Options backdating

Definition:

Awarding employees with stock options those are dated prior to the actual grant date. The date chosen could be one when the company’s stock was at a low, so the options can be in-the-money at the time of granting itself. The practice is illegal if it is not followed by proper disclosure and related expenses are not recorded in financial statements.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Annual report

Yearly record of a publicly held company's financial condition. It includes a description of the firm's operations, as well as balance sheet, income statement, and cash flow statement information.... Read More

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