Chapter 6 Post 2000 Intensification of Focus on the Board
In another set of transactions that resulted in headlines, scandal, numerous court cases, and some major fines and board reorganizations, we look at the issue of options back dating. A number of companies found themselves caught up in this drama in the early 2000s, having liberally used options as compensation in prior years.
In 1972, a revision (APB 25) in accounting rules resulted in the ability of a company to avoid having to report executive incomes as an expense to their shareholders if the income resulted from an issuance of “at-the-money” stock options. In essence, the revision enabled companies to increase executive compensation without informing their shareholders if the compensation ...
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