Backdating of executive stock options
This fact is often used as a reason to downplay the seriousness of the issue.
Executives can profit quickly at shareholders’ expense in such instances.This practice requires at least a nominal investment on the part of the option holder if he or she wishes to exercise.The CEO’s conflict of interest between short-term personal wealth maximization and long-term shareholder interests tends to tilt in the shareholders’ favor.20 to recommend they choose that day to grant options.
He added that he couldn’t remember a time when the board didn’t follow his advice.”So both the CEO and compensation committee are clearly in favor of giving Stryker shareholders as little cash as possible for each option granted to the CEO.
Instead of using excess cash to buy back stock at a short-term discount, a long list of blue chip companies used the post-Sept. A recent Wall Street Journal article entitled “Executive Pay: The 9/11 Factor,” describes the sequence of events (my emphases):“A Wall Street Journal analysis shows how some companies rushed, amid the post-9/11 stock market decline, to give executives especially valuable options.