Backdating stock options spring loading and bullet dodging

That means the company incurs an expense equal to the difference in the share price between the two dates. A double introduction is a first for me — I am very appreciative.In May 2006, the Wall Street Journal published articles that exposed the fact that executive stock options at numerous companies had been backdated or timed to coincide with their lowest annual share price.In some cases, it was estimated the odds that the grants were not manipulated were one in 300 billion. Stock option backdating involves the practice of selecting a date prior to the actual grant date of an option, so that the option exercise price is less than the fair market value on the date the grant actually occurred — the goal being to issue ‘in-the-money’ options that can be exercised for financial gain. Spring loading and bullet dodging refers to a more controversial practice whereby option grants are timed to take place before expected good news or after expected bad news, respectively — to take advantage of the resulting effect on the stock price.

You have assembled an impressive faculty and have set out an ambitious agenda for yourselves for the next two days.We're talking top executives at big-name companies like Apple, Altera, Broadcom, Brocade, Cirrus Logic, Comverse, KLA-Tencor, Maxim, Mc Afee, Rambus, Sanmina-SCI, Take Two, Trident, Verisign, and Vitesse. That's serious fallout considering that options backdating is legit as long as the company reports it and accounts for it accurately.You see, if you backdate stock options to a date when the price of the stock was lower, then the options are "in-the-money" when granted.The scandal has its roots in a 1992 SEC decree that companies list in their annual proxy statements the exact dates that they gave stock options to top executives.The dates had been disclosed before, but only in mailed-in filings that no one ever looked at.

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