Acs backdating

Suppose an executive gets 100,000 options on a day when the stock is at .

acs backdating-83acs backdating-70

His profit on those, if he exercised them today, would be about 7 million more.But if the grant date was a month earlier and the stock then was at, say, , the options would bring in an extra

His profit on those, if he exercised them today, would be about $717 million more.

But if the grant date was a month earlier and the stock then was at, say, $20, the options would bring in an extra $1 million.

A key purpose of stock options is to give recipients an incentive to improve their employer's performance, including its stock price. Backdating them so they carry a lower price would run counter to this goal, by giving the recipient a paper gain right from the start.

It identified several companies with wildly improbable option-grant patterns.

While this doesn't prove chicanery, it shows something very odd: Year after year, some companies' top executives received options on unusually propitious dates.

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His profit on those, if he exercised them today, would be about $717 million more.But if the grant date was a month earlier and the stock then was at, say, $20, the options would bring in an extra $1 million.A key purpose of stock options is to give recipients an incentive to improve their employer's performance, including its stock price. Backdating them so they carry a lower price would run counter to this goal, by giving the recipient a paper gain right from the start.It identified several companies with wildly improbable option-grant patterns.While this doesn't prove chicanery, it shows something very odd: Year after year, some companies' top executives received options on unusually propitious dates.In all, the odds of such a favorable pattern occurring by chance would be one in 200 million or greater.Odds such as those are "astronomical," said David Yermack, an associate professor of finance at New York University, who reviewed the Journal's methodology and has studied options-timing issues.The 1999 grant was dated the very day United Health stock hit its low for the year. Mc Guire in 19 were also dated on the day with those years' single lowest closing price.A grant in 2001 came near the bottom of a sharp stock dip.That's because companies grant their options under a shareholder-approved "option plan" on file with the SEC.The plans typically say options will carry the stock price of the day the company awards them or the day before.

million.A key purpose of stock options is to give recipients an incentive to improve their employer's performance, including its stock price. Backdating them so they carry a lower price would run counter to this goal, by giving the recipient a paper gain right from the start.It identified several companies with wildly improbable option-grant patterns.While this doesn't prove chicanery, it shows something very odd: Year after year, some companies' top executives received options on unusually propitious dates.In all, the odds of such a favorable pattern occurring by chance would be one in 200 million or greater.Odds such as those are "astronomical," said David Yermack, an associate professor of finance at New York University, who reviewed the Journal's methodology and has studied options-timing issues.The 1999 grant was dated the very day United Health stock hit its low for the year. Mc Guire in 19 were also dated on the day with those years' single lowest closing price.A grant in 2001 came near the bottom of a sharp stock dip.That's because companies grant their options under a shareholder-approved "option plan" on file with the SEC.The plans typically say options will carry the stock price of the day the company awards them or the day before.

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