Dating of stock option grants
Despite all the editorials, all the accounting rule changes, and all the new laws, nothing much seems to change except the particular manner in which so many executives get overpaid.
Chances are this particular practice will now go away, but another one will surface all too soon.
Microsoft acknowledged doing this in 1999, stopped the practice, and restated its financials.
Other companies, however, may have followed the same pattern without making these changes.
District Attorney's Office has also issued several subpoenas in launching a criminal probe. The typical practice was to record a felicitously timed prior date as the grant date, such as the point when the stock had been at its lowest in recent months, instead of the date when the award was actually granted.
Nejat Seyhun of the University of Michigan for the newspaper showed that that options granting practices between 20 often failed to comply with the Sarbanes-Oxley requirement that grants of awards to executives be reported within two days of board approval (T"he Dating Game: Do Managers Designate Option Grant Dates to Increase Their Compensation? Prior research at Erik Lie at the University of Iowa found a pattern of probable options backdating in a number of companies prior to 2002.
Excessive executive compensation seems to be an issue that just won't go away because excessive executive compensation won't go away.
The theory seems to be that a good CEO is worth any price a company will pay, no matter that the compensation might literally exceed the GNP of some countries or be enough to hire hundreds of talented employees.
Soon thereafter, two public pension funds in Ohio indicated they will be suing United as well, followed by a retirement fund for Pirelli Armstrong Tire.
No matter how much particular practices may be decried, the consensus seems to remain that corporate success is attributable to a very few people at the top, with everyone else pretty much being replaceable parts.
On October 18, 2005, the FASB issued FASB Staff Position (FSP) FAS 123(R)-2, “Practical Accommodation to the Application of Grant Date as Defined in FASB Statement No.
An analysis of the likelihood that Mc Guire's options could have been as felicitously times as they were showed that the odds were millions to one against it. The state, however, has not taken a position on the merits of the claims.
On April 19, 2006, Minnesota Attorney General Mike Hatch asked to intervene in a shareholder lawsuit against United Health Group (Brandin v. Hatch said that the importance of the company to the state's health care system meant that if there were substantial and unjustified costs, Minnesotans could be harmed.