Back dating option stock
SEC investigations, lawsuits, terminations, and even criminal prosecutions followed in the great stock option backdating scandal.
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The SEC does The rules indicate that a company should disclose in the CD&A whether it had (or has in the current fiscal year) a practice of selecting option grant dates for executive officers in coordination with the release of material non-public information.
If the Company has such a program, plan or practice, the company should disclose that the board of directors or compensation committee may grant options at times when the board or committee is in possession of material non-public information.
Our identification strategies rule out plausible alternative explanations for these abnormal returns.
The data appears to show that, at the companies in question, share prices tend to decline in the 90 days before grant and then rebound afterward much more than at comparable companies during the same period. The SEC’s complete overall of its proxy reporting rules, which occurred a few years late and included the CD&A requirement, suggested that companies disclose in their proxy statements whether they attempt to “time” the award of options to occur before or after the release of news to the market.
If she leaves the company before the five-year vesting period ends, she can only exercise her percentage of vested options.