Basically, a stock option is a contract right to purchase an amount of stock at a set price for a period of time.For instance, if a stock was worth a share, a stock option may grant an option holder the right to purchase
Basically, a stock option is a contract right to purchase an amount of stock at a set price for a period of time.For instance, if a stock was worth $10 a share, a stock option may grant an option holder the right to purchase $1,000 shares at $10 a share for a period of 5 years.||
Basically, a stock option is a contract right to purchase an amount of stock at a set price for a period of time.,000 shares at a share for a period of 5 years.
The Dating Game, by James Surowiechi, The New Yorker: ..
When news broke, earlier this year, that some companies had backdated stock-option grants ...
in order to make them more valuable, it seemed like a problem that would come and go quickly... What’s distinctive about this one is that the benefits companies got from backdating were so small.
Never, you might say, have so many cheated so much to gain so little.
The backdating companies broke this rule: they reported how many options they were issuing, but conveniently omitted the fact that they had been backdated. The bigger reason for choosing to backdate is to get around some bothersome accounting regulations.
In Washington, people say that it’s not the crime that gets you—it’s the coverup. [C]ompanies didn’t need backdating to lavish huge sums of money on their executives: they could have issued more at-the-money options to make up the difference, or they could have just handed out grants of stock. Until recently, the regulations distinguished, for no good reason, between in-the-money and at-the-money options.
The stock plans of many public companies prohibit the granting of below-market options; other companies disclose in their SEC reports that stock options are granted at market and prepare their financial statements on that basis.
The term “backdating” refers to a number of option granting practices in which the reported grant date is different from the date on which the option is actually awarded, resulting in an option that is already “in-the-money” at the time of the grant.
The academics concluded that something funny was going on.