Stock backdating illegal dating islamic view
The reason for doing this was simple: stock options priced at or above where the stock is trading (aka, "out of the money" options) get favorable tax treatment compared to stock awards priced below the market price (aka, "in the money" options).
It was a tax advantaged way for companies to pay executives. Shareholders were correctly told the number of options granted and the price of the options.
Although backdating can be either legitimate or improper, it is often misunderstood and associated with wrongdoing.
Backdating encompasses a broad scope of conduct ranging from blatant fraud to the legitimate and common practice of executing a document after the event has already occurred.
Backdating can also involve the practice of dating a document on the date the event occurred even if it is not signed until later.
It allows that money in excess of what is being paid to investors or lawyers be given to charities, in this case those "corporate governance" programs at universities.The academics concluded that something funny was going on.The companies were awarding the options later but then marking the awards to earlier dates, when the stock's price was low.Given that the class attorneys are negotiating money for third parties instead of their own putative clients (for their own benefit, no less), there is also a breach of fiduciary duty that raises questions whether the class attorneys meet the Rule 23(a)(4) standard.The settlement is further problematic in that the vast majority of class members are entitled to zero compensation; it is far from clear that the sole lead plaintiff is a member of this subclass.