Corporate governance and backdating of executive stock options Sex chatreal free
Beyond such negative controlling measures, a more positive empowering approach based on ethics may also be necessary.What ethical measures need to be taken to address the agency problem?Internal investigations are generally separated because management might find itself at odds with the board.One notable company ensnared in options-backdating scandals, Mercury Interactive, reported that its investigations cost the company more than million.[ILLUSTRATION OMITTED] Prior to the passage of the Sarbanes-Oxley Act (SOX) in July 2002, the regulations surrounding the disclosure of option grants in financial and proxy statements and the requirements for filing notice of option grants to the SEC were fairly loose.While SOX now requires a company to file a Form 4 with the SEC within two days of an option grant to key employees, before SOX it might have been months before notice of an option grant was filed with the SEC.Second, we discuss various stakeholder approaches (e.g., government, directors, managers, and shareholders) by which conflicts of interest (i.e., the agency problem) can be addressed.
Those companies in the technology and biotechnology sectors may have used options more frequently and might be at higher risk than those in other sectors. As of this writing, approximately 100 companies are conducting either internal or external (or both) investigations into their option-granting practices.
The Center for Financial Research and Analysis (CFRA) performed a survey of the 100 companies with the greatest (as a percentage of revenues) pro forma options compensation in the pre-SOX period.
Of those 100 companies, 17 had, on three or more occasions, option grant dates that were at or near 40-day stock price lows which were immediately followed by a significant stock increase.
What values and norms should guide the board of directors in protecting the shareholders’ interests?
To examine these issues, we first discuss the role values and norms can play with respect to underlying corporate governance and the proper role of directors, such as .