Forward dating stock options
But Apple makes clear that Jobs was directly involved in some instances of backdating.The investigation "found that CEO Steve Jobs was aware or recommended the selection of some favorable grant dates." The committee hastens to add that Jobs "did not receive or financially benefit from these grants or appreciate the accounting implications." In other words, he didn't recommend backdating his own option grants.
Prepare a monthly report summarizing post-dated transactions and the reason for the post-dating.by Dan Walter, Jim Vincent, Jennifer Namazi, Jennifer George, Elizabeth Stoudt, and Sarah Roberts If you need to order more than the maximum number in the drop-down list below, change the quantity once you have added it to your shopping cart. After additional training of appropriate staff, the timeliness of reporting terminations improved, but the Company should consider the cost-benefit to integrating the subsidiary.This publication, one of a series of Guidance | Procedures | Systems (GPS) books from the Certified Equity Professional Institute (CEPI), is designed as an administrative-focused document that makes the bridge between compliance and controls easier to navigate for administrators of stock option plans in public companies. And he never cashed in those options because they were replaced in 2003 by a grant of restricted stock.CEOs at other companies have been forced to resign for such activities. His job may be saved by the fact that he did not directly profit.Still, given that (a) backdating helps make earnings look better than they are; and (b) Jobs is a huge shareholder of Apple (10.12 million shares, as of last April), how could he not benefit from this behavior? Jobs recommended some backdating dates for other employees.
It turns out that Jobs did, indeed, receive backdated options—just not at his own direction. 18, 2001, when the stock stood at $21.01, the company gave Jobs a monster 7.5-million-share options grant dated Oct. By doing so, the company gave Jobs $20 million in compensation for which it did not account properly. It also pretended the options grant was approved at a special board meeting, when no such meeting occurred. He received a massive grant that was approved at a phantom board meeting, though he didn't know about the phony meeting.
Because the backdated options’ strike price is lower than the market price on the actual grant date, the recipient has received something of greater monetary value (even if the options have not yet vested) than a correctly dated at-the-money option. Companies could reward executives with cash compensation or additional properly dated and priced incentive awards, including options, rather than engage in dubious backdating practices. It is clear that there must be reasons other than greed that have led so many to backdate executive options. Academics, regulators, and practitioners alike have tried to gain a better understanding of these incentives and the roles they have played in the backdating scandal; however, there is as of yet no consensus regarding the causes of backdating. This is problematic because policy, legislative, or regulatory changes are unlikely to be effective if the root causes are unknown. In 2008, the long-term capital gain rate for individuals in the lowest two tax brackets (currently 5% and 15%) was further reduced to zero.
Untangling the causes of backdating will remain elusive unless each factor is considered in detail using evidence from different regimes. III 2009) (allowing carry forward for a credit for the prior year’s minimum tax liability that resulted from certain timing differences). D (illustrating in Example 4 the effect of AMT); see generally Francine J. 337 (2002) (providing a detailed discussion of the AMT and its application to ISOs). These reduced rates are currently effective until the end of 2012. 111-312, 124 Stat 3296 (extending reduced rates from the end of 2010 until the end of 2012).
Stock options covered in this publication are limited to grants of at-the-money (exercise price is equal to fair market value of the underlying stock as defined by the plan on the date of grant), nonqualified (NSO), and incentive (ISO) stock options made to U. This publication does not address grants to nonemployees, Section 409A deferred compensation issues, international and mobile employee issues, or private companies.1.
For example, the monthly report on post-dated transactions indicated numerous examples where a nonintegrated subsidiary did not forward termination details on a timely basis.
The case is notable for two reasons: it has been one of the few times that an options-backdating case actually went to trial, and it shows that CFOs and chief executives have no way to hide from improper expensing, even years later. Jasper appealed the case on trial errors he claims violated his rights, but did not dispute his knowledge of or involvement in the backdating scheme.