When is options backdating legal Virtual xxx chat game


04-Aug-2016 06:09

It was the pseudo-scandal launched by the Wall Street Journal's investigative unit, after its reporters began following up on an academic report that demonstrated many executive stock options awards were too well-timed to be plausible.

The basic idea was that many companies seemed to award stock options on days when their stocks were at low-points, which increased the value of the options when the stock increased and made the stock cheaper to buy for the executives.

No one's pay was "inflated" by backdating, unless you assume that the alternative would have been awarding executives exactly the same number of options at less-advantageous prices.

Which, of course, you shouldn't assume since any sensible employee can see that if his each stock option is worth less, he should get more of them.

Also assume that the company's chief executive officer (CEO) is given a 4-year option grant covering the period from January 1, 2012, to January 1, 2016, and that on January 1, 2012, the stock was selling for per share.

"Backdating" the option grant by 2 years in this instance allows the CEO to purchase the stock at , rather than at the current per share price, thereby locking in an automatic profit.

The board of directors of an issuer is responsible for ensuring that the issuer prices options appropriately and discloses them properly.

The following guidance may reduce concerns about the timing of option grants and the risk of non-compliance with securities legislation: • establish a compensation committee that follows the guidance contained in National Policy 58-201 - Corporate Governance Guidelines; • consider the guidance in National Policy 51-201 -- Disclosure Standards including adopting a corporate disclosure policy, adopting an insider trading policy, and establishing "blackout periods" around earnings announcements; and • ensure that, following a grant of options to insiders, the issuer provides them with details of their grants so that they can comply with their legal obligation to file insider reports on SEDI within 10 days.

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This enabled them to base the exercise price of the options on a lower market price for the issuer's shares.

Statutory arrangements are arrangements put in place by the Government's statutory child maintenance service.