Option backdating list
Officers and directors could face criminal liability if they have intentionally falsified documents. Companies need to understand their historical option granting practices, address any potential problems and review their option granting procedures going forward.
The discovery of past backdating practices may raise issues as to the adequacy of the company’s internal controls and disclosure controls and procedures.It could also lead to delays in filing financial statements while the magnitude of the problem is determined.Adverse tax consequences may result from option backdating practices.This problem occurs most often when boards or committees act by unanimous written consent but there is a delay in the receipt of all of the signed consents.
Even though no documents are backdated and there may be no intent to select a lower exercise price, backdating issues may arise if the stock price increases before the corporate formalities have been completed.Finally, an option granted at less than fair market value that either vests in whole or in part after December 31, 2004 or granted or modified after October 3, 2004 raises issues under the new deferred compensation rules set forth in Section 409A of the Code.