The backdating scandals second
Clearly, the Enron trials have not closed the book on corporate fraud.A new boardroom scandal is roiling Wall Street: stock options backdating.Dozens of companies – including United Health Group, Comverse Technology, Vitesse Semiconductor and Affiliated Computer Services – have caught the eye of the Securities and Exchange Commission and the Department of Justice for the timing of their stock option grants.The question: did these companies backdate options grants – and falsify records – to make them more lucrative for their top employees?The lower this “strike price” is, the cheaper the executive can buy the stock.When these options then “vest” after a period of time, the executive can sell them at the new share price: giving them a nice bonus if the company has increased in value.
Because the option value is higher if the exercise price is lower, executives prefer to be granted options when the stock price is at its lowest.
(who broke the backdating story), Jobs had an award of 7.5 million shares approved at Apple’s August 29 board meeting, at which point Apple’s share price was .83.
However, because he continued to argue over the point at which they would vest, Apple missed the deadlines it needed to file the right information with the SEC and its auditors.
SAN FRANCISCO (Market Watch) -- Steve Jobs has managed to revolutionize both the consumer electronics and entertainment industries, but the onetime wunderkind can't seem to shake the stigma of the stock-options backdating scandal that enveloped Silicon Valley in recent years.
This week, another former confidante to Jobs came under the microscope of federal regulators.
But as yet another executive who was once close to Jobs comes under the backdating cloud, one has to wonder: Is Jobs as innocent as Apple Inc. Or is the government afraid to go after one of the most respected leaders of American business? You can put him up there with Bill Gates and Warren Buffett," said Peter Henning, a professor who studies white-collar crime at Wayne State University in Detroit and one of the few legal scholars still paying attention to stock-options backdating.