Stock Options Backdating Controversy Raises Issues

One of the dominant stories of late in the equity compensation area is the revelation by numerous companies that they are being investigated, by the government or in internal investigations, in the fast-spreading controversy generally referred to as "stock option backdating." Every day, it seems, additional companies announce the receipt of subpoenas or the commencement of internal investigations regarding their stock option grant practices. Moreover, several senior executives have already been terminated or forced to resign for their role in such practices. The government investigations are being separately pursued by the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice and it appears likely more companies will be targeted.