Corporate Governance Law Review, Vol. 2, No. 3, pp. 385-394, 2006
11 Pages Posted: 21 Oct 2009 Last revised: 28 May 2010
Date Written: September 1, 2006
In this short essay we take on some of the common claims surrounding the law and economics of the backdating of options. Most of these claims are rooted in the basic argument that backdating options amounts to concealment of compensation. While we agree that backdating may have amounted to a technical rule violation in some cases, there is actually no concealment and, in fact, backdated options are fully disclosed when granted, and their value incorporated into stock price. We also challenge a few other myths surrounding the practice of backdating options.
Keywords: accounting measures, corporate ignorance, corporate malfeasance, Gretchen Morgenstern, Jeff Lipshaw, Larry Ribstein, Matt Bodie, PrawfsBlawg, securities regulation, stock options, taxation of compensation
JEL Classification: D21, D23, G18, G30, G38, H25, H32, J33, J38, K22, K34, M40, M41, M52,
Suggested Citation: Suggested Citation
Manne, Geoffrey A. and Wright, Joshua D., Backdating Options and Why Executive Compensation is Not All About Norms (September 1, 2006). Corporate Governance Law Review, Vol. 2, No. 3, pp. 385-394, 2006; George Mason Law & Economics Research Paper No. 10-22. Available at SSRN: https://ssrn.com/abstract=1490845