Comverse options backdating
Options backdating contravenes the very nature and purpose of stock option grants.Originally conceived as a tremendous tool allowing companies to attract talent and reward employees without affecting cash flow, stock options also serve to align the interests of company executives with those of shareholders.The notice concludes with a warning that enforcement action may be taken if the CSA is made aware of any non-compliance with securities legislation.
Just how high these numbers will climb is not yet certain; according to a study conducted by Professor Lie of the University of Iowa, an estimated 30%, or 2 300, American corporations have engaged in the backdating of stock options.2 Recent court decisions have given way to a variety of actions against both company executives and directors.The granting of an "in the money" option clearly negates such an alignment.In its most traditional form, backdating is accomplished by the intentional modification of the minutes of the meeting in which an option grant is authorized.A rather wide range of documents could be potentially significant.
To begin, a company's stock option plan, as well as any other written policies and procedures may provide a preliminary understanding of grant practices.
S., the Canadian Securities Administrators (CSA) released a staff notice5, which provides directors with certain guidelines intended to reduce the risk of non-compliance with securities legislation.