A decade after the stock option backdating scandal broke and then seemed to die down after some civil and criminal prosecutions, the practice appears to have resurrected itself.
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"There was a feeling especially among the legal community that this practice was done, that there's no more backdating, everyone has been punished, and the issue could be laid to rest." Seyhun, Michigan Ross Professor Cindy Schipani, and visiting researcher S. They found that the majority of companies studied are engaged in some sort of unethical practice that benefits top executives by an average of 6 percent in increased stock returns.
Burcu Avci reviewed all option grants—20 billion share awards—to executives in publicly listed firms in the U. "Although each individual manipulation may have a small marginal impact on compensation, collectively, this amount is significant," said Schipani, Merwin H.
Schipani said that "when executives time the release of information to increase their personal wealth, they are misleading shareholders." "We were surprised at how small the amounts were that they were going after.
The average was 0,000, which is a small amount relative to their total compensation," Seyhun said. They looked at it as money that was just sitting there to be taken." The practices were much more prevalent at small-cap and high-technology firms, he said.The reason the stock option backdating litigation was comprised of both derivative lawsuits and private securities class actions is that the stock option backdating litigation could be viewed as appropriate for either genre of litigation.On the one hand, the stock option backdating litigation involved executives absconding with more compensation than they were telling the shareholders they were receiving.But are options really as great for all parties as many have assumed?The stock option “backdating” scandal has implicated several (mostly technology) companies over the past few months.Monster also maintained the Monster Employment Index.