Ethics of options pricing and backdating psychedelic dating

13) and thus provide, “greater incentives for executives to improve firm performance.” (Raiborn et al.

The company would then grant the option but date it at or near its lowest point.

Essentially, stock options were designed to reward current performance with a future benefit when executives neither needed nor desired additional current cash.

Because stock options could be cashed in and the shares subsequently sold, there always existed a motivation for executives with options to quickly boost the stock price, through fair means or foul.

Prior to 2002, a company was not required to, “report the issuance of stock options until after the close of the fiscal year.” (Raiborn et al.

2007 p.3 ) As such many firms decided to retroactively increase the value of their share options, particularly executives options.

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