Comments on: I look pretty young but I'm just backdated, yeah

By: TRUTH ON THE MARKET » Update on backdating

TRUTH ON THE MARKET » Update on backdating — Mon, 21 Dec 2009 03:59:46 +0000

[...] I look pretty young but I’m just backdated, yeah (Geoff Manne) [...]

By: TRUTH ON THE MARKET » Explaining Backdating (and Jenkins Channels Manne Again)

Wed, 30 Aug 2006 18:11:21 +0000

[...] Geoff made exactly these points in this space months ago (and also more recently, here). Personally, I am thrilled to see a column that focuses on the real questions surrounding backdating: (1) Why do firms backdate? (2) What are the consequences of backdating? and (3) What is the theory of harm, if any, upon which we are going to base civil and criminal prosecutions? It is remarkable, but not incredibly surprising, how little attention has been paid to these questions in favor of the Gretchen Morgenstern-style rants that Professor Ribstein enjoys dismantling weekly. [...]

By: TRUTH ON THE MARKET » ISS on Option Timing

TRUTH ON THE MARKET » ISS on Option Timing — Tue, 18 Jul 2006 17:27:09 +0000

[...] While these practices would certainly go a long way towards eliminating backdating and spring-loading, as Geoff pointed out essentially on day one of the scandal (see here), option timing can be an efficient form of compensation. SEC Commissioner Atkins recently expressed a similar view regarding spring-loading in a speech before the International Corporate Governance Network (see here). This view, however, has not been particularly well received (see, e.g., here), perhaps in part for the reasons Tom discusses here. [...]

By: TRUTH ON THE MARKET » Jenkins channels Manne

TRUTH ON THE MARKET » Jenkins channels Manne — Wed, 12 Jul 2006 18:34:43 +0000

[...] Today’s W$J has a great article by Holman Jenkins on reporting on the backdating “scandal.”Â Larry is, of course, on the case.Â I would also — modestly — point out that much of whatÂ Jenkins says in his article today, IÂ said in this space about four months ago, when the news was first breaking.Â The key elements: [...]

By: Conglomerate

Conglomerate — Mon, 22 May 2006 17:17:03 +0000

More on the Options Scandal…

Last week I blogged about the options scandal. Today the W$J reports the results of its own study, finding five…

By: TRUTH ON THE MARKET » Option Backdating: The Next Big Corporate Scandal?

TRUTH ON THE MARKET » Option Backdating: The Next Big Corporate Scandal? — Thu, 20 Apr 2006 20:43:45 +0000

[...] Option backdating was on page one of the W$J again yesterday (here). The story was spurred by comments made by UnitedHealthâ€™s CEO, William W. McGuire, during UnitedHealthâ€™s First Quarter 2006 Results Teleconference on Tuesday. UnitedHealthâ€™s option grants to Dr. McGuire were among those cited as suspicious by a March 18 page one W$J (article here; earlier blog post here). The Journal’s analysis raises questions about one of the most lucrative stock-option grants ever. On Oct. 13, 1999, William W. McGuire, CEO of giant insurer UnitedHealth Group Inc., got an enormous grant in three parts that — after adjustment for later stock splits — came to 14.6 million options. So far, he has exercised about 5% of them, for a profit of about $39 million. As of late February he had 13.87 million unexercised options left from the October 1999 tranche. His profit on those, if he exercised them today, would be about $717 million more. The 1999 grant was dated the very day UnitedHealth stock hit its low for the year. Grants to Dr. McGuire in 1997 and 2000 were also dated on the day with those years’ single lowest closing price. A grant in 2001 came near the bottom of a sharp stock dip. In all, the odds of such a favorable pattern occurring by chance would be one in 200 million or greater. Odds such as those are “astronomical,” said David Yermack, an associate professor of finance at New York University, who reviewed the Journal’s methodology and has studied options-timing issues. [...]

By: Abnormal Returns » Backdating and corporate governance

Abnormal Returns » Backdating and corporate governance — Sun, 19 Mar 2006 19:49:16 +0000

[...] Truth on the Market finds the arguments against the practice less powerful. Indeed the practice may not be “stealing” from shareholders and may provide executives with a powerful incentive. Indeed the solution, further federal rules and regulations on corporate governance practices, may be more painful than the problem itself. [...]

By: Bill Sjostrom

Bill Sjostrom — Sun, 19 Mar 2006 19:37:56 +0000

If companies are failing to comply with disclosure obligations, the SEC should clearly do something about it. The real question is whether backdating of options should be a disclosure obligation. Regardless, the fact that companies apparently are not properly disclosing the practice raises the specter of impropriety. Note that backdating could be used to manipulate fully diluted earnings per share, i.e., a company could essentially lower option exercise prices through backdating and thereby reduce the number of options it has to grant to confer a particular dollar amount of value. On another note, hereâ€™s a link to what I assume is at least a piece of the â€œacademic researchâ€? referenced in the article.