News & Events

Lie: Scandal, Not Rules, To End Backdating

The Securities and Exchange Commission approved rules on Wednesday that will force public companies to disclose in their proxy statements whether they are timing options grants to make them more lucrative to executives and other employees. The requirements were a late addition to a broad package of rules designed to beef up disclosure of executive compensation. The new rules, which take effect for proxy statements issued on or after Dec. 15, were originally proposed in late January, before the options scandal broke. Since then, about 80 companies have said they are being investigated for possible irregularities in the timing of their options grants. ERIK LIE, the University of Iowa professor whose research on options timing helped ignite the scandal, says there will be less backdating and spring-loading -- not because of the new rules, but "because of the media focus and the consequences the companies face. In the past, people were thinking they would get away with it. Now they're recognizing they won't get away with it."

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