Home depot stock option backdating
The list of companies involved in stock option backdating and related investigations continues to grow.The Wall Street Journal currently lists more than 120 companies under scrutiny, including the likes of United Health, Broadcom, Apple, and Home Depot.So why not just grant stock options that are “in the money” from the start and not play around with the grant dates?
The crux of the scandal is the timing of stock options.Federal regulators are so overloaded with investigations, that they are starting to rely on the suspect companies to hire investigators.Outside law firms are to conduct the investigations and hand over their findings to the SEC or federal prosecutors, who decide if the matters should be pursued.Because options are backdated to a date with a lower stock price, this effectively makes the options “in the money” on the grant date.
This must be properly expensed on the company’s financial statements.
They could give the executives options that are already priced below the market price of the stock, disclose it to the stockholders and authorities, and all would be well.