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The Perfect Payday – Must Read
By JLP | May 4, 2006
I read this article in the Wall Street Journal back in March but filed it and forgot about it. Actually, I didn’t forget about it, but since it wasn’t a “free” article I decided not to mention it. Tonight I found a free copy of the article so I decided to share it with you.
The article concerns the way companies award stock options to their executives. Apparently, company boards basically allow executives to backdate their options. The article details several transactions in which executives were granted stock options at a point when their company’s stock price was at a low (the lower the stock price is when the options are granted, the greater the potential reward to the executive). It is a long article but well worth the time. Investors NEED to know about this stuff.
Topics: Investing | 5 Comments »
May 4th, 2006 at 6:36 am
Yep, and it’s legal too…
May 4th, 2006 at 7:27 am
Thanks for pointing out that article JLP. These kind of corporate shenanigans drive me crazy.
May 4th, 2006 at 7:29 am
The Perfect Payday
“Apparently, company boards basically allow executives to backdate their options. The article details several transactions in which executives were granted stock options at a point when their company’s stock price was at a low (the lower the stock p…
May 4th, 2006 at 10:09 am
Holy moley! How in the WORLD can stuff like that be legal?
More specifically, how can investors know if particular companies have this practice?
And what should investors do based on this knowledge?
And finally, what impact could this have on the value of the stock?
April 3rd, 2008 at 4:07 pm
It’s not legal. Why on earth would the SEC be investigating these Companies if they were performing legal practices? It’s not legal, just very difficult to prove. The Companies will ultimately have to restate their financial statements resulting in a huge hit to the Co’s stock prices.