Columnist Questions Import Of Backdating
Bookmark & ShareJune 21, 2006
Source: Wall Street Journal
Missing in the uproar over alleged stock option backdating by companies, argues a Journal columnist, has been any cogent explanation of the possible reasons behind a practice apparently so widespread that companies must either have been sharing notes on it or have discovered it independently following some inner logic of corporate life. Also missing is any cogent explanation of why it's wrong. It took ERIK LIE, an economist at the University of Iowa, to show that the gains realized by executives at certain companies were conceivable only if option grants had been systematically retroactive to a recent low in the share price. His work was noticed by the Journal, which went about identifying some of the companies that engaged in apparent backdating. "His finding is revealing, but of what?" the columnist asks.
Contact: Erik Lie, ,
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