Option backdating investopedia rihanna ryan phillippe dating
But ultimately, it can prove to be quite costly to shareholders.
While not quantifiable in terms of dollars and cents, in some cases, the damage to the company's reputation could be irreparable.
This is valuable to multi-national companies because it eliminates a lot of red tape associated with gaining authorization from each individual country, a process that can be lengthy and costly for a business.
An American option is an option that can be exercised anytime during its life.
In short, it is this failure to disclose - rather than the backdating process itself - that is the crux of the options backdating scandal. To be clear, the majority of public companies handle their employee stock options programs in the traditional manner.
That is, they grant their executives stock options with an exercise price (or price at which the employee can purchase the common stock at a later date) equivalent to the market price at the time of the option grant.
Note that the name of this option style has nothing to do with the geographic location.
In order to lock in a profit on day one of an options grant, some executives simply backdate (set the date to an earlier time than the actual grant date) the exercise price of the options to a date when the stock was trading at a lower level. In this article, we'll explore what options backdating is and what it means for companies and their investors. Most businesses or executives avoid options backdating; executives who receive stock options as part of their compensation, are given an exercise price that is equivalent to the closing stock price on the date the options grant is issued.The last day to exercise a weekly American option is normally on the Friday of the week in which the option contract expires.Conversely, the last day to exercise a monthly American option is normally the third Friday of the month.Assume the investor exercised the call option on Apple prior to the expiration date, the investor would be long 100 shares of Apple at the specified strike price.Conversely, if the investor waited until the expiration date and Apple's stock price closed at least one cent above the strike price, the investor would be automatically exercised and long 100 shares. The investor has the right to exercise the put option on or before the option's expiration date.