A Brief Understanding of Backdating Stock Options

Essay specific features

 

Issue:

Science

 

Written by:

Monte H

 

Date added:

September 12, 2013

 

Level:

University

 

Grade:

B

 

No of pages / words:

1 / 252

 

Was viewed:

7560 times

 

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Essay content:

When options are issued at par value, there is no reporting or tax implications until the options are exercised. Failure to report in-the-money stock options “results in an understatement of compensation expenses and an overstatement of net income. Therefore, option-backdating practices present significant problems for corporate CEOs, CFOs, and their auditors under SOX...
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Therefore, option-backdating practices present significant problems for corporate CEOs, CFOs, and their auditors under SOX.(2)” When this type of practice occurs, analysts and investors are presented with misleading information. Stock options are one way to align employee interests with those of investors; however some people find the practice to be too alluring, and they think stock options should be eliminated...
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