Repricing and backdating
The magnitude of these settlements is obviously arresting.
Options backdating is the practice of altering the date a stock option was granted, to a usually earlier but sometimes later date at which the underlying stock price was lower. The scale of these settlements could have a significant impact on at least some of the other pending options backdating derivative cases, particularly where the company has been forced to restate and where top company officials have personally benefited from the backdating.
A reprice a situation involving the exchange of worthless employee stock options for new options that have intrinsic value.
This is a common practice for companies to keep or incent executives and other highly valued employees when the value of the company's shares falls below the breakeven point for the original incentive program.
Options backdating - Wikipedia A copy of the United Health special litigation committee’s December 6, 2007 report can be found here.
will be determined by binding arbitration.” According to the article, current United Health CEO Stephen J.In-house Counsel and Backdating What Will They Criminalize Next?The United Health press release also stated that under the settlement agreement that the company reached with its former director William Spears, “the fair settlement value of the Company’s claims … Options backdating is to CLOs as financial restatements were to. How can unethical executives use options backdating to evade.Finally, the company may issue additional stock options, leaving the original options in place.This is called a “make up grant.” This does put existing shareholders at the risk of additional dilution should the stock price surge, putting the original underwater options back in the money.
Repricing will increase the option expenses a firm must deduct from net income.