It’s clear there’s a real advantage to backdating this policy.
speed dating in christchurch new zealand - Backdating to
But, there are also some companies out there that have bent the rules by both hiding the backdating from investors, and also failing to book the grant(s) as an expense against earnings.
On the surface - at least compared to some of the other shenanigans executives have been accused of in the past - the options backdating scandal seems relatively innocuous.
To prevent this change in premium, a policy may be backdated to save the previous age of the applicant.
Here’s how it works: Final Premium = $300 annually This policy was backdated with a policy date of July 15, which is one day prior to the applicant’s age change.
This resulted in keeping the life insurance age at policy issue at 30, and the cost of the policy the same as the original quote of $300.
Backdating this policy would result in a savings of 0 over the next 20 years.
That is, they grant their executives stock options with an exercise price (or price at which the employee can purchase the common stock at a later date) equivalent to the market price at the time of the option grant.
They also fully disclose this compensation to investors, and deduct the cost of issuing the options from their earnings as they are required to do under the Sarbanes-Oxley Act of 2002.
In the worst cases of options backdating abuse, the stock exchange on which the offending company's stock trades and/or regulatory bodies such as the Securities and Exchange Commission (SEC) or National Association of Securities Dealers can levy substantial fines against the company for perpetrating fraud.