Errors and Omissions

Bravo to the Wall Street Journal on the options backdating story

Sometimes we complain, and other times we must salute. In March, the Wall Street Journal published this lengthy article about the options grants for CEOs of several companies, including Comverse, Vitesse Semiconductor, ACS and UnitedHealth, coinciding with unusually low price points for their stock. This situation was not the result of mere chance, but most likely of intentional backdating of options to allow the CEO the lowest strike price and, therefore, the most potential for profit.

Rather than relying on anonymous sources, the Journal reporters, Charles Forelle and James Bandler, working with an Iowa professor, Erik Lie, performed an exhaustive analysis of publicly available data to find companies with this unusual pattern of option grants.

The result? A series of investigations into these companies, the resignation of offending CEOs, and a lot more to come. Perhaps the most significant role of the press is to bring situations like this to light, to illuminate a dark corner of the world and bring some accountability there.

Wall Street Journal, CEO compensation, options

posted by Unknown @ 5/06/2006 08:47:00 AM