What is backdating stock options

Posted by / 04-May-2019 14:53

What is backdating stock options

At the end of the day, Jobs dodged a bullet because of 1) his value to Apple's shareholders, 2) his value to the U. economy, and 3) just plain luck that neither Apple's board nor the SEC found a smoking gun to force them to do something they didn't want to do.grants to one that is earlier than the actual grant date in order to place a lower exercise price on the options and thus enhance the potential profits from the exercise of those stock options.The board formally grants the stock options to John every year at its January board meeting.

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.Anderson got nailed because, according to the complaint, he should have noticed what Heinen was doing and either stopped it or reported the expense properly.He also exercised and sold 750,000 back-dated shares.Anderson had already retired in 2004 so, except for giving up some money and his board seat, he got off relatively easy, compared to Heinen.As for Jobs, a report from Apple's internal investigation indicated that, while he was indeed aware of the options backdating, "he did not financially benefit from these grants or appreciate the accounting implications." In addition to vindicating Jobs, that same report fingered Heinen and Anderson.

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Of course, they may have actually been pushed on their swords by their boards, but let? In the case of Apple, not only did the board send two sacrificial lambs to slaughter, but the feds hung some pretty hefty charges on their necks to boot. VP, General Counsel, and Secretary Nancy Heinen, and former CFO and director Fred D. The SEC's complaintfocuses on the backdating of two large option grants, one of 4.8 million shares for Apple's executive team and the other of 7.5 million shares for Steve Jobs.

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