2006-12-28 02:26:53 · 4 answers · asked by drricky40 1 in Business & Finance ➔ Investing
It changes the company's profit projections retroactively... so as long as this is openly reported in the financial statements, it's ok. It's not wise to make your investors mad.
2006-12-28 02:38:02 · answer #1 · answered by Anonymous · 0⤊ 1⤋
Backdating, which refers to the practice of altering the dates of grants, is a way for employees of a company to make additional money from stock options. While it's not necessarily illegal, in many cases it could be.
Backdating is not necessarily illegal. If a company's executives are up-front about it with shareholders and the government, everything's probably fine.
The problem, though, is that the allegations that have come to light have not included full disclosure to shareholders, payment of extra applicable taxes, and earnings statements that reflect the modified grant dates. Any of those three categories could yield civil (and perhaps criminal) legal action.
The fact that all of this corruption is coming out in the media is good news for the common investor. Big companies cannot hide or divert profits as easily as they could 10 years ago. Now more of the profits will go to the individuals that own a portion of the company (stock).
2006-12-28 03:01:41 · answer #2 · answered by MR MONEY 3 · 0⤊ 0⤋
NO! It is not legal and it is most definitely not a legal perk. It is the exact reason why many corporate executives have resigned from their positions. Check out msn.com's article regarding the back dating of stocks for Apple's CEO, S. Jobs.
2006-12-28 02:39:14 · answer #3 · answered by Caity.Esq. 2 · 0⤊ 0⤋
Yes. It is done to give "perqs" to senior managers.
2006-12-28 02:29:50 · answer #4 · answered by Anonymous · 0⤊ 1⤋