Stock option backdating accounting gridview updating deleting
Or that an investigation by Disney into options backdating at Pixar also cleared Jobs of any wrongdoing, even though he helped negotiate the deal in which Pixar's star film director, John Lasseter, received backdated options.The bottom line: Claims that Jobs was unaware of the accounting implications of backdating are hardly believable, but there was no evidence to the contrary.This apparently violates a whole bunch of SEC rules.Heinen also exercised and sold 400,000 back-dated shares.However, when granting options, the details of the grant must be disclosed, meaning that a company must clearly inform the investment community of the date that the option was granted and the exercise price. In addition, the company must also properly account for the expense of the options grant in their financials.If the company sets the prices of the options grant well below the market price, they will instantaneously generate an expense, which counts against income.Of course, they may have actually been pushed on their swords by their boards, but let? In the case of Apple, not only did the board send two sacrificial lambs to slaughter, but the feds hung some pretty hefty charges on their necks to boot. VP, General Counsel, and Secretary Nancy Heinen, and former CFO and director Fred D. The SEC's complaintfocuses on the backdating of two large option grants, one of 4.8 million shares for Apple's executive team and the other of 7.5 million shares for Steve Jobs.
That means the company incurs an expense equal to the difference in the share price between the two dates.
Some executives have, well, at least when it comes to their stock options.
In order to lock in a profit on day one of an options grant, some executives simply backdate (set the date to an earlier time than the actual grant date) the exercise price of the options to a date when the stock was trading at a lower level. In this article, we'll explore what options backdating is and what it means for companies and their investors. Most businesses or executives avoid options backdating; executives who receive stock options as part of their compensation, are given an exercise price that is equivalent to the closing stock price on the date the options grant is issued.
Anderson got nailed because, according to the complaint, he should have noticed what Heinen was doing and either stopped it or reported the expense properly.
He also exercised and sold 750,000 back-dated shares.