Does backdating explain the stock price pattern

The amendment labeled executive compensation in excess of

The amendment labeled executive compensation in excess of $1 million as unreasonable and thus not eligible to be taken as a deduction on the firm's taxes.Performance-based compensation, on the other hand, was deductible.These changes reduced the likelihood of future backdating incidents. Check out Investopedia Academy's Options for Beginners course.

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The amendment labeled executive compensation in excess of $1 million as unreasonable and thus not eligible to be taken as a deduction on the firm's taxes.

Performance-based compensation, on the other hand, was deductible.

These changes reduced the likelihood of future backdating incidents. Check out Investopedia Academy's Options for Beginners course.

With over 4 hours of video content and interactive exercises, you'll learn the fundamentals of options trading and how to employ effective strategies within the options market.

Thus, backdating can be misleading to shareholders in the sense that it results in option grants that are more favorable than the shareholders approved in adopting the stock option plan.

For instance, public companies generally grant stock options in accordance with a formal stock option plan approved by shareholders at an annual meeting.

From a consumer's perspective, customers rely on companies to provide goods and services.

million as unreasonable and thus not eligible to be taken as a deduction on the firm's taxes.

Performance-based compensation, on the other hand, was deductible.

These changes reduced the likelihood of future backdating incidents. Check out Investopedia Academy's Options for Beginners course.

With over 4 hours of video content and interactive exercises, you'll learn the fundamentals of options trading and how to employ effective strategies within the options market.

Thus, backdating can be misleading to shareholders in the sense that it results in option grants that are more favorable than the shareholders approved in adopting the stock option plan.

For instance, public companies generally grant stock options in accordance with a formal stock option plan approved by shareholders at an annual meeting.

From a consumer's perspective, customers rely on companies to provide goods and services.

High-profile companies including Apple, United Health Group, Broadcom, Staples, Cheesecake Factory, KB Homes, Monster.com, Brocade Communications Systems, Inc., Vitesse Semiconductor and dozens of lesser-known technology firms were implicated in the scandal. .) The essence of the options backdating scandal can be summarized simply as executives falsifying documents in order to earn more money by deceiving regulators, shareholders and the Internal Revenue Service (IRS).

From a shareholder's perspective, nobody likes to be lied to when providing the financing and paying the salaries.

(See also: .) In the early 2000s, new accounting provisions were enacted that required companies to report their option grants within two days of their issue and also required that all stock options be listed as expenses.

The roots of the scandal date back to 1972, when an accounting rule was put in place permitting companies to avoid recording executive compensation as an expense on their income statements so long as the income was in the form of stock options that were granted at a rate equal to the market price on the day of the grant, often referred to as an at-the-money grant.

This enabled companies to issue enormous compensation packages to senior executives without notifying shareholders.

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