Does backdating explain phone text dating

Posted by / 12-Feb-2020 23:21

Does backdating explain

For example, suppose that it is August 16, 2006, and the closing share price of XYZ Corp. On June 1, 2006, XYZ Corp.'s stock price was at a six-month low of .Technically, any options granted today should bear a strike price of .The SEC’s opinions regarding backdating and fraud were primarily due to the various tax rules that apply when issuing “in the money” stock options versus the much different – and more financially beneficial – tax rules that apply when issuing “at the money” or "out of the money" stock options.Additionally, companies can use backdating to produce greater executive incomes without having to report higher expenses to their shareholders, which can lower company earnings and/or cause the company to fall short of earnings predictions and public expectations.However, this concept is not perfect and there are ways that executives can take advantage of the way that options are granted in order to earn money.An option's strike price is usually chosen by taking the stock's closing price on the day that the option was granted, calculating an average of the day's high and low prices or by taking the closing price from the previous day's trading.

The company would then grant the option but date it at or near its lowest point.This process makes the granted option in-the-money and of value to the holder.This process occurred when companies were only required to report the issuance of stock options to the SEC within two months of the grant date.This is the granted option that would be reported to the SEC.The act of options backdating has become much more difficult as companies are now required to report the granting of options to the SEC within two business days.

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