Erik Lie Uncovered
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Does It seem reasonable for executive and employees to "backdate" stock option grants so that their grants are priced at the lowest daily stock price within a two to four month time period? Why?
It does not seem reasonable for executives and employees to "backdate" stock option grants so that their grants are priced at the lowest daily stock price within a two to four month time period.
The reason is that backdating stock options means that "cost" of stock is "selected" by the company to be at a lower price and when the stock is actually given to the employees/ executives the price has already increased. The net effect of such backdating is that the employee/executives get the option at a time when the price is actually higher than the 'cost' to the employee.
If there is no lock-in period these options can be sold immediately at the higher price and the employee/ executive can make a 'profit' on the stocks. This is not reasonable because this opportunity is not available to other shareholders. It is not ethical as it gives the employee the ready opportunity to make a 'profit' on the sales of stocks that is not available to other shareholders.
From a different perspective it is ...
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