Options Backdating

Options backdating is the practice of altering the recorded grant date of an employee stock option to an earlier date when the underlying stock traded at a lower price, so the strike price is set below the market price on the actual grant date rather than at it. The practice chiefly benefited corporate executives; one finance researcher found that more than 2,000 companies used some form of backdating to reward senior executives between 1996 and 2002. Backdating is not illegal by itself when it is properly disclosed to shareholders and reflected in a company's earnings and tax filings, but undisclosed backdating has been prosecuted as securities fraud: the US Securities and Exchange Commission investigated companies including Apple over the practice, and Apple's former general counsel and former chief financial officer both paid civil penalties to settle related securities charges. This description is adapted from Wikipedia contributors under CC BY-SA 4.0; changes were made. https://creativecommons.org/licenses/by-sa/4.0/