Nejat Seyhun of the University of Michigan for the newspaper showed that that options granting practices between 20 often failed to comply with the Sarbanes-Oxley requirement that grants of awards to executives be reported within two days of board approval (T"he Dating Game: Do Managers Designate Option Grant Dates to Increase Their Compensation? Prior research at Erik Lie at the University of Iowa found a pattern of probable options backdating in a number of companies prior to 2002.
Recording the exercise as having occurred on an earlier date when the stock price was lower would minimize the executive's income tax liability, but constitutes tax fraud.
Some of the companies that get entangled in this may have been making honest mistakes, recording dates that were off by a few days because of inadequate administrative procedures.
Exercising them after it has reached would bring a profit of times 100,000, or million.
All six of his option grants between 19 were dated prior to a rise in stock price.
The odds of this happening are about one in 300 billion.
Or did a lot of CEOs just have amazingly good luck?
A stock option gives the recipient the right to purchase stock at a set price.