Stock Option Outrage

by Robert Reich, TomPaine.com

The latest CEO trick pits executive interests against investor interests.
//www.tompaine.com/articles/2006/07/25/stock_option_outrage.php



Stock option outrage

Tom Paine
by Robert Reich

07/25/06

More than 60 companies have disclosed investigations -- including 40 grand jury investigations -- into whether they've backdated executive options to coincide with days when their stock prices were low. And a raft of shareholder lawsuits have been filed. At least 17 people have been fired or quit in connection with the unfolding scandal. One lawsuit, for example, alleges that Apple Computer backdated stock option grants to 14 current and former officers -- dating each grant just after a sharp drop and just before a substantial rise in Apple's stock price. What's the big deal? Just this. If Apple or any other company backdates options for when share prices are especially low, executives who exercise the options get a windfall. They can buy shares at that extra-low price and then sell them after their price has risen. Seems unfair, right? Like insider trading, or outright stock manipulation, or worse." [editor's note: Mr. Reich is correct that something very wrong is involved; he's relying on spurious "crime" designations, but is looking in the right directions for the "frauds" committed - SAT]

//tinyurl.com/esmqr


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