Grant backdating
16-Mar-2020 06:59
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17, 2001, through the end of the month, 511 top executives at 186 of these companies got stock option grants. They were worth about 5 million when granted, based on a standard method of valuing stock options.“At Stryker Corp., a Michigan maker of orthopedic products, onetime stock option committee member John Lillard said he didn’t regret the decision to award options nine days after the attack. 20, 2001, at the bottom of a sharp ‘V’ pattern in the share price.“Mr.The number who received grants was 2.6 times as many as in the same stretch of September in 2000, and more than twice as many as in the like period in any other year between 1999-2003.“Ninety-one companies that didn’t regularly grant stock options in September did so in the first two weeks of trading after the terror attack. ‘If you believe the company is going to do well, and here is an external event that is affecting the market, and you’ve made a decision to reward executives, you go ahead with it,’ Mr. ‘Life goes on.’ …“At Stryker…post-9/11 stock option grants to several executives appear to have been initiated by the chairman and CEO at the time, John W. Brown would ‘periodically tell us if he thought the stock was attractive,’ and then the board would decide whether to award options, said Mr. Besides, he added, no one could have known whether the stock would rebound immediately or continue to slide.“Mr.This fact is often used as a reason to downplay the seriousness of the issue.You’d think that shareholders wouldn’t tolerate the use of accounting sleight of hand to compensate executives while bypassing the traditional “selling, general, and administrative” line in the income statement.But are options really as great for all parties as many have assumed?The stock option “backdating” scandal has implicated several (mostly technology) companies over the past few months.If the exercise price were
That’s what we’re gunning for.’“Stryker’s option grant came on the lowest closing stock price for the second half of the calendar year. Brown said he believes that he called both members of the stock option committee on Sept.These companies met their demands, and were allowed to do so by shareholders who were far too distracted in their quest to find tech companies with the best growth prospects.By the market bottom in 2002-2003, scores of tech companies were left with unhappy employees holding worthless options with triple-digit exercise prices.Instead of using excess cash to buy back stock at a short-term discount, a long list of blue chip companies used the post-Sept. A recent Wall Street Journal article entitled “Executive Pay: The 9/11 Factor,” describes the sequence of events (my emphases):“A Wall Street Journal analysis shows how some companies rushed, amid the post-9/11 stock market decline, to give executives especially valuable options.
, then options would be nothing more than free stock grants, and treated as such in the eyes of recipients.But the great majority of public companies issue options with an exercise price equal to the market price at the date of grant.A review of Standard & Poor’s Execu Comp data for 1,800 leading companies indicates that from Sept.But abuse of stock options has been allowed to perpetuate for years.
[[A review of Standard & Poor’s Execu Comp data for 1,800 leading companies indicates that from Sept.
But abuse of stock options has been allowed to perpetuate for years.
||A review of Standard & Poor’s Execu Comp data for 1,800 leading companies indicates that from Sept.But abuse of stock options has been allowed to perpetuate for years.
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