2004, are facing civil and criminal charges.

In addition, Antonio Canova, Brocade's former chief financial officer, is facing civil charges. The FBI has not alleged that Reyes backdated stock options for his own financial benefit.

A paper (click for PDF) that Lie and Randall Heron, an associate professor at Indiana University's business school, published on July 14 estimates that 18.9 percent of unscheduled grants to top executives from 1996 through 2005 were backdated or manipulated.

The pair estimates that 29.2 percent of firms manipulated grants to top executives at some point between 19.

Even if grant dates are fixed and happen at the same time every year, there's still room for shenanigans. There's an exception in the tax code, however, for "performance-based compensation," which includes stock options.

Academics have found some evidence that CEOs time the release of negative information to happen just before a scheduled grant date, and release positive information after a scheduled grant date. So companies can save on taxes by handing out lucrative stock options instead of lucrative salaries.

Any of those three categories could yield civil (and perhaps criminal) legal action. Second, do the backdated options constitute "nonqualified deferred compensation," in which case the companies may be liable for excise taxes? If they had stock options that were backdated and not disclosed, that essentially provides executives (or other employees, but typically executives) with extra compensation.

Q: What kind of legal charges could companies face? But in general, backdating a stock option (without communicating this to shareholders) could run afoul of tax laws, securities regulations and laws prohibiting fraud. That's an expense that must be disclosed to shareholders.

Then, after the announcement boosts the share price to , each option would be worth . "Then you have both insider trading and you have an accounting issue," Ryan said.

"An old-fashioned cooking-the-books fraud." Q: Would fixing executives' grant date to, say, July 1 every year fix things? tax code limits companies' ability to deduct pay for certain executives if the amount exceeds

Academics have found some evidence that CEOs time the release of negative information to happen just before a scheduled grant date, and release positive information after a scheduled grant date. So companies can save on taxes by handing out lucrative stock options instead of lucrative salaries.Any of those three categories could yield civil (and perhaps criminal) legal action. Second, do the backdated options constitute "nonqualified deferred compensation," in which case the companies may be liable for excise taxes? If they had stock options that were backdated and not disclosed, that essentially provides executives (or other employees, but typically executives) with extra compensation.Q: What kind of legal charges could companies face? But in general, backdating a stock option (without communicating this to shareholders) could run afoul of tax laws, securities regulations and laws prohibiting fraud. That's an expense that must be disclosed to shareholders.Then, after the announcement boosts the share price to $25, each option would be worth $5. "Then you have both insider trading and you have an accounting issue," Ryan said."An old-fashioned cooking-the-books fraud." Q: Would fixing executives' grant date to, say, July 1 every year fix things? tax code limits companies' ability to deduct pay for certain executives if the amount exceeds $1 million a year.You can check or update your payment details by logging in to your account.

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Academics have found some evidence that CEOs time the release of negative information to happen just before a scheduled grant date, and release positive information after a scheduled grant date. So companies can save on taxes by handing out lucrative stock options instead of lucrative salaries.

Any of those three categories could yield civil (and perhaps criminal) legal action. Second, do the backdated options constitute "nonqualified deferred compensation," in which case the companies may be liable for excise taxes? If they had stock options that were backdated and not disclosed, that essentially provides executives (or other employees, but typically executives) with extra compensation.

Q: What kind of legal charges could companies face? But in general, backdating a stock option (without communicating this to shareholders) could run afoul of tax laws, securities regulations and laws prohibiting fraud. That's an expense that must be disclosed to shareholders.

Then, after the announcement boosts the share price to $25, each option would be worth $5. "Then you have both insider trading and you have an accounting issue," Ryan said.

"An old-fashioned cooking-the-books fraud." Q: Would fixing executives' grant date to, say, July 1 every year fix things? tax code limits companies' ability to deduct pay for certain executives if the amount exceeds $1 million a year.

You can check or update your payment details by logging in to your account.

||

Academics have found some evidence that CEOs time the release of negative information to happen just before a scheduled grant date, and release positive information after a scheduled grant date. So companies can save on taxes by handing out lucrative stock options instead of lucrative salaries.

Any of those three categories could yield civil (and perhaps criminal) legal action. Second, do the backdated options constitute "nonqualified deferred compensation," in which case the companies may be liable for excise taxes? If they had stock options that were backdated and not disclosed, that essentially provides executives (or other employees, but typically executives) with extra compensation.

Q: What kind of legal charges could companies face? But in general, backdating a stock option (without communicating this to shareholders) could run afoul of tax laws, securities regulations and laws prohibiting fraud. That's an expense that must be disclosed to shareholders.

Then, after the announcement boosts the share price to $25, each option would be worth $5. "Then you have both insider trading and you have an accounting issue," Ryan said.

million a year.

You can check or update your payment details by logging in to your account.