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ARTICLE · 12 JUNE 2007

Stock Option Backdating: What Every Director Should Now Know

Gowling WLG
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American courts have brought the practice of stock option backdating to the forefront. Described by the Wall Street Journal as "the perfect payday", some company executives and directors are now beginning to suffer the consequences of a practice that saw several of them draw undue profits after issuing stock options on dates hand-selected to coincide with favourable exercise prices.

CanadaCriminal Law
Martine Guimond
Martine Guimond
Julie-Martine Loranger
Julie-Martine Loranger
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The number of U.S. cases grows and media attention heightens:

  • UnitedHealth –
    • Financial restatement of between $400 and $600 million
  • Comverse
    • – Top executives found guilty of criminal charges, while paying roughly $3 million to settle civil accusations of fraud – top lawyer sentenced to a year and one day for his role in the backdating scheme
  • Maxim
    • – Delaware judge opens the floodgates for shareholder derivative suits in backdating cases

American courts have brought the practice of stock option backdating to the forefront. Described by the Wall Street Journal as "the perfect payday"1, some company executives and directors are now beginning to suffer the consequences of a practice that saw several of them draw undue profits after issuing stock options on dates hand-selected to coincide with favourable exercise prices.

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