Beyond Backdating: Stock Option Grant Self-Assessment Guide

In recent weeks, corporate stock option practices have come under extreme regulatory and media scrutiny. The U.S. Securities and Exchange Commission initiated investigations of more than 80 companies for potential accounting and disclosure problems relating to the dating of their stock option grants. Companies and individuals have been targeted with grand jury subpoenas, and federal indictments in this area have made front-page news. The plaintiffs’ bar has filed dozens of derivative and class action lawsuits against executives and directors, challenging option grants. Options granted as far back as the 1990s are being closely examined, and companies face severe consequences if their historical practices failed to meet the then-current accounting and taxation requirements.