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Opinion: Reality of stock option drama is that most errors were unintended
by Jahan Raissi and Jason Lee
Originally published in the San Jose Mercury News, 8/20/06
Recent headlines have portrayed a corporate America littered with scandals rivaling the Enrons and Worldcoms of yesteryear as executives lined their own already-bulging pockets by “backdating” their options.
We may only be seeing the tip of the iceberg, with recent press reports and economic studies speculating
that as many as 2,000 public companies have some sort of an options backdating problem.
Predictably, people have called for aggressive government prosecutions of executives and companies
and new laws and regulations. However, the reality is likely to shape up a bit differently.
The media naturally gravitate toward the most egregious cases, but they do not reflect what we are seeing so far
with many public companies. Many (and we will guess that it is actually most) situations appear
to involve ministerial errors and unintentional conduct.
No end in sight to options backdating investigations
by Jahan Raissi
Even if you have been living under a rock, it is unlikely that you have missed the fact
that the government’s investigations of stock option “back-dating” have recently gone into overdrive.
What started last year with a few investigations has now grown to include well over 40 public companies
grants occurring almost exclusively on days when the companies’ stocks were trading at periodic lows –
a pattern that was statistically unlikely to have occurred without the benefit of hindsight.
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